Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Greece

The Bubble in the Caribbean: Puerto Rico

This article was first published at The McAlvany Intelligence Advisor on Wednesday, October 30, 2013:

The complacency of municipal bond holders ended in July with the filing for bankruptcy by Detroit, an unhappy town of just 700,000 owing more than $18 billion to investors. Haircuts there have variously been estimated to be between 15 and 60 percent.

Since then, those holders have been looking around to find the next shoe to fall, and they have found it:

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Why are Puerto Rico’s Bond Prices Falling?

Despite the fact that Puerto Rican (PR) municipal bonds are triple-tax-exempt (no federal, state or local income taxes apply on their interest), those interest rates have skyrocketed since the Detroit bankruptcy first ended the complacency among municipal bond investors in July. High quality municipal bonds are paying little more than 1 percent annually but PR bonds, even though they remain investment grade (barely), have spiked

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University of California Study: The National Debt is really $70 Trillion

Professor James Hamilton, economics professor at the University of California, San Diego, just published his best estimate of the federal government’s “off-balance-sheet” liabilities and concludes that the real national debt, popularly estimated to be $16.9 trillion, is in fact more than four times larger: $70.086 trillion. This is because of decisions to

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Staff Report from the IMF Blames the European Union for Mishandling the Greek Crisis

The report from the International Monetary Fund is remarkable in its candor: efforts to bail out Greece were fumbled as the IMF, the European Commission and the European Central Bank all tried to promote their own agendas with little regard for the lowly Greek citizen.

Happily the disclaimer appeared on the front page:

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Taxpayer Protection Pledge Takers Now Breaking Their Promise

U.S. Senator Saxby Chambliss, of Georgia.

U.S. Senator Saxby Chambliss, of Georgia. (Photo credit: Wikipedia)

A defection on Thursday from Grover Norquist’s “Taxpayer Protection Pledge” by Saxby Chambliss, the senior Republican Senator from Georgia, triggered similar defections over the weekend. It also triggered a strong response from Norquist.

Said Chambliss: “I care more about my country than I do about a 20-year-old-pledge. If we do it his way then we’ll continue in debt, and I just have a disagreement with him about that.”

The pledge that Chambliss is breaking states:

One, [I will] oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and

Two, [I will] oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

This reflects the philosophy of Norquist and the organization he founded in 1985, Americans for Tax Reform, that “opposes all tax increases as a matter of principle.” Norquist explained why the pledge was

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Making Sense of Europe’s Nonsense

The official emblem of the European Parliament.

The official emblem of the European Parliament. (Photo credit: Wikipedia)

Anthony Wile is at it again. While most were caught up in the national election and the aftereffects of Hurricane Sandy and General Betrayus, Angela Merkel, the German Chancellor, explained what the implosion in Europe is all about. In speaking to the European Parliament last Wednesday, she shed all cover and told all who would listen what’s really going on:

Of course the European Commission will one day become a government, the European Council a second chamber and the European Parliament will have more powers – but for now we have to focus on the euro and give people a little more time to come along.

Wile has been saying this for years. That’s part of why his blog has grown so rapidly: he sees with a view and an insight that truth seekers appreciate. Out of 644 million active websites  Alexa ranks www.thedailybell.com at 16,991 in the United States. More than 6,700 people come to his Switzerland-based website every day. And his readership has grown 60% just in the last three months.

He’s like the 500-pound canary: when he speaks, people listen!

He notes that the European Union was always, from the very beginning, designed with

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Myths About the Marshall Plan

Logo used on aid delivered to European countri...

When establishment historians consider the Marshall Plan, its intents and purposes and alleged successes, they typically make at least two errors–one in logic and the other in history. First, they assume that since Europe began to revive at about the time the Marshall Plan was implemented then that revival must have been because of the plan, not in spite of it.

Second, they fail to make any mention of the forces in the background that had a much different purpose in mind: specifically, how to use the Marshall Plan to further their internationalist agenda.

One example of a “court historian” providing his readers with the accepted view of the Marshall Plan is Robert V. Remini, professor emeritus at the University of Chicago, and author of numerous books on the American republic’s early figures, such as Andrew Jackson, Henry Clay, John Quincy Adams and Daniel Webster. In 2005 Remini was appointed the Historian of the U.S. House of Representatives. Remini thus serves as the perfect example of someone who knows his history but fails to tell all he knows, especially when it comes to the Marshall Plan.

In his “A Short History of the United States” Remini had this to say about the Marshall Plan:

Secretary of State, George C. Marshall, then devised a plan, which he outlined in a speech at Harvard University on June 5, 1947, by which the United States would assist European nations to rebuild their shattered economies…

Between April 1948 and December 1951, the United States contributed a little over $12 billion to Europe…

By 1951 Europe had not only achieved its prewar level of production but its level of industrial production rose to virtually guarantee prosperity for the future…

There it is: the United States, out of the goodness of its heart, gave five percent of its gross national product with no strings attached to European nations to help them get back on their feet. And it worked!  Look! By 1951 Europe had fully recovered!

It is tempting to ascribe malevolent intentions to Remini. But that does not preclude asking some questions and pointing out some errors of commission and omission in his establishment view. For instance, who

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Eurozone Teetering on the Edge of Recession

The economic growth of Portugal, Italy, Irelan...

With economists predicting the start of an official recession in Europe, the latest numbers from the European Union’s statistics agency, Eurostat, show that the recession hasn’t been confirmed, at least not yet.

Without Germany’s slightly better economic performance in the first quarter, however, the recession would be official. Two quarters of “negative growth”—or rather shrinkage—is the usual definition of a recession, and it appears that the official declaration will have to wait until July. Germany was expected to grow at a paltry annualized rate of 0.1%—barely perceptible—but instead grew by a modest 0.5% in the first quarter, which followed a 0.3% contraction in the last quarter of last year. Some economists had the audacity to call this a “strong economic performance” by Europe’s powerhouse, but a closer look at the real numbers reveals how close a call it was and that it’s just a matter of time before the economists finally recognize the reality that

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French Elections: Austerity, No! More Spending, Yes!

François Hollande à Saint-Cyr-sur-Loire

By a three-point margin, French citizens replaced President Nicolas Sarkozy with the Socialist and Radical Left Party candidate, Francois Hollande. Hollande, a former mayor of Tulle (pop. 15,000) and then president of Correze (pop. 242,000), beat Sarkozy 51.9% to 48.1%, resulting in the first Socialist president of France since Francois Mitterand left that office in 1995. With Socialist Party majorities in the upper house of parliament and two-thirds of all French towns, a win by the party in the upcoming June elections in the lower house would give the Socialist Party “more levers of power than ever in its 43-year modern history,” according to NewsMax.com.

With such control, Hollande knows exactly what he is going to do: apply what France is already suffering from, only more so. He wants to spend more money even in the face of the agreement recently signed with German Chancellor Angela Merkel to cut spending in order to save the banks and the euro. His campaign slogan, “Austerity is not inevitable,” Hollande is persuaded that he can do the impossible: spend more and balance the budget at the same time. He plans to:

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Iceland Says “No” to Bank Bailouts, Enjoys Economic Growth

THE GRAND KREMLIN PALACE, MOSCOW. President Pu...

To look at the streets of Reykjavik, Iceland, an alien would be hard-pressed to see any aftereffects of the banking crisis that nearly bankrupted the country in 2008. The capitol of the 40,000-square-mile island just below the Arctic Circle between Greenland and the United Kingdom is the country’s largest city where nearly two-thirds of the island’s 320,000 inhabitants reside. Unemployment is down, economic growth is positive, and its streets are calm.

But it was the center of the financial crisis precipitated in 2008 when one of its three largest banks had a big loan payment coming due and couldn’t come up with enough krona to make it.

As Iceland’s President, Olafur Ragnar Grimsson, said in an interview with Business Insider International:

If a collapse in the financial sector can bring one of the most stable and secure democracies and political structures to [its] knees as happened [here] in Iceland, then what could it do in [other] countries?

When Iceland’s legislature decided to take over the country’s three largest banks—Glitner, Landsbanki, and Kaupthing—it was discovered that, despite all four credit rating agencies giving them A or better credit ratings, the banks owed an amount that approached six times Iceland’s gross domestic product (GDP). Grimsson, who has been President of this parliamentary republic since 1996, had a decision to make: pump government (taxpayer) funds into them to keep them afloat, or

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Group of 20 Balks, Stalls and Dithers

Español: Foto de familia de líderes del G20 en...

The Group of 20 meeting in Mexico City over the weekend decided that the best course of action was inaction, putting off making any decisions on how to “rescue” the European Union from its financial and economic difficulties until next month at the earliest. The statement justifying kicking the can down the road for another month or so was breathtaking in its obfuscation: putting off any decisions, it said, “will provide an essential input in our ongoing consideration to mobilize resources…” This is how finance ministers and world economic experts explain that, after two days of meetings, the best thing to do was nothing at all.

There were great expectations before the meeting ended that something of substance would come out of it. The plan was not only to pave the way for the second bailout of Greece but for each of the G-20 members (including the U.S. and most of the other industrialized nations on the planet) to pony up additional taxpayer funds to the International Monetary Fund (IMF) which would then be used, at its discretion, to bail out over-indebted countries like Greece, Portugal, Spain, and others as they need them. Expectations were that commitments totaling $1 trillion would be made before the end of the meeting on Sunday.

Plans went awry when Germany’s Chancellor Angela Merkel, responding to pressure from more sensible voices, said Germany would be unable to participate in any further assistance. This reluctance no doubt stems from the fact that the German parliament, the Bundestag, still hasn’t

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The Greek Deal Saves the Banks

Map of Greece with EU flag

Following a 13-hour marathon session on Monday, eurozone ministers announced an agreement to loan Greece another $170 billion, which saves the banks while punishing private investors and damaging Greek national sovereignty.

The bailout brings the total spent or committed to save the eurozone countries of Greece, Ireland, and Portugal to $500 billion with little assurance that more won’t be needed very soon. Details of the agreement require that 90 percent of private bondholders agree to take a 53-percent haircut on their investments by exchanging old bonds for new. It requires acquiescence by Austria, Finland, Germany, the Netherlands, and Slovenia to allow the European Central Bank and the International Monetary Fund to part with the funds. And it forces Greece to accept permanent and rigid enforcement of debt service payments by outsiders monitoring government revenues and expenditures and forcing debt service payments to be made ahead of any other government commitments.

The parties who come out whole on the deal are, naturally, the European Central Bank and other banks that hold Greek debt. Their holdings will be paid off at par.

Observers with chips in the game were decidedly guarded in their enthusiasm. Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt, said, “Greece will find it difficult to shoulder even the

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Plans Revealed for Greek Default on March 23

March 25 - Greece Independence Day

Writer Bruno Waterfield’s claim that Germany has drawn up plans to deal with the inevitable Greek default was published in the British newspaper The Telegraph a little after 8 p.m. Saturday night. Within hours his claim was confirmed separately by blogger John Ward with times, dates, and consequences all spelled out by those drawing up the plans.

German Finance Minister Wolfgang Schauble has increasingly voiced his opinion that the economic implosion taking place in Greece would result in its bankruptcy despite official protestations to the contrary from German Chancellor Angela Merkel. One official close to Schauble said, “He just thinks the Greeks cannot do what needs to be done. And even if by some miracle they did what has been promised, he…[is] convinced it will not pull Greece out of the hole.”

Schauble’s opinion gained increasing credence by a report issued last week by the European Commission, the European Central Bank, and the International Monetary Fund (EC, ECB, and IMF—the “troika”). According to their report, even if Greece were successful in accomplishing all that it has promised in order to secure the next round of financing, it will still fall far short of bringing down its debt load to manageable levels. Waterfield went on to say that Schauble, behind the scenes, is pushing Greece to declare itself bankrupt and demand a 70 percent “haircut” from the banks holding the bulk of its debt.

The timetable is pushing events inexorably forward: Greece must receive the next round of financing in order to pay debt service of $20 billion on March 20. Without it the debt will default and government checks will start bouncing. But it will take at least four weeks to get a formal agreement on

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Eurozone Recession Accelerates; Moody’s Piles On

Board of Governors - International Monetary Fu...

Economists polled by Reuters predicted that the recession in Europe that began late last year would continue into the new year and they weren’t disappointed. Reuters announced that economic output in the 17-member eurozone declined by 0.3 percent in the last quarter of 2011, the sharpest since the second quarter of 2009 at the start of the recession. Those same economists are now predicting that European GDP growth will stay negative at least for the rest of the year with only modest chances of improvement in 2013.

The International Monetary Fund (IMF) has the same negative expectations, predicting at least a 0.5-percent contraction of the eurozone countries next year. Even Germany, long the anchor to windward and the engine of growth for the European community, went negative in the last quarter compared to its modest growth rate of 0.6 percent in the third quarter.

Investment banking firm ING admitted that the decline caught their forecasters by surprise. Carsten Brzeski said the economic contraction “turned out to be weaker than expected.”

The Netherlands declined into recession (defined as two quarters of declines in GDP, or “negative growth” in economic parlance) with its third quarter contraction of 0.4 percent followed by another 0.7 percent decline in the fourth. Italy’s economy dropped by 0.7 percent in the last quarter with little improvement expected for at least a year. This puts Italy into the same recessionary camp as Belgium, Portugal, and Greece.

Portugal may be looking for another bailout as its economy suffered at 1.3 percent decline in the fourth quarter, more than double the 0.6 percent decline from the third quarter.

But Greece is the basket-case poster child for economic performance, with a stunning

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Greeks About to Learn the True Cost of Bailouts

Ευάγγελος Βενιζέλος, συνέντευξη τύπου στα μέσα...

Greece’s Finance Minister, Evangelos Venizelosrejected the German idea of imposing a eurozone “overseer” as part of the agreement to keep bailout funds flowing to his country.

He said that the proposal, floated late last week as a condition for Greece to receive another $170-billion bailout from the European Central Bank, would force his country to choose between “financial assistance” and “national dignity.” He said that forcing Greece to accept such an overseer—with the power to veto Greek tax and spending decisions and make sure that debt service is paid before any other government expenditures—“ignores some key historical lessons.” An unnamed official privy to the conversation put it even more clearly: “If you went with that model, you’d do away with the normal democratic decision-making in a member state.”

Venizelos failed to be explicit about those “key historical lessons,” but the threat was clear: Here was Germany trying to enforce its version of financial austerity and “behavior” onto another sovereign nation, just as it did in the 1930s. It was also a reminder of the continuing failure of the EU, which was sold initially as a way to keep the German threat from rising again in the years following the Second World War.

Greece has so far been successful in negotiating a 70-percent “haircut” with private bondholders as part of the deal to bring its national debt down from the current 160 percent of Gross Domestic Product to an allegedly more manageable 120 percent by 2020. The bond holders will exchange their current bonds for new bonds that have 30 percent of the value of those they exchanged. They have agreed to take a loss of 70 percent of their original investment. But the Greek economy continues to languish, and its shortfall in tax revenues is widening rather than shrinking, putting into jeopardy another part of

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World Economic Forum in Switzerland: Global Elites Celebrating Hypocrisy

Davos, Switzelrand, Klaus Schwab, Founder and ...

Global elites—many of the 2,500 of them billionaires—are spending a few days in Davos, Switzerland, attending the World Economic Forum (WEF), a group founded in 1971 “committed to improving the state of the world.”

The state of the world doesn’t appear too rosy. The recent downgrades of major economies, the clamor over perceived income inequality, the crisis in the Eurozone, and other concerns are weighing heavily on the participants. Vikas Oberoi, chairman of India’s second-largest real estate developer, observed, “Many who will be in Davos are the people being blamed for economic inequalities. I hope it’s not just about glamour and people having a big party.” Azim Premji, chairman of India’s third-largest software company, was equally somber: “We have seen in 2011 what ignoring this aspect can result in. If we don’t take cognizance of it and try to solve this problem, it can create a chaotic upheaval globally.”

Not just the movers and shakers were expressing concern, either. Mainstream economists were of one mind about the world economy, agreeing with the downbeat report from the International Monetary Fund on January 24 which reduced its economic growth outlook for 2012 significantly, predicting at least a “mild recession” in Europe and the rest of the world to slow further from its current tepid pace.

Carmen Reinhart of the Peterson Institute for International Economics agreed that there will be a “serious economic crunch [with] another sub-par year of stubbornly high unemployment, weak growth and delayed recovery in general in all the advanced economies.” Professor Joseph Stiglitz of Columbia University, also on the roster of attendees, said that the IMF might be underestimating the projected difficulties and that the crisis will be “all the worse because of the weakness of appropriate government response.”

Manpower CEO Jeff Joerres admitted, “Twelve months ago we were all looking forward to a pretty good 2011. Twelve months later, here we are in a completely different world.” That was the tone set by the founder of the WEF, Klaus Schwab, in his opening remarks. The problem is that capitalism, according to Schwab, is failing and that

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The Imminent Collapse of the Euro

Safe deposit boxes inside the vaults of a Swis...

One of the unintended consequences of the ongoing and accelerating crisis in the eurozone is that ordinary citizens are taking their money out of the banks and burying it. Lack of both confidence in the stability of the European economy and credible solutions to the crisis have led to the exit of currency from banks in Greece, Italy, and other European countries.

One Greek banker said that safe deposit boxes are in great demand: “There has been a big increase in rentals…about five-fold compared with last year. About 10 percent of the withdrawals we see are headed there. The most extreme case was a client who told me he was building a safe under his pool.” Retail bank deposits in that country are now at five-year lows, adding to the instability of banks whose balance sheets depend on those deposits staying put.

Italian citizens are moving their money out of the country into Switzerland while others are purchasing German bonds. Those purchasers have been so willing to pay for the privilege of owning safe German bonds that they have driven interest rates to less than zero.

Others are putting their paper into hard assets such as apartments in Berlin. Frederico Racca, a realtor in Berlin, reported, “Sales skyrocketed in the last two months due to

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Latest Numbers from Germany Confirm Recession

English: Night view of the euro monument (euro...

The announcement from the German Economy Ministry over the weekend confirmed that the long-awaited European recession has officially begun: German factory orders dropped to the lowest level in three years, down nearly five percent in the past month. The ministry also revealed that orders from outside the EU dropped by 10.3 percent.

Said Jennifer McKeown, an economist at Capital Economics Ltd. in London, “It’s quite clear that we’re heading into a pretty sharp downturn in Germany, which has been one of the strongest of the eurozone’s economies. Orders are very clearly on a downward trend, as is industrial production itself.”

The German economy is the fourth largest in the world, generating nearly $3.5 trillion in goods and services annually. Most of its trade is inside the eurozone, resulting in its position as the second-largest exporter in the world. Despite its strong economy relative to its neighbors, its debt-to-GDP ratio is 142 percent, and it is running an annual deficit of almost nine percent of GDP. It nevertheless retains its AAA rating from the three major credit rating agencies, which is strong enough compared to its eurozone partners to have caused a strange anomaly in the markets: yields on its six-month bonds have gone negative.

Translation: Banks are so nervous that they would rather

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Blowing Up the Euro

George Soros, billionaire

In her article on Monday, financial journalist Jessica Mortimer said that the euro had just set a new record low against the Japanese yen: Its value is now the lowest it’s been in 10 years. The irony wasn’t lost on her as she also noted that it was just 10 years ago that the euro was first denominated in coins and currency, three years after being introduced electronically among the member states.

And she sees further weakness in the euro, now trading below $1.30 versus the dollar, and likely to move ever lower into the New Year: “In the absence of a comprehensive European policy response to the debt crisis, the euro could test its 2010 low of $1.18.” This would imply at least another nine-percent loss in value in less than a year.

She touched on only one of the few remaining options open to keep the euro from blowing up altogether: more austerity on the backs of the citizens of the member states who took excessive advantage of lower-than-market interest rates to load up on debt that they can’t pay back. She noted the survey that came out over the weekend indicating that a key European manufacturing index remains persistently below recovery levels, with further declines into a full-blown recession in Europe likely. Additional austerity measures would simply hasten that recession. Kathleen Brooks, director of research at FOREX.com, told her clients: “We remain a sell on rallies (with the euro) as we tend to think the eurozone crisis will actually get worse before it gets better.”

That’s one option: Increase the pressure on the taxpayers to

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European Union Agreement: Too Little, Too Late

English: The City of London skyline as viewed ...

As reported by Annika Breidthardt for RealClearMarkets.com, the latest European crisis summit that ended last weekend resulted in “a historic agreement to draft a new treaty” which she then characterized as “too little, too late.” Reaction of the equity and currency markets agreed, with substantial losses in American and European stock markets opening the week, and the euro dropping to lows not seen since last February.

The agreement will require EU member states to ante-up $267 billion to the International Monetary Fund which will then turn around and re-lend it to those member states in financial trouble. Exactly how those needing the funds will “ante-up” was left unexplained. The existing bailout fund—the European Financial Stability Fund, or EFSF—will be leveraged, debt upon debt, to give it more ability to lend to those same struggling countries.

But the big news is the moving forward of the date for ratification of the ESM—the European Stability Mechanism—by a full year, to June of 2012. This is the elephant in the living room that few in the media have spent much time reviewing, although a careful analysis is available here. The reason for moving ahead with such a grotesque totalitarian program is obvious: there may not be enough time left to implement it. Investors continue to demand

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.

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