Tag Archives: Goldman Sachs

The assumption of right

This happens, it happens almost every day and we all (including me) see that happen. My view was that oil prices would go up. It is a logic set to demand and supply, a basic principle. As OPEC cut production by 1.2 million barrels a day, we would have expected a rise, maybe not directly, but overall when you get less of a product, the prices rise. It is the basic foundation of commerce; shortage tends to drive prices up. Yet a Forbes article proves me wrong (at https://www.forbes.com/sites/gauravsharma/2018/12/10/opecs-output-cut-not-enough-to-provide-short-term-70-oil-price-floor/#668312a8d58d).

This is fine, I never proclaimed to have all the answers, yet it does seem odd that less oil still drops the price from $80 to $51 in one month, and the logic is gone at my end of the table, yet I also know that oil prices are a little more complex, so I took this moment to learn a little. Gaurav Sharma gives us: “oil price is not just a story of supply; it is also a story of demand“. That part makes sense, yet this part only gives rise to changes if demand dampens and dampens by a whole lot. We see that with: “It cannot be ignored that Eurozone growth continues to disappoint, global trade is decelerating and China’s slowdown is a visible fact, and not just a forecast. We haven’t even mentioned the words “trade wars” and a prospect of further U.S. interest rate hikes“. Yes, so far I am on board, yet does that dampen the need for oil to THAT degree? This is precisely the setting when we consider: “If anything OPEC’s move provides U.S. drillers with a further incentive to pump more, and they already are, having made America the world’s largest producer of crude oil.” This implies that the need is changing; America needs less as they become self-reliant more. This explains the setting in the short term, yet it also gives rise to other dilemmas. As the US is using its own stock to keep cheap oil, we also see the change in the dynamics. Less money in the treasury through cheap oil, more costs (and optionally more jobs mind you), yet the budget and shortages of America (like $21 trillion debt) now has another not so nice tail. The interest on 21 trillion can no longer be fuelled with fuel. With a downwards economy, the debt will rise a little faster and there will not be anything left for infrastructure. Now, in this case none of this is the fault of the US Administration, or the current administration to be a little more precise. There is a lot wrong as the Clinton administration left the nation with surplus. I am not ignoring that 9/11 changed the game, yet the Obama administration had a clear directive to do something and that was not done. We can argue whether they had the options or not, we know that the war on terror has had a long-lasting impact. And the downward fuel price does not help. Yet cheap fuel is good for all the non-petrochemical industries and the people requiring cheap oil for heating.

The writer also gives us: “As things stand, a sustainable $70 oil price doesn’t look certain at all for 2019“. OK, I can only support that for as long as the US can keep up with the reductions that OPEC and Russia implement, when that stops working prices will go up, just how fast is unknown. It depends on the current storage and demand and I am not certain that this will not bite in 2019. I cannot academically argue with Gaurav Sharma and his 20 years of experience. His point might be valid, yet the Economic Times gives us: “WTI is forming Doji candlestick pattern and also near its long term Fibonacci retracement. Both are positive signs for crude oil prices“, If this happens within the next two weeks, my predicted increase of 15% comes true. Yet how is that chance? Focussing on merely my point of view tends to be delusional, which is why I liked the view by Gaurav Sharma. He gave me something to think about. It is Mike Terwilliger, portfolio manager, at Resource Liquid Alternatives, in New York who gave us (last week): “It’s a stunning market backdrop where everything from the adjectives used by the Fed chairman to whom is appointed head of trade negotiations can roil the markets. While the macro backdrop remains firm, with strong earnings and historically low unemployment, sentiment is unquestionably vulnerable. That would, in my view, fit the definition of an opportunity – a disconnect between the underlying and perception.” (at https://economictimes.indiatimes.com/markets/stocks/news/us-wall-st-tumbles-growth-trade-unnerve-investors/articleshow/66946928.cms)

I have always considered and known about ‘the underlying‘ and or versus ‘perception‘, no mystery there, yet are there factors we see to forget about? Part we get from the Guardian (May 2018) when we were given: “Demand is expected to average 99.2mb/d this year.” I am adding the part where that demand is not going to diminish over at least part of 2019. Even as we see more and more drive towards sustainable energy, most players are still all about presenting and not completely in the realm of achieving, hence oil demand remains stable (as far as stable tends to be), in addition we need to look at the oil futures. S&P global (at https://www.spglobal.com/platts/en/market-insights/latest-news/oil/121018-crude-oil-futures-stable-to-higher-on-opec-production-cuts) gives us: “risk sentiment remained heightened after US Trade Representative Robert Lighthize Sunday said that he considers March 1 to be a hard deadline for a trade deal to be reached with China and that tariffs will be imposed otherwise“. So basically the futures are rolling towards the up side making me correct, yet as long as the US can keep up with demand and as long as we see this continue, oil will remain stable and not push beyond $60 per barrel in the short term. MatketWatch is actually more optimistic towards the consumers of fuel. With: “Oil futures fell Monday to settle at their lowest in about a week on growing concerns surrounding a slowdown in energy demand“.

Why do we care?

We care because the drop in demand as projected and given by several sources is also the economic indicator that not all is well. This is seen in several sources. Goldman Sachs, via CNBC gives us: “We expect the U.S. to slow down to less than 2 percent by the end of next year and as a result of that you could see the market getting quite scared“, yet would be an overly optimistic view. We saw last week that the US Economy gained 43,000 jobs less than last year giving us a much less optimistic view on that part of the equation. Apple is falling down, tension on the Economy (specifically the US economy) is on the rise, some might say sharply on the rise. In addition, the Financial Post gives us: “Wall Street ignored trouble signs for months. Now it sees risks everywhere Markets face stomach-churning swings as economic uncertainty grows“. Even when we stick to the headlines, it was nothing really breathtaking. The US trade deal with China, the growth fears in the EU, they all link into a negative setting of the economy. Not recession, yet a negative impact due to no growth (too little growth is more accurate) and the events in France do not help either. In addition, there is now a realistic chance that Italy is entering recession territory. Even as it is possible to avert it, it will means that the Italian economy will end at a standstill (which is not a recession), yet in all this, with the Two large EU economies at 0 (France and Italy), it falls to Germany to bring home the bacon and sausages, implying that they are all eager and desperate to sink any notion of Brexit as soon as possible. As we see the jesters giving us that the UK can exit Brexit, that whilst they are seemingly unable to get a handle on the ECB and their everlasting lack of transparency, so whilst we see (at https://www.euractiv.com/section/politics/news/ecb-chief-rejects-chance-to-adopt-eus-transparency-register/) the unsettling part “The European Central Bank’s President Mario Draghi has rejected calls from European lawmakers to have financiers who give advice and feedback to the ECB register as lobbyists, saying they merely provide “information”.” I merely see an extended reason to pursue Brexit stronger. I actually am in a state of mind to demand the right for targeted killing these so called ‘informers’, which is a massive overreaction, yet the need to get these information givers listed next to the lobbyists is becoming more and more essential. If any nepotism, or if any under the table deal is found within the EU, their exposure is essential. I believe that this will flush greed out into the open rather fast, but then I am merely one voice in all this.

It connects

You see, the QE is supposed to come to an end this Thursday, or at least the formal announcement to end it at the end of this month. However, when we consider Reuters: “the economy weakening, trade tensions darkening the outlook and headwinds still on the horizon in the shape of Italy and Brexit, financial markets are looking ahead to next year and just how the ECB will protect the bloc from a severe downturn“, not only does the rejection to officially end QE have an impact, it also means that suddenly demand for things like oil will suddenly spike, that means that reserves go down, oil prices go up and there the cost of living will impact harshly on Europe in winter and as such on American soil the need for a price hike will not really be one that people will cherish, and when we add to that the part that Germany also has a depressed economy to look forward to, we see the three great economic players all in a diminished form, implying that the economy will tank on the low side not merely in this year, it will have a depressed form of growth in 2019 as well. There will be all kinds of lessened good news, whilst the good news is not that great to begin with. It gives rise to the point that I might be wrong on the oil price as I expected it to grow by 15%, it might still go up yet not that much and it will come at a really high cost this time around.

Right or Wrong?

It does not matter in this case; the issues seen are openly visible and heralded throughout the net, magazines and newspapers. The issue of ‘the underlying‘ and or versus ‘perception‘ is at the heart of the matter. Even as energy and oil prices show certain paths in all of this, it does not make it a correct view (which is neither right not wrong), what we perceive in opposition to the underlying elements connected, that is the bigger picture of impact. It is also a new stage. As the politicians are fighting over the carcasses of opportunity and bonus structures, we see that Germany has a few other elements in play. It is not merely the manufacturing part of it all, it is infrastructure as well and that is where we get my earlier statement, a statement I gave 3 days ago in ‘Behind the facade‘ (at https://lawlordtobe.com/2018/12/08/behind-the-facade/), if Huawei (minus one arrested exec) shows their value in Germany with the given quote, which came well over a day after my article (at https://foreignpolicy.com/2018/12/09/germany-is-soft-on-chinese-spying/), where we see: “In the terms of reference published last week by the German Federal Network Agency for its 5G auction, security was not even included in the conditions for awarding the contract. In October, the government announced: “A concrete legal basis for the complete or partial exclusion of particular suppliers of 5G infrastructure in Germany does not exist and is not planned.”“, as well as “For Deutsche Telekom and other network operators, the situation is clear: Huawei offers innovative and reliable products at highly competitive prices. Legally, Deutsche Telekom does not bear any liability for the security risks associated with Huawei technology. And the company does not care about the fact that Huawei’s price advantage is the result of a highly skewed playing field in China. In the world’s largest market, domestic providers control 75 percent of the market, giving them unbeatable economies of scale“, we see the hidden trap that some people related to Mr S. Tupid are now in hot waters (optionally with the exception of Alex Younger). Not only have they not given any evidence regarding the security risk that Huawei is supposed to be. Foreign Policy also gives us: “Given the massive cybersecurity and national security risks, the only responsible decision is for Berlin to follow the Australian, New Zealand, and U.S. lead and ban Chinese providers from the German 5G network“, yet there is no evidence, that was always the problem and so far there is more and more indicators (especially in Australia) that the claim “In none of these three countries will domestic suppliers be the primary beneficiaries“, which I regard to be false, on paper it does not impact ‘primary beneficiaries’, but it does harshly (in Australia at least) negatively impacts the competitors of Telstra, which amounts to the same thing (TPG, Vodafone, Vodafail et al). And when we go back to my writing in ‘Behind the facade‘, where I give the reader: “You see, Huawei can afford to wait to some degree, as we see the perpetuated non truths of devices being pushed forward, the replacements better do a whole lot better and they are unlikely to do so. When we see another failure in 5G start and we see transgressions and those screaming that ‘Huawei’ was a danger, the moment they cannot prove it and their ‘friends’ give us a device that is malicious, the blowback will be enormous. There is already cause for concern if we go by CNBC. They give us a few points that show the additional fear that America has on Huawei“, when the intrusions are not proven and Huawei shows to be a strength for consumers and businesses, heads will roll, there will be a demand for blood by the people, which means that politicians will suddenly hide and become ‘on the principle of the matter‘ and transform their perspectives into in all kinds of lethargic versions of denial.

That too is impacting the economy, because those on track to start pushing out new innovations on 5G will have a clear advantage over the other players and that pushes for success even more, will it come to pass? I cannot tell as there are too many elements in motion and the policies now in place are off course under optional revised in the future as Annegret Kramp-Karrenbauer will replace Angela Merkel if her party is re-elected as the biggest one.

We are seeing a few versions in the assumption of right, and we need to realise that the assumption of right and speculative version of what will happen overlaps one another, but they are not the same thing. States of delusion tends to be an impacting factor. Am I delusional to think that big business gives away greed? Am I delusional to consider that Huawei is not a danger? If we go by ‘the underlying‘ and or versus ‘perception‘ I am correct. You see, would China endanger the true power of economy where Huawei would become the biggest brand on internet and 5G requirement, using it for espionage when there are dozens of other methods to get that data (including Facebook policies implemented by Mr S. Tupid and Mrs M. Oronic). As this sifting of data exists on many levels in several ways, not in the least that the overly abundance of TCP/IP layer 8 transgressions happening on a daily basis and at least twice on Sunday), when we realise that, why would any Chinese governmental (namely Chen Wenqing) endanger a Chinese technological powerhouse? The logic is absent in all this. This gives us the light of Alex Younger opposing the others. He gave a policy setting of national need, whilst the others merely voiced all this ‘national security‘ banter on risks that do not even exist yet. Especially when we saw the Australian version of: ”5G will carry communications we “rely on every day, from our health systems … to self-driving cars and through to the operation of our power and water supply.”” Perhaps anyone can tell me how many self-driving cars there are at present or within the next 10 years?

And none of these клоуны (or is that Sarmenti scurrae) considered the step to start with Huawei 5G and replace them at the earliest convenience whilst you work out the bugs of your currently incomplete 5G solutions, the few that are out there for now, a simple business decision that is at the heart of any daily event, including military ones. A nice example there is the ugliest dinghy in US history (aka the Zumwalt class) where we see: “Zumwalt-class destroyers are armed with 80 missiles in vertical-launch tubes and two 155-caliber long-range guns“, which is an awesome replacement from the previous version that was regarded as a Ammo less Gun edition, in the face of continuing budget shortfalls, personnel problems and of course the fact that the previous edition was $1 million per shell, for its smart (GPS) capability. The mere elements that some sources gave out that shooting straight was an ability it naturally acquired as well as the fact that a $440 million ship was not given the budget to get its unique, 155-millimeter-diameter cannon that can shoot GPS-guided shells as far as 60 miles the 600 rounds of ammo at a total cost of $600,000,000. And that is apart from the $10 billion the Navy spent on research and development for the class. So perhaps people still have questions why I considered this monstrosity to be regarded as a ‘sink on the spot‘ project. The fact that The Drive gave us a year ago: “the Navy has steadily hacked away at various requirements, stripping planned systems from the design, in no small part to try and control any further cost overruns and delays. Close-in protection, ballistic and air defense capabilities, and various other associated systems are no longer part of the base design, something The War Zone’s own Tyler Rogoway explained in detail in a past feature, leaving it with limited utility despite its size and cost” (and apart from some minor issue regarding stability and stealthablity which we shall ignore for now) in that light the entire 5G redeployment after the fact and the ability are acquired, tested and evaluated, at that point re-engineering away the advantage that Huawei had built, did that not make sense within 10 seconds?

It is common business practice in IT, and has been for over 2 decades, that is why ASUS and not IBM rules the lay of the desktop land nowadays. so getting even would not have been the dumbest idea either, but no, we see all kinds of unfounded accusations and that is where those people are most likely to lose and out in the sunlight, when they cannot prove that claim, that is when we see on how some elements will soon be disregarded. In this Huawei has a nice advantage in Germany and Saudi Arabia. When they prove the elements there, we will see a large driven technology shift and those making the claims at recent days better have their stories straight.

Yet again, I might be wrong, my assumption of right might get sunk on false premise and nepotism, I do recognise that this has happened before and will happen again.

The assumption of right is at times hindered on delusional thoughts, as well as the need that the other players are straight shooter, and that definitely applies to all politicians, does it not?

 

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War lines and Battle lines

We all know them, we all personally have them. Some are founded on the realism of professional life, In thee we see the person who works well with others, there is one that is off. You see, that person also wants the senior position you have been working towards and there are two paths trodden at the same time. Your opponent is working as hard as possible to be better and in that same stretch equally is working to make sure that you look worse. The acts are trivial, a little block here, a little delay there and it seems all friendly, it seems corporate, yet you know better, you know that this person is after your future goal. It is corporate politics. You both work towards pleasing the larger shark, you both work to get the amenities to gain favour and play whomever you can to end up being first. It is the corporate environment and we have accepted that for close to a quarter of a century, if not for longer.

It is seen everywhere and this same setting is now in a stage for the conservatives and Brexit as well. Here we see a growing list, a list that currently includes Suella Braverman, Shailesh Vara, Esther McVey, Dominic Raab, Jo Johnson (Boris Johnson cleverer brother), Guto Bebb and now Sam Gyimah. We could go on and point out on how the connections are with places like Goldman Sachs, but that is merely stupidity to the max, Brexit is much larger than that.

And the Guardian (at https://www.theguardian.com/politics/2018/nov/30/sam-gyimah-resigns-over-theresa-mays-brexit-deal) gives us oppositional goods we should not ignore. When we see the quote: “In these protracted negotiations, our interests will be repeatedly and permanently hammered by the EU27 for many years to come. Britain will end up worse off, transformed from rule makers into rule takers“. We see a partial and an absolute truth, we could argue that they are both partial, yet that is actually influenced by the economic powers like Goldman Sachs.

Britain will end up worse off‘, I never denied this. The issue is not the temporary ‘worse off’ part, because it is merely a temporary stage, the actual issue is the unaccountable acts by the ECB and people like Mario Draghi. Three trillion all pumped into a stage that was never going to work. That evidence has been clearly seen, yet the overspending goes on and on and on. Being a member of a group where simple book keeping and budgeting is lost again and again due to a two party political game (national party members versus EU party members) is costing the nations dearly and for the most they are all playing possum, it’s not a good thing believe me. The additional issue that all places (like Bloomberg) where we see: ‘Draghi Says ECB Still Expects Net Bond Buying to End in December‘, yet the operative word here is ‘Expects‘.

It is the larger problem in this. Even as the last month has set in we are not given that December is the end date, gives rise to the setting that they want to continue this bad plan. That and a few other parts give rise to walking away. I would personally add that unless nations get the right to targeted killing the heads of the ECB, both present and past (Mario Draghi is about to leave), we should not give any confirmation of talks in any direction. The taxpayers have been given the bills of the high, rich and mighty for too long. When this game collapses (and it will) Europe faces a civil war level of unrest and so they should. They key points in Bloomberg: “The end of new bond buying won’t mean the end of stimulus, Draghi said, in light of the reinvestment of maturing assets, guidance on interest rates and the 2.6 trillion euros ($3 trillion) of securities purchased by the ECB so far. Chief economist Peter Praet made the same point earlier on Monday” gives support to my view (as well as some consideration that we might have to resort to targeted killing at some point).

our interests will be repeatedly and permanently hammered by the EU27 for many years to come‘ the second part is the consequence of banks losing power and momentum, because 68 million consumers walking away will hit EVERY book there is and the banks and power players will become vindictive little children as their need and desire for Sex, Drugs and Rock & Roll can no longer be met. Salespeople in a growing economy walk around like the (Pea)cocks that they are, in a recession and shrinking economy the become blaming little bitches, just like every other corporation. I have seen it too often. Making deals they cannot hold and when the facts are laid out they go into the blame game throwing it on the others ability not to be able to communicate. Cash is king, bonus is sacred and the rest can get fucked. That is the world we created and the UK will get hit by it, yet there is also another part. You see, the quiet number two elements in that venue will see it as an opportunity to rise and people like Sam Gyimah know this, he was at Goldman Sachs long enough. For almost five years the UK and Scotland did not consider the power place they had to assist India to become much larger European players and as such get some of that cream. But some were too busy facilitating to Pfizer and not considering the position nearly every NHS in Europe has and the ability for India to become part of the solution here. I saw this opportunity as early as 2013, but the others were too busy looking into the mirror, considering which DJI logo would look better in their photo frame of a long term sustainable life of wealth. During those 5 years Wall Street has all been about setting the stage to build fortresses to protect IP to their wealth. It is the stage of Jonas Salk versus Pharmasset & Gilead Sciences. Jonas Silk walked away from a $34 trillion payout and saved the American people, as well as many millions all over the world. His action caused the eradication of polio, the other two have the solution to Hepetitis C and is set in value to well over $11 trillion, and these patents are still highly protected for another two decades. America only fights protectionism when it suits them, interesting, not?

There is a third part, a part we all (including me) seemingly ignored. The distinguishing of ‘rule makers to rule takers‘ is a path we need to consider, even as the EU gravy train is in full motion, we see that rule makers are only there in the stage of presentation, to keep asleep the masses. If that was not the case there would not have been an Italian Budget issue, but there is ad even as we see: “Rome could ultimately face a fine of up to 0.5 percent of economic output — or some €9 billion“, should we see it for what it is, a joke? The Italians will add the fine to the debt; they will do whatever they please and in that, Europeans are in a Europe where the rich and the ignoranusses do whatever they please. How is being part of that anything but a joke?

  • The unaccountable actions of the ECB
  • The unmanaged ability to keep budget within the EU
  • The lack of transparency in EU politicians (travel expenses anyone?)
  • The lack of long term thinking
  • The lack to innovate parts that need overhaul

The UK has failings there too, yet by themselves they can make amends over time, in this European Union there is no chance of that happening. So, as the UK pushes Brexit, there will be impact, there will be cost (it was never denied), yet as the UK improves its own standing, whilst the EU keeps on going spending trillion after trillion on ‘stimulus after stimulus‘, it is at that point where the flaccid economies (France and Italy) will impact the others and the ‘rise’ and bettered economies all over Europe to the smallest extend, will not undo the overspending to the much larger extend, we will see presented bettering, followed by managed bad news in that same fiscal year. The entire issue with Mario Draghi and the G30 bankers group is merely one visible example of many. If you think that there is no impact, guess again. How long until we learn what happened in the G20, only after it passed the consent of the G30? The Europeans are about to be diminished to empowered consumers versus disregarded collateral. Some went as far as the early 80’s to make statements in that direction, yet the 90’s was too enabling, only now, only as we see that the entire large corporation setting can no longer be maintained, now we see a much larger change and for all those players it is important to sink Brexit. A true independent monarchy is a danger, because whatever step forward the monarchy makes, the other path will have to take two steps back, and you tell me, when was the last time that banks were willing to do that? For that to succeed all European nations will have to be ‘reduced’ to rule takers, and who elected them exactly?

And right there, we see the final part that opposes the quote of Sam Gyimah. With: “It has become increasingly clear to me that the proposed deal is not in the British national interest, and that to vote for this deal is to set ourselves up for failure. We will be losing, not taking control of our national destiny“, you see, in this EU, the British National Interest is merely a presented one, a PowerPoint page in a stage where the EU parliamentarians and ECB dictate the stage without transparency. That part is seen in two headlines in the last month alone. The first is Bloomberg, giving us: ‘Draghi Defies EU Criticism in Attending Group of 30 Meeting‘, the second one is the Financial Times giving us: ‘EU bank stress tests should be redesigned, says watchdog head‘. The second one (at https://www.ft.com/content/868f2dfc-e842-11e8-8a85-04b8afea6ea3), also gives us: “The comments by Andrea Enria, who is set to become the eurozone’s top banking regulator, were made two weeks after the latest stress test results, which saw British lenders among the worst performers while Italian banks largely sailed through“. As we were treated to the Italian issues over the last month, with Reuters taking the Cheesecake with “Italy’s third-largest bank Banco BPM will discuss an up to 8.6 billion euro bad loan sale at a board meeting on Thursday, picking one or two bidders to continue talks with, three sources familiar with the matter said“, I would really like it if someone would have that conversation of applied logic with Andrea Enria in the near future, especially in light of certain facts openly available. When performance is weighted on the absence of bad loans, I reckon that we get numbers that make no sense at all, optionally making the European economy 0.2% better than it actually is. It could push Italy, France and optionally Spain form a positive to a negative economy, when two of the large four are negative, how much trouble is the EU actually in?

I have never trusted any group that demanded continued membership at any cost. If the EU was so great, people would not want to walk away and now we have two members one who is trying to leave and the second one (Italy) is seriously considering walking away. In all this the third player (France) is in a stage where a positive economy is not likely to come soon. Strike after strike is making that an almost dead certainty. I wonder what the numbers would have been if we had removed Greece (not withdrawing support from them though), as they had less adherence and more options to seek solutions, things might actually be less dire for the EU. The fact that once in never out is the standard gave (in my personal opinion) rise to politicians doing whatever they pleased no matter who got hit in the process.

There is one upside, those who have been placing battle lines are now out in the open, so we see a stage where we start identifying the opponents, the question becomes will there be actions, long winded speeches, or denial? Each has a separate disadvantage and none seemingly have advantages, that is also the impact of a ‘once in never out state called European Union’, for all the benefits are merely given in a memo, with bullet points and is redundant the moment that the next memo is released.

Did anyone realise that?

 

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That crazy thought

Crazy thoughts, we all have them at times, we all think them, we all wonder the ‘What if’ question whether it is valid or not. So when the news hit, among them the line ‘The $6 trillion wipeout in Asian stocks is getting deeper‘ (source: Sydney Morning Herald). I was not contemplating the quote: “Just like that, the region’s equity benchmark erased weekly gains and is now heading for a sixth slide in seven weeks, only worsening the wipeout that already erased $US4.3 trillion ($5.95 trillion) of market value this year“. So there I was looking at that quote, as well as the quote “One thing that might be worth keeping an eye on is data around China’s consumption — car sales fell for a fifth month and and Ctrip.com International joined the likes of Baidu and Alibaba Group Holding in being unable to avoid the economic slowdown. Also throwing cold water on the recovery is the US dollar, which resumed its appreciation as the Federal Reserve signaled it’s still ready to increase rates in December. The strong greenback has been a key concern for investors in the region, as its weakened local currencies and triggered massive outflows from emerging-market assets“. You see, I believe that none of this matters, the excuses like ‘consumer prices steadied amid sluggish demand‘. I went into the ‘What if this was always meant to happen?‘ mode. It is my personal belief that we have been sitting still whilst analysts have been inflating prognoses of economy, whilst they were all humming; it is a bright and sunny day, whilst it was not. We get excited when USA Today gave us ‘Economy adds robust 250,000 jobs in October in last employment report before election‘ on November 2nd. Yet this is news that was merely overdue and way too late. The world has been at a stand still for the longest of times. Millions of US citizens are still overcoming a decade of hardship, many of them lost the bulk of their retirement funds and it will take half a decade of really good news to turn this around. Too many have felt the pain and it is the same all over Asia. We might see news last month with ‘India adds 7,300 new millionaires’ thinking that hard times are over, yet this merely shows the stage where 7,300 clever Indians are getting other Indians doing their bidding, the millions behind those 7,300 people are not in a much better place, they have not been for the longest of times. Those 7,300 will be the foundation of a dozen or perhaps two dozen billionaire over time, yet like in any pyramid scheme, the profits go upwards, the foundation of that pyramid will not see a dime of that and we forget about that unbalanced setting. So as we are all in a stage of happy happy joy joy, the market is relentless in too much upbeat procrastinated prognoses and the market will seek equilibrium. No matter what excuse we see, what term we give to oil, what term we give to car users. The foundation is that every sold car is linked to a person buying it and from the current stage less than 25,000 were able to afford a new car, because the normal monthly expenses remain the same or go up, they never go down. So when we see ‘car sales fell for a fifth month‘, it makes perfect sense, you can up production all you like, yet when the people cannot afford to buy one, making more really makes no sense. That stage is clearly seen in Asia and Europe, in addition, the people in the US don’t have that much extra to spend, even with the new job, their living expenses had been through the roof for 2-3 years and they build either a buffer or go hungry and become homeless.

It all gets to have a hilarious side when you consider the Wall Street Journal (at https://www.wsj.com/articles/peter-navarro-blasts-china-and-wall-street-globalists-1541787254). We see “President Trump’s senior trade adviser, Peter Navarro, excoriated China and attacked Goldman Sachs and Wall Street as Beijing’s “unpaid foreign agents” who are weakening the U.S. leader before his meeting this month with China’s president“. It seems to me that Peter Navarro does not comprehend Goldman Sachs or Wall Street, so as an Australian I feel it is my duty (my entertaining duty mind you) to explain that part in a plain manner. ‘Mr Navarro, these two players Wall Street and Goldman Sachs do not give a fuck about you or your president, they never did! They only care about their bottom line, the annual growth, the profits they do make and their bonuses. It is that plain, and simple enough the board of directors in these two places care exponentially more about their bonus, nothing else matters!‘ I do hope that Peter Navarro comprehends that part, because it has never been different. The American people were sold down the drain in an instant in 2004 and 2008 and those people will do that again and again. It is not rocket science; it is transparent and extremely predictable. So when I see “As a summit with Chinese President Xi Jinping looms at the Group of 20 meeting in Buenos Aires, the economic council is coordinating what kind of trade deal the U.S. might accept from China. It is focusing on intellectual property, agricultural tariffs, forced technology transfer and requirements that U.S. firms form joint ventures to operate in China“, I see no mystery, I see no questions. It is merely the execution of the operational merit that profit brings to these 20 players that is on the table and the US is weaker than it has been ever before. A lot of the IP is not in American hands, the ones that matter are in the hands of IBM, Google and Intel and the US administrations have been able to piss all three off in more than one way, so good luck there. In addition, if the US exercises some ownership need, we will see both IBM and Google moving their IP all over the place making matters for the US worse.

Oh and this was all before we see the current US president in a stage where we see: “France on Saturday attempted to defuse a row sparked by President Emmanuel Macron’s comments about a European army which angered US President Donald Trump“, we can consider that passing of the few allies left is not really a good thing, is it? Especially in light where Marine Le Pen is currently more popular than Emmanuel Macron is the upcoming EU elections. The advantage is only one percent, yet we also see: “Far-right parties, including those supporting a French exit from the EU, secured a combined 30 percent of support“, that is way more than most EU nations are currently willing to be comfortable with. The fact that President Macron has agreed with Dutch Prime Minister Mark Rutte to a union of En Marche, Dutch Liberals and Democrats is optionally one that could backfire in France to some degree and if Le Pen gets to the 40% mark a stage of Wall Street panic would be the consequence making the markets slip even further getting the overall losses to surpass eight trillion before the year ends. This stage becomes an even larger US nightmare as Matteo Salvini enters the stage, and he is siding largely with Marine Le Pen in all this, most likely purely for his own interests as would be expected in Lego Politics, but the impact is still there. This all impacts to a much larger degree as Italy has stated less than a day ago that they will not adjust the Italian budget which now puts the ECB and the EU in a much darker light, this budget could optionally impact the stage in a few European ways and the other nations will be reminded of the Greek tragedy when it overstated what they did not have, whilst we now see Italy not acknowledging the things they do not have, with a similar impact to several EU nations, the consequences could propel out of control and that too will impact greed driven Wall Street. This means that President Trump is going into a G20 meeting with three sets of balls and chains on their ankles, whilst China gets to point out these six balls and chains and remind him that this is partially all his doing (whether that is true or not).

So in the end, he sits in a meeting with little to use, nothing to go by and all merely because the previous 4 administrations all left control of the wealth reigns with Wall Street themselves, how was that ever going to work?

So that crazy thought is now going into the direction: ‘What if we remove the reigns of wall Street?‘ Would that be the craziest idea? In the end it is not going to happen, yet a first step is not the weirdest idea. It is time to take a very close look at those Wall Street analysts and their exectations, even if they ever correctly solve their rounding problem, the people still end up being confronted with a (what I personally would speculatively call) a 1.13% offset from any norm and that made all the differences for well over 12% of the companies ‘underperforming’ in the eyes of Wall Street. When we consider going back in time to 1874 when French economist Léon Walras decided to give ‘Elements of Pure Economics‘, he failed (as these settings did not exist) to give two elements a much larger consideration. The first is ‘behaviour of supply and demand‘, whilst not realising that governments have a required supply and demand and the corporations have a forecasted supply for the expected demand of an international community, which is weighted and rounded upwards sinking the notion of science towards anticipated presentations. So there we see three sets of numbers, all weighted and only after the fact shown as ‘due to unexpected factors‘ graded downwards after the fact giving us a few headaches all at the same time.

So as we see ‘adjusted’, ‘evolved’ and ‘expert driven’ algorithms towards forecasting the fact that there was something wrong with the formula’s in the first p[lace is not set into the stage of punitive prosecution ever. Meaning that these wipe-outs will happen again and again and the next time it hits a group of people that will revolt violently for being presented the invoice that others should have paid for, a stage that is unseen as many are in denial and often merely wiping the consideration away as non-relevant and unimportant. And the idea is not unique, my thoughts, my very own thoughts were proven correctly in 2013 by former Wall Street analyst Yves Smith in her book ‘ECONned‘ and she is not the only one, yet in the 5 years that followed, after all the evidence shown in several ways, the US Administration decided not to act, decided not to take control of the situation, even largely diffusing the danger was beyond them and now we see the stage where we see ‘weakening the U.S. leader before his meeting this month‘, in my personal view Peter Navarro needs to wake up and smell the coffee. He comes from an environment that did nothing for too long.

How crazy was that thought?

 

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A haircut before the guillotine

That is how we sometimes see life. We are all dressed up, all ready, smooth shave and a decent look, all on route to the main event where we are the guest of honour at a dinner party hosted by Joseph-Ignace Guillotin. Yes, we are the person on the chopping block. When death is all you look forward to, the way getting there will mean the most to anyone.

So out comes the master of coiffure, to make sure that the shave and the haircut were done to levels of excellence that you never considered before. Master tailor Marc de Luca will come and see you to make sure that the suit is one that Versace will look at with utter envy, the people on Saville Row will look with utter amazement on just how perfect a suit can be, because you must look your best on route to that once in a life time dinner party with Joseph-Ignace Guillotin, all the elements mattered the most on this one day.

So there is the setting you see when we consider ‘EU says Greece can ‘finally turn the page’ as bailout ends‘. The article (at https://www.theguardian.com/world/2018/aug/20/eu-greece-bailout-ends-pierre-moscovici) gives us “Greece has turned the page to become “a normal” member of the single currency“. Yes in that regard it is nice to know that a mental health setting of ignorance when it comes to the economy, is still riding high with too many individuals. I mentioned it over 3 years ago in the article ‘Dress rehearsal (part 1)‘ (at https://lawlordtobe.com/2015/07/01/dress-rehearsal-part-1/), where I stated ““Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors“, the reason that I call it questionable, is because Greece is what I call a 3G nation, which means it will take three generations for this debt to become close to manageable. So, with that I imply that the debt is still a massive form of pressure in 2061, there is no escaping it“. That part we now see with “Greece has the highest government debt in the EU, 177% of gross domestic product, and is forecast to be repaying loans until 2060“. WOW! I was off by one year and that was me using my fingers and an abacus over three years ago. Now we see that it will be all done by 2060, which is actually not a certainty. I took a few setbacks in consideration that are likely to be missing here, so considering that this started 8 years ago, we see that in the end it will take another 42 years, making my ‘three generation‘ prediction spot on. Yet the good news is not yet done. When we consider that the debt is 177% of gross domestic product, the fact that youth unemployment remains at 43.6%, as well as a few setbacks, there is merely one stupid act of starting another bonds plan and it all goes south really really fast.

The first is that with “Athens will face more exacting checks than any other Eurozone member, so Brussels can monitor whether the government’s budgets are in line with EU stability and growth targets” Greece will still be bound by some factors. The setting is a given if Greece decided to try the Goldman Sachs strategy again, the future will start to look extremely dim again at that point, with little to no hope on resolving it ever. There will always be politicians that play the fast and loose card whenever they are in a pickle, which will soon thereafter become the ‘fast and lose‘ scenario, especially for the Greek population.

Even now we see the quote: “Many analysts believe it will take a decade before Greece returns to pre-crisis living standards following a slump in which its economy contracted by 25% and unemployment peaked at 28%“, I am not convinced that it will be that quick. It might be if serious investors can be found to pump up the Greek economy like a Google space, an Apple hub and an IBM data centre. Those steps will be a turn for the good for Greece, but without a really large player opening the field, Greece keeps on lagging behind and a decade will not be enough to set the economy back on track to the pre-crises degree stated. Furthermore, there is the consideration of “levels of extreme poverty jumped. The population has fallen by 3% because of emigration and a lower birth rate“, you see, the levels of extreme poverty also slows the recovery setting and the loss of population will not merely mean that there are less jobs required, it also means that a continuation of certain aspects can no longer happen. So the setting of parent to child implies that more and more businesses die over time lowering the GDP further, which in turn shoves the debt up by 5%-10% more than previous. So it is not the percentage, it is the €336,900,000,000 that is due its interest and that amount is not shifting merely due to the shifting GDP percentage. It is rising because 336 billion implies 6-9 billion euro of interest a year and with a population of less than 11 million, whilst we get the slightly over enthusiastic “By 2023 unemployment is forecast to fall to 14%“, yes, I’ll accept that when I see it. You see, last October it was 20.7 percent. This now give us that close to 2.5 million Greeks are not paying tax. So exactly how are they not merely getting the infrastructure paid for, but in addition to that pay for the 6-9 billion in annual interest? From my point of view the picture we are given is a rosy coloured setting of ‘Bull dung and grapes’, at which point the grapes are not that appetising anymore.

The final part is seen with “As a condition of getting debt relief, Athens agreed to the EU’s demand to run a budget surplus of 3.5% of GDP until 2022 and thereafter 2%. However, the International Monetary Fund, a co-funder of the bailouts, has long argued this goal is too onerous for a country that has endured years of belt-tightening“. That shows part of the imbalance, or merely the gross injustice to the Greek population. There is close to no way to live with the ‘a budget surplus of 3.5% of GDP until 2022‘, unless you cook the books that is, which is a purely personal speculated option. It merely seems more than an impossible task and agreeing towards demands that are unrealistic is just not acceptable and utterly inhumane.

Forbes is on my side in this. The article (at https://www.forbes.com/sites/francescoppola/2018/08/20/lessons-for-the-eurozone-from-the-greek-debt-crisis) gives us: “Fiscal austerity is on the menu for generations to come. Furthermore, if GDP takes a nosedive – as both business cycle theory and economic history tell us is almost certain to happen at some point during that time – further cuts will be necessary to meet primary surplus targets. In the light of this, the IMF has expressed serious reservation about the sustainability of Greek finances. If it is right, then the Greek crisis is not ended. It will be back with a vengeance in a decade or so“, I actually believe that ‘a decade or so‘, is a little optimistic. When we correct for Murphy (anything that can go wrong will go wrong), the tie line will shove the entire situation to the foreground by the year 2025.

The article is a really good read, mainly because it gives us in short the history on how it happened, which was essential in all this, because the danger of “in 2009 the Greek government lied about the true state of its finances, and that the pre-crisis boom had resulted in a fiscal deficit of 15% of GDP and debt/GDP of well over 100%” is a setting that is not unlikely to return in the 2023-2025 years, for a few reasons, especially when the Greeks are set in a stage of what is humanly called to be in a stage ‘without a pot to piss in‘. there will be overreactions and that is when things go from bad to worse and in that time, when there is still 35 years to go, a lot of people will re-enter new (read: even more harsh) levels of austerity.

So even when we think that the bailouts have ended, we also need to consider that this is academically correct, yet the truth is that we need to realise that in a little less than 16 months “the expensive debt to the International Monetary Fund, some 2.6 billion euros of which is due by the end of 2019” (source: Bloomberg), apart from the interest, posts like the maturing bonds come out to play and that is in this case well over 2.6 billion, also we need to consider ‘the interest Greece has to pay on bonds is still too high at about 4.2 percent‘, there we see that the additional pressures that Greece gets from refinancing all those bonds come at a huge cost. In addition to that part, we also need to notice ‘National Bank of Greece issued international bonds (XS1698932925) with a 2.75% coupon for EUR 750.0m maturing in 2020‘, so where will that money be coming from? We accept that seven hundred and fifty million Euros is not a lot when you say it fast, but in lieu of the outstanding debts, the budget surplus as well as bond maturities, all that whilst the economy is not on track and will not be anywhere near that in 2020, my prediction of a new stage of defaulting by 2025 might have been slightly too optimistic.

Personally I really hope that we can find a decent solution for Greece, a solution that allows for a growing economy because Greece is an awesome place and for the most Greeks are awesome (unless you’re German at that point you’re on your own). The good news is not there yet and I personally believe that some players are still stacking the cards in a way that suits them and not Greece. I am referring to the message: ‘S&P Global Ratings upgrades Foreign Currency LT credit rating of National Bank of Greece to “B-” from “CCC+”; outlook stable‘. It was given to the people on June 6th 2018. I personally do not believe it to be correct or better stated ‘justified’. Bloomberg gave us those goods an hour ago with: ‘Greek Bad Loans Are a Drag Even after Crisis Shrank Bank Sector‘. Basically an hour ago we were treated to “the problem she saw 12 years ago lingers on — Greece’s banks are still weighed down by bad loans. That’s making them cautious about new lending, which the country’s cratered economy needs to grow again after its European bailout ended on August 20th“. Basically hidden ghosts still rock the financial cadaver of Greece and there is more to come. Do you really think that ‘stable’ is the correct word? When we consider the S&P definitions we end up getting “An obligation rated ‘B’ is more vulnerable to non-payment than obligations rated ‘BB’, but the obligor currently has the capacity to meet its financial commitments on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitments on the obligation“, if the entire setting relies on ‘currently‘ I end up with the consideration that this could revert to a more negative stage by years end and then we see that the costs will increase whilst the maintenance of a budget surplus is close to a nil percent possibility at that point.

If we see that this is going on and the stage is set in several ways against Greece, who was the message ‘Greece can ‘finally turn the page’‘ for? Was it for the EU and European, was it for Greece (as an optional setting of false hope) or was this as the starting signal for Wall Street? In my mind the question becomes, who exactly was The European commissioner for economic and financial affairs, Pierre Moscovici catering for? Perhaps it is less complicated, perhaps he was merely acting as the maître des cérémonies for Joseph-Ignace Guillotin. To set the stage, where in the old days, executions by guillotine were a popular form of entertainment that attracted great crowds of spectators (their version of the Roman bread and games). Perhaps that is what is needed in Europe and for now the Greek government is unaware that their status has been elevated from underdog to the proverbial ‘guest of honour’.

Yet in all this, we need to be more then sceptical, there is much doubt and most of it based on common sense. We need to realise that the setting of Greece remains close to unacceptable, these levels of austerity will have to continue not for a decade, but for several decades, mainly because until the economy gets an actual boost, the options of budget surplus seem to be so unrealistic that whatever was signed was basically signed under duress. If the CIA and others stopped torturing a terrorist because the issue was too inhumane and the intelligence was never reliable, why would you transfer such levels of inhumane economic pressure to a European ally?

In the entire Greek economic setting that one part never ever made any sense to me.

 

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Round two

Yesterday was a day when I thought it was essential to speak out against the language used in the NY Times. It was part of a larger whole that will be shown to all over time (as I am missing three pieces of evidence). Yet the oil issue was in the centre of it all and so it remains. Now, I had done my homework (for the most), yet there was one element I overlooked and it is an important one. Reuters was awake and gave us (at https://www.reuters.com/article/us-oil-opec-saudi-trump/can-saudi-arabia-pump-much-more-oil-idUSKBN1JR1HI) the part I forgot about. “the kingdom, OPEC’s biggest member, can barely raise output by 1 million bpd to 11 million bpd and even that would be difficult, according to industry analysts who forecast a further oil price rally due to a lack of new supply“, yes we forgot about the engine that drives it all. It has been increasing production again and again, yet at some point; the system that drives the production of crude reaches its maximum and that is where the teller of barrels is now hitting a little issue. I like (yet optionally disagree) with Gary Ross, head of global oil analytics at S&P Global. With “While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, possibly up to 1 year“, we see a ‘stabilising’ comment, but based on what, knowledge of the parts that are driving the crude oil machine forward? Perhaps that is true, yet if that is the case the one year setting is off. Other elements require adjustment, but the one year (yes he did add ‘up to’) implies that engines and perhaps pipes require adjustment, meaning that the system is set to increase beyond the 100% marker might be more dangerous. Pressure can be a bitching issue and the mere fact that even in suburbia water mains still go out (mine went kablooie yesterday evening) implies that there is a setting where pressures do not align. Now with water it is a nuisance, so my evening of pasta went straight out of the window. With crude oil it is another matter entirely. There the blown gasket can optionally make a mess to the environment and more important, it could optionally force Saudi Arabia to turn the dial down to 60%-80% until that mess is fixed. When that happens they go into a freefall where one plugging evokes another part to burst emotionally, that is where the problem starts and that is an important side in all this.

It is not the only part; CNBC gave us (at https://www.cnbc.com/2018/06/30/oil-deal-may-stir-the-pot-in-the-middle-east-and-test-saudi-capacity.html) a few other parts. Even as we might be able to ignore “Iran and Venezuela are both reeling economically, with Tehran feeling the bite of new sanctions“, especially as Iran has a set clientele. Yet the given part of “President Donald Trump surprised the world on Saturday by announcing a new side agreement with the Saudis to compensate for supply shortages from crisis-hit producers“. I found the setting of ‘compensate for supply shortages from crisis-hit producers‘. It is interesting for two reasons. The first is that the US had no application for Iranian oil in the first place and the second is that Venezuela had all kinds of issues; I personally believe that the low price of oil is reasons for some of it. Yet when we take a step back we get three pieces. The first in 2017 when we saw the Business Insider treat us to “Falling output at refineries means that Venezuela needs to import more gasoline, squeezing the national budget even further. Refineries are currently working at less than 30 percent of average 2016 levels. State-run oil company PDVSA is importing between 100 and 150 thousand barrels per day of gasoline”, so why are the refineries down to 30%? In addition, that is the refinery issue, the setting is not the petrochemical part it is merely the availability of crude oil that was the issue. The second was March 2018 where Reuters gave us “Indian imports of oil from Venezuela have fallen to their lowest levels in over half a decade, shipping and industry data showed, as a severe economic and political crisis hits crude output in the South American OPEC member“, so that is a production need, which beckons why India has decided to import less, are there suddenly 275 million cars less? No there are not, just try to blindly cross Saket Metro Station in New Delhi and you will get hit by two dozen cars within a minute, so that part is not happening. Forbes had its own version of the issue in 2017 and even as it sounds acceptable, I belief that there is a larger issue in play. You see We might look at the Financial Times and see ‘A Venezuelan oil embargo would wipe out Maduro & Co‘, yet the setting is larger than that. Consider Chili, Brazil and Argentine, all needing petrochemical products, the fact that refineries have issues is one thing, the fact that there is a shortage of crude oil and that cannot be met is equally an issue, so why is that?

I have no answers, mere speculations, yet whenever I searched for the Venezuelan reserves and beyond the Argentinian president Mauricio Macri advocating of ‘there would be ‘broad support’ across the region for a full oil embargo‘, I see no evidence of shortage (out in the open). All these actions on Venezuela, forcing them into even more hardship, how has that ever led to anything positive?

Yet the story is the crude, would an arm-twisting scenario to send 30% of the crude oil price into a fund that is only to be used for humanitarian and local support. Would that not work? It seems better than an embargo kicking things over. The additional news that China is importing less from that source is making things worse and no resolution will be coming forward making things better. The other party Iran is a given, yet they still export to a few nations.

Oil price dot come is giving numbers that clearly imply that over a year oil production has fallen by close to 50%, with the implied forecast that the International Energy Agency (IEA) states regarding the Venezuelan oil production which could drop to just 800,000 bpd or even lower next year. it seems that most actions against Venezuela is a little too harsh, now nobody is implying that they are saints, yet we can all agree that they are not Iran. In 2017 it was all about censorship (or anti hatred laws as the Venezuelan government puts it). Yet, there is light at the end of the tunnel. Al Jazeera (at https://www.aljazeera.com/indepth/features/2017/04/venezuela-happening-170412114045595.html) gave us a more in depth part. So when I see some of the issues, with items like ‘Health assistance’, ‘Food shortages’ as well as ‘Hyperinflation’, where a deal could be made that 30% of the sale goes into 10% sprockets addressing these three settings, it could be an optional solution to negotiate. It seems to me that an embargo is often the least of all working solutions, even as it enables the US to get basement prices on a million barrels a day, apart from the setting that they have more immediate problems and removing Venezuela form the equation pushes the other pressures more. Even if it means that the Maduro administration would have to swallow its pride, there might be a path to a long term solution that they were part of, at present they have nothing to look forward to but an angry mob of people left with nothing. It should not allow the US to discuss the price of eggs, yet the Maduro government will realise that the price of fish came at a premium and it is not derived from merely sweat and tears.

This setting is important, because when we look back at the Saudi situation with its 10 million barrels a day, when the pressure goes wrong and the US suddenly loses access to two to four million barrels a day. when that happens and that danger is not unrealistic, do you really think that the American economy is ready for a 25% price hike? Do you think that there will be mere frowns? That danger is not merely a speculation. the danger was shown last week when we saw reports on “The shutdown of Syncrude’s oilsands facility last week could lead to a shortage of oil in North America, investment bank Goldman Sachs has warned“, the source was the Huffington Post (at https://www.huffingtonpost.ca/2018/06/26/syncrude-outage-oil-shortage-north-america_a_23468490/), in addition we got “Syncrude’s facility has a capacity of 350,000 barrels of oil per day, but it shut down production on Friday after a transformer blew, the Globe and Mail reported. The company says production could be offline for all of July“, so there was the given part I left for last, merely a ‘transformer’ and without Optimus Oil rolling out the juice, no crude for a month. So do you really want to play a game of Russian Turbines with the Saudi oil setting and pushing the need from them to deep into the red zone of engineering safety? With that given, what are the dangers when the push goes south in a very realistic way when the downfall will be 90-150 days? Do you still think that finding some dialogue with Venezuela is not an optional much better solution? I would tell you the story of the silly politician and that person relying one basket for all his eggs (and his demoted belief that they were golden ones), your parents might have told you the story when you were young. So when Goldman Sachs gives us: “shrink stockpiles at the main U.S. storage hub at Cushing, Oklahoma, putting upward pressure on oil prices“, they are telling you no fibs, what they neglect to mention is that the danger is a lot more realistic then most predict and the impact could end up being an increase in price that is not pennies, but several dollars. to emphasize that, you merely need to consider May 2008 when the crude price went to $148 a barrel, twice the price it is now. You still ready to play that game of chicken with oil producing hardware, because in the end you will always lose that game. These devices adhere to the cold calculations of pressures and power and in the end the Wall Street motto of ‘120% of norm is merely our version of a Monday morning wakeup call‘ will backfire to all those who relied on affordable fuel.

 

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They are still lying to us

There is a piece that the Guardian gave us less than 12 hours ago. The title ‘Greece ‘turning a page’ as Eurozone agrees deal to end financial crisis‘ should worry you. You are getting played! The article (at https://www.theguardian.com/world/2018/jun/22/eurozone-greece-financial-crisis-deal) is giving a dangerous situation as it is downplayed on nearly every level. Now, to set the stage, we need to understand that government budgets are complex. No one is denying it. Yet, what is complex about: “Eurozone member states reached an agreement on the final elements of a plan to make its massive debt pile more manageable, ending an eight-year bailout programme“, can you tell me that? You see in the heart of this is ‘its massive debt pile more manageable‘, we all see that. Yet do we understand it?  €328 billion, the interest on that small sucker is well over €500 a second! The debt is around 180% of GDP, it was 178% last year. These are issues that matter, because it gives Greece no options. Then the Guardian gives us the bit that matters a lot more. You see, in part one we consider “The plan allows Greece to extend and defer repayments on part of its debt for another 10 years and gives Athens another €15bn (£13.2bn) in new credit. Tsakalotos said it marked “the end of the Greek crisis … I think Greece is turning a page.”“, so an option to get even MORE DEBT. When was that a good idea? Now consider that the interest on the current loan is €640 million a year, so how does raising the debt by 5% help? You see, we see the game played, because the next elections are 20 October 2019. This is the beginning of an election stunt and the Eurozone is happy to help only if the current government does what the Eurozone tells them to. How is that for an option?

The next pack of non-truths is given by PM Alexis Tsipras with “The prime minister, Alexis Tsipras, told a meeting of MPs: “Greece is once again becoming a normal country, regaining its political and financial independence.”” I hope you understand that financial independence will not happen until 2045. The debt is that severe. The banks are not willing to be soft any longer, when the access to the markets are given it will merely take one screw up, one act of short sighted stupidity and people all over Europe will rally to demand the barring of Greece from the markets for decades. So when we are presented within: “The plan allows Greece to extend and defer repayments on part of its debt for another 10 years and gives Athens another €15bn (£13.2bn) in new credit“, you see this is what the beginning of slave labour looks like, a debt that cannot be repaid, a setting where €15 billion is merely a smoke screen and the coming years when you think your life is getting better, the truth is merely that your options are taken away. That is how you enter into slave labour. And the Eurozone will be nice and humane about it, they will not call it slave labour, they will call it new zero hour contracts and with the definition “Any individual on a zero hours contract who is a ‘worker’ will be entitled to at least the National Minimum Wage, paid annual leave, rest breaks and protection from discrimination” and the Greeks will realise too late that this government AFTER its election will set the stage where because of the high debts the National Minimum Wage would optionally have to be lowered by 20%, until the debts are better dealt with. So there you are sitting on a terrace having your last pita gyros with an Ouzo realising that you can no longer afford to do that, your income got cut by 20%. The opposing party reacted to the credit buffer with ‘Kostis Hatzidakis said it reflected the lack of faith international creditors had in Athens’ ability to successfully return to capital markets.‘ And in this Kostis is right, the international markets have zero faith in their return, they rely on a small thing called mathematics and the clarity there is that the scales are not in the favour of the Greeks. The financial market is hailing the success, especially those making money of every trade, and until the money is gone, some parties on Wall Street will love the Greek, give parties in their honour. The parties behind this were shown in the NY Times last week (at https://www.nytimes.com/2018/06/19/business/economy/greece-europe-bailout.html). Here we see “To play it safe, Greece won’t start selling bonds until well after it exits the bailout. Instead, the government, which is being advised by Paris-based Rothschild & Company, will pick a moment in the next two years when market conditions seem favourable. A cash buffer of up to €18 billion, funded by creditors, may help Greece secure the liquidity it needs in the meantime“, so now the credit makes a lot more sense, does it not? A credit to pay the bills until there is one more fish to cook for Wall Street ending the existence of Greece. Well, actually the Greek elected officials will do that all by themselves. Because it will be there choice (through whispers) that benefits could be gained through 10 year bonds giving 10 more years of relief. Yet those billions come at a cost, a 2% cost which goes to the traders, they will cash in millions at the expense of a few parties costing them mere thousands, after which they switch off their phones, walk away and it is no longer their problem. For them it was merely good business, the direct application of a mere fool and his money getting parted.

Yet, this is not the only part. In what I would regard to be a direct outright lie, we see the actions from Pierre Moscovici as we are treated to: “Greece had received €275bn in financial support from its international creditors over the past eight years and twice came perilously close to being kicked out of the Eurozone group, the EU commissioner, Pierre Moscovici, said, adding: “There have been enormous sacrifices. But at last Greece will be capable of moving on its own two feet.”“. This is what I personally see an outright lie! Let me explain why I think that this is as bad as such. The documentation gave us (I already published it before). It is a paper from 2009 from the ECB and I gave light to it in my article on July 1st 2015, yes, almost 3 years ago. The article was ‘Dress rehearsal (part 1)‘ (at https://lawlordtobe.com/2015/07/01/dress-rehearsal-part-1/), the original paper is there at the end. It is called ‘Withdrawal and expulsion from the EU and EMU some reflections‘, a paper written by Phoebus Athanassiou. Here we see “The idea that the treaties should explicitly provide for a possibility of expulsion was discussed in the 2001-2003 Intergovernmental Conference responsible for drafting the ill-fated Constitutional Treaty, but was abandoned“, on page 32 it gives the premise that greed driven politicians did not consider that expulsion should be an option. In addition, the EU observer gives us in 2011 ““Neither exit nor expulsion from the euro area is possible, according to the Lisbon treaty under which participation in the euro area is irrevocable,” he added, referring to the European Union’s rule-book.” and there is May 2012, where we get “The Mechanics of Eurozone Withdrawal, It has frequently been stated that the EU Treaties contain no legal framework for a withdrawal from the Eurozone.  This is true and, indeed, the Treaties make it clear that the process of monetary union was intended to be “irreversible” and “irrevocable”“. The last we got from Locke Lord LLP, a Texas Lawfirm. So I now need to revert to my original Dutch Diplomatic self stating: ‘Moscovici, you stupid fuck! There is 9 years of documentation from people better educated than me stating that kicking out of the Eurozone was not an option in any way. So get a fucking grip on your stupidity and amend it or resign your post, your choice!‘ (Sorry, I needed to get that off my chest, I feel a little better now).

The final straw for my ego is found in the Guardian quote “But it means the left-led government in Athens will have to stick to austerity measures and reforms, including high budget surpluses, for more than 40 years. Adherence will be monitored quarterly“, when we consider that my setting was without the ‘discount’, the proven setting that the debt will be a 3G debt, it will push hardship on three generations. A setting I was able to prove with an abacus is now finally recognised by those less fortunate as they were not able to get basic calculus done. I am happy for me being correct, but not for the hardship that the next generation of Greeks face, they never had any choice in the matter, merely have to clean up after grandpa’s bad political choices, to them it is massively unfair.

The final part if given with: “At almost 180% of GDP, Greece is burdened with the highest debt load in Europe. The €320bn debt mountain is widely recognised as the single biggest obstacle to economic recovery. The International Monetary Fund had resolutely refused to sign up to the country’s latest bailout unless Eurozone creditors agreed to a restructuring that would ultimately make the debt sustainable“, most will not recognise the miswording that is used here. With ‘widely recognised as the single biggest obstacle to economic recovery‘, which is actually ‘Greece has no options to recover from a debt that high, not ever‘. Which leads to ‘International Monetary Fund had resolutely refused to sign up to the country’s latest bailout‘ and ‘make the debt sustainable‘, which needs to be read as: ‘the IMF cannot allow the support of a debt that cannot be paid off, lower it!‘, yet when is the setting for sustainable made? Making it longer by setting the €328 billion in three stages of 26 years each? Who will sign up for that? How many forward pushing bond programs will it require and we understand that among the banks (read: financial institutions), they are willing to do that as long as it is set in 25% profit stages, giving light to the fact that the additional pressure beyond the debt is the Greek population paying an additional €78 billion in sustainable bonus. If you’re Greek, would you want your child to inherit a €75 billion invoice at birth? That was what I predicted three years ago and I have been proven correctly and I have been conservative, when you consider the cost of the bonds, the interest paid to the people buying the bonds as well as the impact of devaluation of a nation that cannot fund its infrastructure. It is a mess and when you consider Forbes on 28th Jan 2017, where we see: “The IMF projects Greek debt will reach 170 percent of GDP by 2020 and 164 percent of GDP by 2022 but will rise thereafter, reaching around 275 percent of GDP by 2060” (at https://www.forbes.com/sites/timworstall/2017/01/28/amazingly-yes-the-imf-is-still-saying-that-the-greek-debt-problem-is-not-yet-solved), we see that they were off last year by close to 10%, so the prospect for Greece is even worse than the IMF predicted (I admit a slight overbearing assumption at present).

To illustrate that, I will revert to a source that I cannot vouch for, yet they give (at https://www.thenation.com/article/goldmans-greek-gambit/) “As a result, about 2 percent of Greece’s debt magically disappeared from its national accounts. Christoforos Sardelis, then head of Greece’s Public Debt Management Agency, later described the deal to Bloomberg Business as “a very sexy story between two sinners.” For its services, Goldman received a whopping 600 million euros ($793 million), according to Spyros Papanicolaou, who took over from Sardelis in 2005“, a fee closing that surpassed half a billion euros.

So in the end, the news, the papers the quotes, it will be up to you to decide how Greece is given a fair go, yet they themselves have mostly only themselves to blame. You see, in all this, how many Greek politicians went to prison? How many got their assets taken from them? Or are we all agreeing that there was no legal option? Now wonder if the legal options exist at present, if not. Then this is the bed of hardship that the Greeks made for Greece.

So, are the Greeks still being lied to? If that is so who exactly is presenting their version of the ‘facts’ to the Greeks?

 

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As the costs come

There is an issue that we see floating at Pressnet. Actually it’s an issue that started last week. I got the news from Retail Week (at https://www.retail-week.com/companies/bhs/bhs-admin-costs-spiral-as-mps-demand-answers/7017777.article), yet it came from several directions, so there is ample visibility. Yet, what is going on? This is an important part and even as there is great benefit to anyone’s soul to blame PwC for this, yet is that fair? The question becomes, is it in the books? When we look at the previous audits, was the quote “BHS administration costs have come in at £1.3m more than expected as MPs question a £35m ‘floating charge’ paid by Arcadia” a fair question? In all this, are these floating costs in the books? I actually do not know, yet I equally question why certain parties aren’t openly asking these questions at the PwC desk. Is that not equally odd?

The two quotes that matter are “If it was such a completely standard move, as Duff & Phelps claim, one wonders why it was reversed by the co-administrators as one of their first acts upon being appointed, and why the PPF seems to take a rather different view.” and “Meanwhile, Field questioned the transference of a “floating charge”, put in place at BHS by Green’s Arcadia Group. Duff & Phelps transferred the charge to Linklaters last October“, this now gives us the parts:

  1. If we accept the bankruptcy announcements of April 2016, how come that this is done in October 2016?
  2. If we accept that a floating charge is ‘a liability to a creditor which relates to the company’s assets as a whole‘, than the part that this is a credit to the Arcadia group should be in the books, and should have been in there for some time I gather, so why are there no questions asked at the address of PwC, in addition, why are MP’s not asking certain questions from Linklaters? Now, we should accept that Linklaters cannot divulge too much (read: any) information, yet when this was all set up could be seen as mere administration and that needs to be logged, which means that either Arcadia or BHS could release that information, if they choose not to do that, the question that follows should be a lot more serious and we need to wonder what else is in play.
  3. When we look at the quote “If it was such a completely standard move, as Duff & Phelps claim, one wonders why it was reversed by the co-administrators as one of their first acts upon being appointed, and why the PPF seems to take a rather different view“. In that I look at another issue, the quote found in Professional Pensions gives us “A spokesman for FRP Advisory declined to comment, adding all that needs to be said is covered in creditor reports“, yet if it is there, should it not also be in the accountancy audit? That is an assumption from my side, and I could be wrong, yet the amount of £35m moved via Linklater in April 2016, if none of the audits has this on paper, questions should be asked, if it is there, questions should still be asked, yet it seems that questions are asked in such a late stage. In all this, City A.M. gives us: “Tension has been building between the PPF and Duff & Phelps throughout the administrative process. In November, the PPF voted against Duff & Phelps’ request to increase its fee. Malcolm Weir, head of restructuring at the PPF, said BHS pension scheme members deserved “value for money”“, which sounds fair enough, yet in all this, even if Arcadia hasn’t received the funds at present, the fact that we see “The £35m was never paid to Arcadia. It was always held in an account to our order. Our legal advisers have confirmed that the floating charge is valid. However, I understand that the liquidators and their legal advisers have made comments concerning its validity, but, I nor my legal advisers, have received any evidence to support their view.” In that regard, we now see that legal advisors are on opposite sides and both sides claim their version of validity, as legal advisors would. This is not in question at present, what is interesting is that the media at large have not included PwC in any of this, as they have been seen as the auditor of BHS. Oh, and there was a reason for me mentioning: “if none of the audits has this on paper, questions should be asked”, be aware that I have no experience on corporate taxation. However, would it not make sense that a £35m invoice would impact next year’s taxation significantly and as such, should it not be mentioned?

In this let me take you back to the previous article, where I discussed the Financial Times (at https://www.ft.com/content/4c3965f2-3c4e-11e6-9f2c-36b487ebd80a). Here we see “The Financial Reporting Council said its investigation related to PwC’s audit of BHS accounts in the year before the retailer was sold by Sir Philip Green’s Arcadia Group, in a deal that wrote off £215m of debts“, which is fair enough. In addition we see “At a committee session in May, PwC partner Steve Denison was asked by MPs to explain why the firm was prepared to sign off BHS as a “going concern” just days before its sale for £1“, which is fine too, yet where in all this is the £35m transfer to Linklater for the Arcadia group? If Duff & Phelps took control in April, would the accountant not have been aware of the thirty-five million, as such should PwC have been aware? (Read: not implied, yet questioned).

Let’s not forget that the Financial Times article was from June 27th, which means that the £35m should have been on many minds at that time, yet for the longest time there was little to no mention. I would think that if a firm is sold for the price of a mere Tesco Sliced Wholemeal Batch Loaf, would a question not be ‘What else needs to be paid for?‘ at that point the entire £35m transfer should be on the top of everyone’s mind, especially as there was a decadent pension gap issue many times that size? Perhaps it is just me, but that would be on my ‘media’ mind. Not just the actual newspapers, a few other publications (like TV and morning shows) would have had a field day with the mention that pensions will remain short, but the bosses will get squared for that thirty-five million. Emotions would be running high that day, let me guarantee you that emotions will run high on that topic!

In that regard, some MP’s are starting to ask additional questions as we see a fees increase £500,000 for Duff & Phelps’s. I wonder how many additional man years of work have been spent that warrants a £500K increase. The week gave the quote: “When they were appointed last April, initially at the behest of Green and then approved by the BHS board, the company estimated its costs would be around £3.5m“, now I imagine that an insolvency comes with all kinds of complications, but how much work, how many months of full day activities warrants £3.5M? I do not know, I am merely asking, especially as the pensions have been for the most unpaid for years now. The site this is money gives additional connections in the shape of Goldman Sachs, where among the top earners at the investment bank’s London office will be the former co-chief Mike Sherwood, who faced questioning from MPs last year over the bank’s role in the BHS scandal. He landed a $21 million pay and bonus package last year, worth £15 million at the time (at http://www.thisismoney.co.uk/money/news/article-4120336/Now-bankers-bonus-Brexit-Goldman-staff-BHS-probe-donate-pension-fund-says-MP.html).

Now a lot of this news is between 1-2 weeks old and a few items are merely days old. Yet in all this we see a massive drain to less than a dozen people, where including Arcadia a syphoning through invoicing has surpassed £50M if we include the Arcadia bound payment, yet all is not well as several sources give large payments in their report, yet the exact part of what represents BHS is not given, but implied to be a large part. As such Mike Sherwood might have ended up with 21 million dollars, yet what part is though or because of BHS is not given, in his position, with his amount of accounts, the BHS part could be less than 1%, and as there is no clarity, the Week who gives us in addition “Huge payments to bankers who worked on the BHS deal could prove particularly controversial“, only if the bulk of these payments were regarding BHS, but that is not a given, I would add, it is exceptionally unlikely. By the way, those people did not really bother reporting that when Greece got back onto the markets In April 2014. In my article ‘Are we getting played?‘ (at https://lawlordtobe.com/2014/05/18/are-we-getting-played/), where we saw the disastrous act of Greece getting back on the bonds field selling 5 billion in bonds. Yet the media at large was very very eager not to mention that the few bankers connected to this ended up with a total bonus of $50 million for what amounts to 3 days of work. So on one side they refuse to give the info, now we see incorrect (or at least incomplete info), with a reference of 21 million, the package of Mike Sherwood.

Yet there is more, the part I find hilarious is “Frank Field MP, chairman of the Work and Pensions Select Committee which quizzed the Goldman bankers on the deal, said: ‘This gives them an ideal opportunity to donate something to the pension funds, to make partial amends for the failure to give effective advice“, you see in that, he didn’t make any such reference to PwC. Pricewaterhouse Coopers, has been seen on the minds of a few as we see (in the Telegraph of all places) “select committees have also said that they have welcomed the Financial Reporting Council’s investigation into why PwC audited BHS’s accounts as a going concern when it was evident the high street chain was dependent on support from Arcadia Group, Sir Philip’s empire which includes Topshop, Dorothy Perkins, Miss Selfridge and Burton” in that the red flags of pension deficits we see a £571m pension deficit and kindly audited by PwC, so who else are they auditing in the Empire that is (or was) part of Philip Green?

Yet in all this, at present there is, just like with Tesco very little noise regarding the Financial Reporting Council and PwC, it seems like the press walks away when these two are mentioned in one sentence. After June 2016 there is abysmal little to see, which after Tesco and BHS that should be a little weird. Even when we look at the BHS elements now, overall the Auditor is left unseen in more serious ways, other than that Tesco is now hiring PwC again for other services, which after the shortfall and the DeLoitte results is a little bit weird to say the least.

You see, last year Aditya Chakrabortty in an opinion piece wrote: “Cameron warned of “the slow-motion moral collapse that has taken place in parts of our country these past few generations”. He was right. It’s just that it’s been led by those at the top – the ones at the boardroom tables, their expensive helpers – and their mates and supporters in politics using taxpayer money to wave them on” is not a wrong view, it comes three years after I made pretty much the same claim, so we can see that some players are a little late to the party. What is linked that when it comes to the matters as happened with BHS, crime literally does pay. It does for the auditor, the business men who own the place and sell it for £1 as well as the politicians who threaten with a £1,000,000,000 fine which will never happen (that pesky thing called the law gets in the way). You see, for many of us and for the victims it is a crime, yet from a legislation point of view that is not certain and it seems that no crime took place, because the people are not in jail, not in the dock and not in court. They are refurbishing their £10 million estates, whilst the working victims cannot make ends meet and where the auditor gets rehired by those they seemingly wronged for even more high priced consultancy.

As the costs are handed to the corporations in the shape of invoices, we see that crime seems to pay and it does so at a lower tax bracket than normal incomes. It can be stopped, you could be on the other side of the equation. You only have to be willing to do the one thing others did not anticipate and you have to be willing to be utterly ruthless. Basically you have to become a businessman like Sir Philip Nigel Ross Green and hire and firm like Pricewaterhouse Coopers to advice on your endeavour and audit it.

 

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