Baltic Dry Index. 788 -06 Brent Crude 57.33
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
The
larger the German body, the smaller the German bathing suit and the louder the
German voice issuing German demands and German orders to everybody who doesn't
speak German. For this, and several other reasons, Germany is known as 'the
land where Israelis learned their manners'.
P. J.
O’Rourke.
Get long fully paid up physical gold and silver. Later this month the
shootout between Greece and Germany is about to get serious. In the minds of
the arrogant Germans in Berlin, if the Greeks vote in Syriza on January 25th,
Germany will crush Greece without any EU consequence outside of Greece. But
that’s a great gamble best not put to the test. If the continentals really want
to keep the Eurozone together, wiser heads than the Germans need to be heard
from. Greece only needs to threaten to default on 245 billion “bailout,” and
the whole continental banking system comes under threat again.
Up first, the Gospel according to Berlin.
Euro zone no longer obliged to rescue Greece, Merkel ally says
BERLIN(Reuters) - Euro zone politicians are not obliged to rescue Greece as the country is no longer of systemic importance to the single currency bloc, a senior member of German Chancellor Angela Merkel's party was quoted as saying.
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 euro."
The remarks are the clearest warning yet to Greek voters from a senior German politician that Athens might lose support if it flouts the terms of its 240 billion euro EU/IMF bailout after early elections next year.
Fuchs, deputy parliamentary floor leader of Merkel's Christian Democrats, has frequently expressed frustrations felt by many politicians and the German public about the pace of reform and political hold ups in twice-rescued Greece.
Polls suggest that Syriza will emerge as the strongest party in the Jan. 25 election, although its lead has narrowed. The party wants to cancel austerity and a big chunk of national debt but says it will keep Greece in the euro zone.
The head of Germany's influential Ifo economic research institute, Hans-Werner Sinn, meanwhile called a Greek exit from the euro zone an option.
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Below reality as seen from the safety of non-Euroland London. Euroland is a house of cards just awaiting a draught, and in a suicidal sanctions war with Russia that threatens disaster, irrespective of the outcome of Greece v Germany. Crushing Greece may trigger bank bail-ins all across Europe.
Greek expulsion from the euro would demolish EMU’s contagion firewall
Should EMU leaders choose to cut off liquidity support for the Greek banking system they might find that their contagion defences are a fiction
We know from memoirs and a
torrent of leaks that Europe’s creditor bloc came frighteningly close to
ejecting Greece from the euro in early 2012, and would have done so with
relish.
Former US Treasury Secretary Tim
Geithner has described the mood at a G7 conclave in Canada in February of that
year all too vividly. “The Europeans came into that meeting basically saying:
'We’re going to teach the Greeks a lesson. They are really terrible. They lied
to us, and we’re going to crush them,'” he said.
“I just made very clear right
then: if you want to be tough on them, that’s fine, but you have to make sure
that you’re not going to allow the crisis to spread beyond Greece.”
German chancellor Angela Merkel
did later retreat but only once it was clear from stress in the bond markets
that Italy and Spain would be swept away in the ensuing panic, setting off an
EMU-wide systemic crisis.
The prevailing view in Berlin and
even Brussels is that no such risk exists today: Europe has since created a
ring of firewalls; debtor states have been knocked into shape by their EMU
drill sergeants.
The democratic drama unfolding in Greece this month is
therefore a local matter. If Syriza rebels win power on January 25 and carry
out threats to repudiate the EU-IMF Troika Memorandum from their “first day in
office”, Greece alone will suffer the consequences.
----This loosely is the “German view”, summed up pithily by Berenberg’s Holger Schmieding: “We’re looking at a Greece problem, the euro crisis is over. I do not expect markets to seriously contest the contagion defences of Europe.”
It sounds plausible. Bond yields
in Italy, Spain and Portugal touched a record low this week. Yet it rests on
the overarching assumption that the Merkel plan of austerity and “internal
devaluation” has succeeded. An army of critics retort that the underlying
picture is turning blacker by the day.
Europe’s rescue apparatus is not
what it seems. The banking union belies its name. It is merely a supervision
union. Each EMU state bears the burden for rescuing its own lenders. Europe’s
leaders never delivered on their promise to “break the vicious circle between
banks and sovereigns”.
The political facts on the ground
are that the anti-euro Front National is leading in France, the neo-Marxist
Podemos movement is leading in Spain, and all three opposition parties in Italy
are now hostile to monetary union.
The creditor core has destroyed
the political unity of EMU by pushing its contractionary agenda too far, and by
imposing an “asymmetric adjustment” that forces deficit states alone to close
the intra-EMU gap rather than surplus states.
----Spain’s car factories may be working day and night again after slashing wages by 27pc, and they may be exporting vehicles at a record pace, but this is a displacement effect within EMU at the cost of France and Italy. It pushes the currency bloc as a whole further into a deflationary vortex.
The eurozone recovery that was
proclaimed a year ago never happened. Barely out of double-dip recession, it is
flirting with a third, even as America roars ahead at a growth rate of 5pc. “I
completely underweighted the possibility they would flail around for three
years,” said Mr Geithner. Make that five years.
Not only has EMU strategy managed
to trump the Great Depression – leaving output below its prior peak six years
on – but it has brought about deflation and therefore proved self-defeating
even on its minimalist objective of containing debt.
Italy’s debt ratio has spiked
from 116pc to 133pc of GDP in three years despite a primary surplus, simply
because nominal GDP has failed to keep pace with interest costs. Alarm in Rome
is palpable.
----As matters stand, the ECB’s backstop plan for Italian and Spanish debt (OMT) cannot legally be activated. The German constitutional court has ruled that it “manifestly violates” the EU Treaties and is probably ultra vires, implying that the Bundesbank may not take part.
The case was referred to the
European Court (ECJ) as a courtesy. Its adjutant-general will issue an opinion
on January 14 but this has no legal standing. The judges will not rule for
months. When they do, they cannot safely ignore the prior findings of the
irascible German court.
Nor can the ECB safely ignore
German objections to quantitative easing, unless it is willing to test the
limits of German popular consent for the euro. There is talk of a half-baked
compromise where each EMU central bank buys only the bonds of its own country,
creating a fresh vicious circle. Such is the determination to avoid any pooling
of debt or sharing of risk.
The eurozone is not an inch
closer to fiscal union. There is a wearying array of “two-packs” and
“six-packs” and other such measures to police sinners, capped by a Fiscal
Compact of staggering folly, yet nothing has been done to place monetary union
on viable foundations.
More
"If you don't trust gold, do you trust the logic of taking a beautiful pine tree, worth about $4,000 - $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?"
Kenneth J. Gerbino
At the Comex silver
depositories Thursday final figures were: Registered 64.60 Moz, Eligible 110.93
Moz, Total 175.53 Moz.
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.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
We leave the final word to Mish. His whole article is well worth the read.
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.
The monthly Coppock Indicators finished December.
DJIA: +138 Up. NASDAQ: +247 Down. SP500: +198 Down.
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