The E.U., Neofeudalism And The Neocolonial-Financialization Model
by ilene - May 24th, 2012 11:41 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Submitted by Charles Hugh Smith from Of Two Minds
The E.U., Neofeudalism And The Neocolonial-Financialization Model
To fully understand the Eurozone's financial-debt crisis, we must dig through the artifice, obfuscation and propaganda to the real dynamics of Europe's "new feudalism," the Neocolonial-Financialization Model.
Forget "austerity"and political theater--the only way to truly comprehend the Eurozone is to understand the Neocolonial-Financialization Model, as that's the key dynamic of the Eurozone.
In the old model of Colonialism, the colonizing power conquered or co-opted the Power Elites of the region, and proceeded to exploit the new colony's resources and labor to enrich the "center," i.e. the home empire.
In Neocolonialism, the forces of financialization (debt and leverage controlled by State-approved banking cartels) are used to indenture the local Elites and populace to the banking center: the peripheral "colonials" borrow money to buy the finished goods sold by the "core," doubly enriching the center with 1) interest and the transactional "skim" of financializing assets such as real estate, and 2) the profits made selling goods to the debtors.
In essence, the "core" nations of the E.U. colonized the "peripheral" nations via the financializing euro, which enabled a massive expansion of debt and consumption in the periphery. The banks and exporters of the "core" countries exacted enormous profits from this expansion of debt and consumption.
Now that the financialization scheme of the euro has run its course, the periphery's neofeudal standing is starkly revealed: the assets and income of the periphery are flowing to the Core as interest on the private and sovereign debts that are owed to the Core countries' commercial and central banks.
This is the perfection of Neofeudalism. The peripheral nations of the E.U. are effectively neocolonial debtors of the Core countries' banks, and the taxpayers of the Core nations are now feudal serfs whose labor is devoted to making good on any bank loans to the periphery that go bad.
To fully understand the Neocolonial-Financialization Model, we need to establish some basic characteristics of the Eurozone system. Do to that, let's start with the Eurozone and the euro.
The European Union established a single currency and trading zone for the classical Capitalist benefits this offered: a reduction in the cost of conducting business between the member nations and a freer flow of capital and labor.
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DiggRumors and Denials of Rumors
by ilene - May 24th, 2012 12:22 am
Courtesy of Russ Winter of Winter Watch at Wall Street Examiner
The market rallied higher once again on more rumors (some kind of unworkable bank deposit scheme: what Europe’s loan-deposit ratios look like), and denials of yesterday’s rumors (L-Pap now says Greece to say in EU, blah, blah). The second chart shows what’s involved with PIIGS banking deposits. Using hook theory, trading rumors is the modus operandi, and not just plain rumors; but rather, inside-job rumors. It’s only a matter of time before this market collapses, but one has to slough through the rigged foul stench along the way. Fund managers scramble all over themselves to load up on “safe” German Bunds and US Treasuries [Bond Funds Prepare for Worst out of Greece]. Looks like an historic top in those.
Lee Adler and I conducted a gratis podcast covering actionable points. Among other aspects I mentioned that ”managed money” has positioned themselves short the precious metals at the highest level since 2008. However from a trading perspective, the chart on silver looks negative with convergence overhead.
source: GGR
For additional analysis on this topic and related trades subscribe to Russ Winter's Actionable – risk free for 30 days.The subscription fee is $69 per quarter and helps support Russ.s work on your behalf. Click here for more information.
Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to The Wall Street Examiner.
Japanese Debt Downgraded by Fitch; No Urgency for Japan (Until Sudden Panic Hits)
by ilene - May 23rd, 2012 5:13 pm
Courtesy of Mish
With Japan's public debt about to hit 240% of GDP, Fitch Downgrades Japan's Sovereign Rating
The ratings agency Fitch on Tuesday lowered its assessment of Japan’s sovereign credit to A+, an investment grade just above the likes of Spain and Italy, and criticized Tokyo for not doing more to pare down its burgeoning debt.
Japan’s public debt will hit almost 240 percent of its gross domestic product by the end of the year, Fitch warned.
The new rating also heightens the pressure on Prime Minister Yoshihiko Noda to rein in spending and raise taxes at a delicate time, when the Japanese economy is still recovering from natural and nuclear disasters last year.
Mr. Noda has warned that Japan could eventually face a debt crisis akin to that afflicting Europe and is staking his job on a plan to double the consumption tax rate to 10 percent by late 2015. That increase, he has argued, is necessary to pay for soaring welfare costs and pension payments.
But lawmakers even within his own party have attacked the plan, saying it would put a damper on growth just as Japan’s recovery gets on track. Even if Japan does double its sales tax, the revenue will most likely not be enough to balance in the medium term.
According to the statement, Fitch lowered Japan’s long-term local currency rating to A+ from AA. It also cut the country’s foreign currency rating to A+ from AA. Fitch said the outlook was negative for both.
The A+ rating puts Japan four notches below the ratings of other major economies like the United States, Britain, France and Germany, which all retain the top AAA rating from Fitch. Japan’s grade is now just one notch above Spain’s and two above Italy’s, countries that have struggled in the European debt crisis. Two other global ratings agencies, Standard & Poor’s and Moody’s Investors Service, lowered Japan’s credit rating last year.
No Urgency for Japan (Until Sudden Panic Hits)
As Japan's debt careens out of control, Keynesian clowns do not want to do anything about it for fear of hurting the recovery. They have been saying the same thing for over 20 years.
Nonetheless, the rally cry remains No Urgency for Japan to Deal With Debt.
With Japan awash in cheap funding provided by domestic savings and local
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Facebook Investors that lost money in IPO deserve no sympathy – Overheard – WSJ
by ilene - May 23rd, 2012 4:55 pm
Courtesy of Lee Adler of the Wall Street Examiner
When you lose the lottery, you can’t blame anyone but yourself for taking a sucker’s bet.
That’s not stopping those that took a Facebook flyer from blasting others for their own gamble. With shares off 16% from the initial price of $38, they’re saying it’s Nasdaq’s fault for botching the offering. They say it’s unfair that analysts at Morgan Stanley and Goldman Sachs cut their earnings estimates but only told big clients about it.
Those issues are clearly significant. And regulators need to get to the bottom of what happened. But investors can’t claim they they were not warned about other potential pitfalls – which were well-telegraphed, and well-reported.
via Facebook Investors that lost money in IPO deserve no sympathy – Overheard – WSJ.
Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!
Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.
Germany Rules Out Eurobonds for 104th Time; Damned if They Do, Damned if They Don’t
by ilene - May 23rd, 2012 4:52 pm
Courtesy of Mish
I have no idea what the actual number of times Germany Has ruled out Eurobonds. It could be 504 or even 1004. I Made up the number 104 which simply means "a lot."
Nonetheless, the Eurobond idea resurfaces every other week or so, and every time, someone from Germany (typically Merkel, the Bundesbank, or the Finance Minister) rules them out.
Once again, this time under pressure from French president François Hollande, Germany rules out common euro bonds.
Germany refused to share the debt burden of stressed eurozone peers on Tuesday, ignoring two of the most influential international economic bodies which offered support for proposals championed by Paris, Rome and Brussels ahead of a summit.
Angela Merkel, Germany’s chancellor, has argued that any co-mingling of eurozone debt would remove incentives for southern economies to adopt structural reforms. The calls from the International Monetary Fund and the Organisation for Economic Co-operation and Development came on the eve of Wednesday’s EU summit.
François Hollande, France’s new president, has strongly backed common eurozone bonds – which would ease funding constraints for the eurozone’s stressed periphery but potentially raise German borrowing costs by diluting its creditworthiness across the currency union.
German officials made clear the idea was a non-starter in Berlin.
“There is no way of introducing them under the current [EU] treaties. Indeed, there is an explicit ban on them,” one senior German official said, adding Berlin would not drop its opposition in the foreseeable future. “That’s a firm conviction which will not change in June.”
Diplomats said the summit, which just last week looked like it would be a highly scripted affair on European growth, had become increasingly unpredictable, with leaders struggling with how to respond to the havoc wreaked by political instability in Greece. Officials emphasised that no formal decisions would be taken.
The euro bonds debate could produce fireworks between Mr Hollande and Ms Merkel – a possibility that has captivated officials involved, given the comparatively harmonious Franco-German relationship in the latter years of Nicolas Sarkozy’s tenure. But most diplomats believe Ms Merkel would succeed in blocking any proposal, producing more smoke than fire.
Damned if They Do, Damned if They Don't
“They say that when Germany and France don’t co-operate, we have a problem,” one senior diplomat from a smaller EU country said. “And when they do,
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The Economic Crisis in Greece – Video – The New York Times
by ilene - May 23rd, 2012 4:50 pm
Courtesy of Lee Adler of the Wall Street Examiner
Video
The Economic Crisis in Greece – Video Library – The New York Times.
Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!
Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.
Harry Dent: “Understanding Demographics Is Vital to Success”
by ilene - May 23rd, 2012 4:32 pm
In this segment from one of his talks at the Casey Research Recovery Reality Check Summit, economics expert and author Harry Dent explains how shifting demographic trends lead to economic cycles and why the current US federal government is so afraid of deflation.
Harry's complete presentation – as well as the speeches of 30 other economic and investment luminaries from this Summit – is available to you in MP3 or CD format. Listen to experts like David Stockman, Harry Dent, Lacy Hunt, James Rickards, John Hathaway, Chuck Butler – their assessment of what investors should expect and their best investment strategies for the coming years. Get more details here.
Who will be the next Treasury secretary? | Felix Salmon
by ilene - May 23rd, 2012 4:19 pm
Courtesy of Lee Adler of the Wall Street Examiner
Glenn Somerville has one of the first of what will surely be many articles handicapping possible Treasury secretaries come January. We know we’re going to get a new one, whatever happens — Geithner won’t stay on for a second term.
Top of the list if Obama gets re-elected is Larry Fink, of Blackrock — he wants the job, and he has a pretty solid reputation in finance circles. I think the problem with Fink, though, is that the country has had enough of financiers at Treasury. I suspect that Obama will want Geithner’s successor to be a communicator — someone who can get through not only to the country at large (something Geithner’s never been good at) but also to Congress. And Fink is no man of the people.
It almost goes without saying that Jamie Dimon neither wants the job nor would ever be offered it, at this point.
via Who will be the next Treasury secretary? | Felix Salmon.
Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!
Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.
Flight to Safety: German 2-Year Bonds Yield Hits Zero; Eurozone Officials Tell Countries to Prepare for Greece Exit
by ilene - May 23rd, 2012 4:08 pm
Courtesy of Mish
The once taboo subject of a Greek departure from the eurozone cracked in the past couple of weeks, primarily with threats to Greece.
Today the exit discussion dam broke wide open as Eurozone tells members to make contingencies for "Grexit"
Euro zone officials have told members of the currency area to prepare contingency plans in case Greece decides to quit the bloc, an eventuality which Germany's central bank said would be "manageable".
Three officials told Reuters that the instruction was agreed on Monday by a teleconference of the Eurogroup Working Group (EWG) – experts who work on behalf of the bloc's finance ministers.
"The EWG agreed that each euro zone country should prepare a contingency plan, individually, for the potential consequences of a Greek exit from the euro," said one euro zone official familiar with what was discussed.
For the first time in more than two years of debt-crisis meetings, the leaders of France and Germany have not huddled beforehand to agree positions, marking a significant shift in the Franco-German axis which has traditionally driven European policymaking.
Instead, new French President Francois Hollande met Spanish Prime Minister Mariano Rajoy in Paris to discuss policy, before the pair travel to Brussels for the 1800 GMT summit.
A German two-year debt auction gave a stark illustration of how money is dashing for safe havens. Investors snapped up the 4.5 billion euros of paper on offer even though it came with a zero coupon – offering no return at all.
One proposal on the table is for the euro zone's rescue funds to be allowed to recapitalize banks directly, rather than having to lend to countries for on-lending to the banks.
But that is another idea with which Germany is uncomfortable, even though Merkel said on Tuesday a way should be found to dismantle banks across borders, a possible nod to a pan-euro-zone bank restructuring scheme
Here is one for the surprising candor and honesty department:
Dutch Prime Minister Mark Rutte said "The hard truth is that there are no magic solutions to solving this crisis. We will all have to keep our spending in check, pay off our debts and swiftly introduce healthy reforms. This is what will kickstart growth."
The one major thing missing is that bondholders, not taxpayers need to take a substantial hit. Only
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Doug Casey – Notes from the Front Line on International Travel
by ilene - May 23rd, 2012 3:58 pm
By Doug Casey, Casey Research
In an excerpt from his presentation at the Casey Research Recovery Reality Check Summit, legendary contrarian speculator Doug Casey remarks on the farcical aspects of international air travel.
You can hear Doug's complete speech, along with all the other presentations given at this Summit, at your convenience and in MP3 or CD format. Learn more about this collection, which includes actionable investment advice and trend forecasts from some of today's brightest economic and investment minds.
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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