Tag Archives: IMF

April 15, 2014 · 11:44

Facts, Fiction or Fantasy

It is the elementary consideration of the three F’s, when we look at the information in regards to the Ukraine. It is not whether we give value or credibility of the news we see coming from Sky News, the Dutch NOS, BBC, CNN or even Fox News. There is a side that remains largely unspoken by many of them.

We see the news on how it is written on how these poor, poor Ukrainians are getting pummelled back into the anti-freedom group called ‘the Russian Federation’. Is that actually a truth?

Yes, we all notice on how well organised and well-armed these pro-Russian antagonists are, but are we seeing all the information correctly? Consider that not a few or a dozen people are in favour of these so called referendums, no; the people are out and about in hundreds and thousands. Many are singing their ‘old’ Russian songs and anthems. This is at the heart of the missing information. Consider that we see a lot more US involvement, whilst Kiev is now asking for the ‘Blue Helmets’ (UNIFIL) intervention. These people are about to get more support in 2 weeks, then the entire Syrian nation got in three years. I hope you remember that little escapade. It is still going on and the amount of casualties remain rising in Syria.

So, why are we all up in arms about Ukraine? Is it because some in Kiev want the European values and we are so upset about those who do not want to share ‘our’ way of life? Consider that the news has all been about implying that these acts are all orchestrated by the Kremlin and whilst it sounds really fun to hear about some politician who is about to get his assets frozen, nothing real can be done. By the way, can anyone tell me when the American Politicians or Wall street big bosses got their assets frozen?

The Ukrainian mess is blowing out of proportions in two ways. The first was the start of the Crimea and in specific the way the west and others responded to the events. I will always consider the fact that Russia did have some involvement here to some extent. The reason is that not having their fingers on the pulse whilst there is a massive naval base there is just not an option. They might not have intervened, or they remain silent on actions, but they knew what was going on. It was in their interest to pretend to be the non-observant here. Yet, that story does not reflect on the other parts of the Ukraine. A simple look at the map can tell us that. The Crimea was a military power point; the rest of the Ukraine is not. It is so simple for Russia to stand at a distance as see this all go up in flames and then offer ‘humanitarian’ aid.

The part that western news is ignoring is the shouting of the people that they have had enough of Kiev corruption. In their mind this will only lead to even worse times. Can we even blame them? Look at what the IMF has wrought (not through their actions through), Greece, Italy, Ireland, Spain and Cyprus. Massive debts, then IMF/EU financial support and after that austerity and continues after it started to choke a population. Government administrations get re-elected, no one goes to jail and some end up with a massive amount of money and favours. Is it such a leap of faith that Ukraine, a nation where corruption is such an issue, a place where now its population is just too scared to see what happens next? Consider the news in the last week, where we read that Christine Lagarde stated that the IMF was no longer forcing structural changes (http://www.sbs.com.au/news/article/2014/04/13/imf-no-longer-forces-structural-change). Was that just a small illumination of change as fear is gripping certain population groups? Consider the statement that was given last week that ‘the IMF was a victim of US politics‘, it is enough to scare many people. The statements of the IMF, which were also stated by Australian Treasurer Joe Hockey, that the US seems to be playing their own political games on regards to the IMF. None of these issues were raised, even though it is stated in several sources that the Ukraine is about to receive 9 billion in aid from the IMF. Now, I am not objecting in regards to the aid, yet, whilst it is known by all the players above a certain levels (at least 4 levels below Lagarde, Obama and Putin), that the Ukraine has a history and environment of corruption. None of that is properly addressed, so whilst 9 billion will go to the Ukraine, how much will end up out of the hands of the corrupt? Misreading gas meters, government invoices and the list goes on, how much of those will get paid by the 9 billion? Still wondering why the Ukrainian people are so anxious?

None of these matters are looked at (with proper levels of investigation) by the press, which makes for some of these newscasts a negotiable level of ‘pro-western’ advertisements, making the situation worse.

What the press is unwilling to illuminate, is that at the centre of these troubles are the pro-western politicians. They had no issue disposing of its former president, yet when they themselves are rejected by the Crimea and as it seems by the people at large, everyone shouts foul!

That part is an issue, no matter how many journalists ignore it. It is of course also a nice point of light as well; my income might drastically improve if the cold war is back. There is of course the badge of benefits we see with new movies (like a new impossible mission going up against their old adversary), the video games and in my case more data analyses. All those international locations that would need Palantir Government installed, trained and consulted upon.

Is this the reality? I do not know, the pressure between east and west is growing, so it remains a consideration. Consider however the events in Syria and that red line that was drawn (by the US), nothing happened. Is it because US intervention might get some of their oil benefits revoked? Is Syria not an interesting nation? (Which seems odd, as the pressures there would influence their long-time ally Israel.) So what is the press not investigating and what are we not getting told in this instance?

Consider that when you watch the news tonight and listen to what they say exactly, because you will hear suppositions and carefully phrased implied events, but where were the facts and more important, why are we not getting all the facts? That last one is important, as it turns a fact driven newscast into a work of fiction or even fantasy, which is getting the Ukrainians so angry and bothered.

In the end I still ask the question that is at the centre of this all. Why did the EEC not let the Ukraine be? This is not a statements against dealing with the Ukraine as a business partner, but in the light where the economies are down to such a degree, when the EEC is still dealing with the new partners and the overall debt levels are far exceeding acceptable levels in many of the EEC nations, growing is not a solution, it is a sure path to implosion, which will leave most of the EEC in a destitute state. That part is also seen as the two big national influencers, namely the French ‘Front Nationale’ and the British UKIP. When they do get the referendum to fall in their favour, the EEC will be in a mess that they will not be able to fix. Is the adding of as many nations as possible a desperate act to float the EEC at that point? (That was an actual question I am phrasing myself!)

The last one is likely to be a mere speculation (read fiction), from my side. Yet, considering the steps as we saw the EEC change and grow from 2008 onwards, after economic blow after blow. Now Greece is selling bonds again, whilst at present, their economy is in no way ready to deal with the old debts as well as the additional new ones. Are you still surprised to see the Ukrainian actions?

I am not stating that Russia is in such a great state, but there is every indication that they are not in a bad state either (with massive parts if Europe depending on Russian Gas), add to that, the fact that the Middle East is now diversifying by making Russian arms deals and other deals, which should indicate that they will order less from the west. Cars, electronics and other needs are now more and more moved to Asian makers like China, India, Myanmar et al. Some was already there, but slowly the list of migration is growing. Australia will lose massive amounts of jobs as the car industry moves away (not one brand, but all brands within the next 36 months). We see that airlines are slimming down and as the news reaches us day after day, often just after some ‘good’ news reached us, the balance is not looking good. The west is becoming less and less the place to be.

I do agree that the economy is slowly getting better, but it is also changing. Both have an impact on most of us and I still believe that actual economic improvements are not enjoyed by many of us until late 2015. All these factors are linked, as they are told to all. This is because the Ukrainian people are also watching the news, reading it on the internet and the picture shown is not a good one. So, when they felt that they were about to get the short end of the stick, they all rose up, because the devil you know (Russia) beats the devil you don’t (EEC). That part the big bosses all forgot about and when they applied pressure, they lost the Ukraine. Now the escalations there might not be so much orchestrated, but the stories, as they came from their ‘new’ government is sounding less and less honest in their ears. They want the old days back and in all fairness, can we blame them? Moreover, are the involved nations even happy to add another nation who is on the brink of bankruptcy?

These questions have not been dealt with at all. The last one is one we should all ask ourselves. Why intervene in the Ukraine, whilst politicians have no solution at all for those in hardship and dying in Syria? That issue reflects directly on the people of Jordan and Palestine, especially after a second chemical attack, whether we believe these events to be stories of fact, fiction or fantasy. We are witnessing iterations of ‘the cost of doing business’ on a global scale. It is however the local people who pay the bill through taxation and the Ukrainians seem to be very unhappy about the changes and the bill they will get presented with.

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Tagged as Australia, Blue helmets, Christine Lagarde, corruption, EEC, France, Front Nationale, Greece, IMF, Italy, Joe Hockey, Jordan, Kiev, Lagarde, Obama, Palantir Government, Palestine, Putin, Russia, Russian Federation, Spain, Syria, UKIP, Ukraine, UN, UNIFIL, US

April 10, 2014 · 12:57

One debt too far?

I feel interestingly happy today. It is almost like I got the big role in the new Alice in Wonderland play. As i am a guy, some will think it is the role of the Mad Hatter or even the March Hare (there is supporting evidence that I am mad as a hatter and nuts as a Hare), but no! Those are not the leading roles. The leading role (apart from Alice) is the Cheshire cat, who was guiding Alice down the path.

The reason for these, are the events as I saw them this morning in the news. These events all took me back to my article on the 19th of June 2012 called ‘The accountability act – 2015‘. My quote ‘This is about stopping those walking out with non-existing virtual profits, turned into real money, and leaving others behind to clean the mess‘, is at the centre of that all.

This is all linked to a number of things, which by the way will have bearing on the Ukraine as well. The first is the article that we saw on Sky News (at http://news.sky.com/story/1239678/imf-warns-investors-over-rock-bottom-rates).

We see two quotes. The first gives us the warning “Investors are becoming dangerously reliant on rock-bottom interest rates, with many becoming so indebted they will face serious problems when borrowing costs rise, the International Monetary Fund (IMF) has warned“. The problem is that these investors include several governments. When we see in that same article “the amount of cash spent on leveraged loans – the high-debt instruments with financial problems – now exceeds the level in 2007 before the crisis“, we are starting to see a clear pattern. In my view this pattern is that those who were in charge are doing it again. Those who wielded certain options are now doing it behind the screens. They are servicing a ‘population’ of what I consider to be not too bright members of a government executive branch and as such the fallout will be well beyond what we considered possible before.

The last quote “The IMF said it was also concerned about the levels of debt in the emerging markets” is the one I leave in the middle for now, I will however get back to this one later in this article.

The second article comes from the IMF themselves (at http://www.imf.org/external/pubs/ft/survey/so/2014/POL040914B.htm) “Across advanced economies, the pace of fiscal consolidation is set to slow in 2014 as focus shifts to how to best design fiscal policies supportive of both further consolidation and a still uneven recovery“.

This reads as ‘In the US, EEC and Japan, the pace of reducing government deficits and debt accumulation will slow as governments are staring at designs of new fiscal plans for consolidation in the near future’. There could be other explanations, but consider that these three players have been utterly unable to close their wallets. They keep on overspending many billions (in the case of the US and Japan up to a trillion) of money they do not have. Over the last several months we have witnessed bad news management on many PRESS levels, whilst not actually looking truthfully at certain events. I will not insult the reader’s intelligence by quoting the LA Times in this case, but the headline that ‘the Global Economy is strengthening‘ reads like nothing less than a joke. The article read like a promotion page, with no real value, other than the percentages they were ‘boasting’ about. For the record, the US leading the way with less than three percent whilst Chinese growth is set at well above 7% might be correct, yet in the second part the US was leading as one of the developed nations, implying that China was not a developed nation, go figure!

The issue (as not shown by the LA Times) is that there are delays with the US for the IMF. In a quote from Australian Treasurer Joe Hockey, the following was phrased by ‘the Australian‘ “Senator Ted Cruz said that the package would unfairly raise US contributions while undermining its influence” (paraphrased).

This reads wrong in several ways. Is the IMF not supposed to be impartial in all this? The mission statement of the IMF (at http://www.imf.org) states “The IMF’s main goal is to ensure the stability of the international monetary and financial system. It helps resolve crises, and works with its member countries to promote growth and alleviate poverty“, it might just be me, but does that not require an impartial approach? If the US has too much influence here, how can stability be achieved, or is this the world according to ‘the US congress’? (I will steer away from blaming the White House here, as the IMF is supposed to be a long term planner and the White House is a short term location, in sets of 4 years).

It is however interesting how little there is to find on US Congress and the IMF, even by the larger newspapers. I was able to find http://www.reuters.com/article/2014/04/07/us-imf-reform-britain-idUSBREA361BX20140407. This article was published two days ago and it is interesting to see how many newspapers veered away from this Reuters article. Reuters had this quote “The failure of the U.S. Congress to ratify the agreed IMF reforms is bad for the institution and bad for the international community“. The additional part “A bid to get Congress to approve reforms of the IMF was dropped last month amid concerns that it could hold up a bill providing aid to Ukraine” as well as “The White House has been urging Congress for a year to approve a shift of $63 billion from an IMF crisis fund to its general accounts, as agreed by the U.S. government in 2010” are cause for concern. These payments were due for the IMF long before the Ukrainian crisis was on the map. So is this about not having any influence, or is this an early signal that the US has completely run out of money?
Yet a Chinese site (at http://english.cntv.cn/2014/04/08/VIDE1396947727947648.shtml) shows us that in their view with “The Spring gathering of the International Monetary Fund is approaching. China, Russia and other major developing nations are angry about a delay in reforms that give them more voting rights at the IMF. Now the countries are pushing forward with the reforms without waiting for the United States“, so now we get another view on the matter, Was Australian Treasurer Joe Hockey playing nice with the Chinese, or is there more? I personally do not think that he was ‘just’ playing nice. I have predicted before that the time with the US as a superpower would end. I have stated this for almost a year now. No matter where the interest of Texan Republican Senator Ted Cruz are and I have no doubt that his interest is Texas first, America second and his family third. Before you the reader thinks or even accepts the allegations by some that he is some newly formed version of the infamous McCarthy, then think again! When I did the math in a previous article called ‘Biased Journalism on USA shutdown?‘ which I wrote on October 1st 2013. Here we saw that Texas is one of only three states that could shoulder the national debt if it was evenly spread. So, to keep Texas strong, Ted Cruz has a fair point in regards to the IMF influence, but that is not what the IMF is about and it is Washington DC that went along with that, which means his hands are slightly tied.

The IMF article has set out that people are playing profit or government bail-out again (they did not state that, but the article implies it to some extent). The governments are not speaking out against these acts and as such we could face another massive economic setback in early 2015. In a minimal defence for Republican Ted Cruz it must be said that the IMF and the EEC are on a dangerous course. The Guardian is filled with messages on how the crises seems to be over and on how Greece is turning a corner towards better times. This is done at a time when it still needs another 8 billion; unemployment rates are at an all-time high and with European incomes remain dwindling down, Greek tourism is likely to remain far below levels for another 2-3 years.

It is the Catholic charity Caritas (at http://www.theguardian.com/world/2014/mar/27/europe-economic-crisis-worse-caritas-report) stating “disturbing levels of poverty and deprivation being noted among children and youth“. This is at the centre of the issues that are enveloping Spain, Italy and Greece. In addition a 114-page inquiry into the human cost of the crisis also mentions Cyprus, Ireland, Portugal and Romania. This might not be at the centre of the mission statements that the IMF goes by, yet these industrial nations rely on workers, the fact that these nations are in such a state is a clear signal that several governments are not up to speed to give the needed aid to those people. This is not in regard to the intent a government has, but the IMF signals seem to be lacking certain reporting flags at present. the Catholic report is a first clear signal that those ‘happy happy joy joy‘ reports that economies are getting better are basically skating around the issue that is holding many down and for some considering the statement that ‘these two issues are not connected‘, should consider standing in a corner staring at the wall and feeling ashamed for even considering the thought to begin with.

Now, I promised to get back to the Ukraine as I stated in the beginning. When we consider last year’s BBC article (at http://www.bbc.com/news/business-13366011), we saw that between 2009 and 2012, Germany was the ONLY nation who had its budget set correctly. The rest was short between 1% and 10% of their budgets. It is nice that these nations speak on percentages, because those shortages go into the hundreds of billions for some nations. The twelve nations represent over 53% of the entire EEC giving a summed deficit of 13.2 percent. This in itself is not a fair assessment, so let’s turn this around into a number. This number comes down to minus 546 billion, which is just the deficit for 2013. So, the governments are not keeping their balance in any way, in addition, we now see that investors are slowly playing their ‘games’ again. There was a rush on Greek bonds, because the evidence is coming that these people will get their money no matter what. So, why do we have any form of bail-outs? It is clear that overspending is not punished, so the entire Austerity posturing seems like an empty threat. I am all for helping out those in need, but it seems more and more clear that those ‘in need’ are not doing their part in cutting down on spending in any way, shape or form. So when (not if) the train goes off track, those smaller nations will be left to their own devices, ready to get exploited by all bigger companies to get their dividend. With the larger players India and China, it seems that US companies and bigger players want cheap nations for whatever market they want to get to. In such sights is it even a wonder how areas of the Ukraine are now in fear of what comes next?

That part is shown in several ways. Even though there is now such a boasted evidence of corruption in the Ukraine as the involvement of the ‘former’ president Yanukovich. Yet, if we accept and use the paper by Anna Yemelianova and is called ‘A Diagnosis of Corruption in Ukraine‘ (at http://www.againstcorruption.eu/wp-content/uploads/2012/09/WP-14-Diagnosis-of-Corruption-in-Ukraine-new.pdf), which I mentioned on March 18th, then there is no way that corruption is limited to one side of politics. Corruption in the Ukraine is too wide spread and any player above a certain level has to be tainted to some level.

It is still puzzling why the EEC and the US are so set on the Ukraine. Why set yourself up for these levels of costs? Why get in bed with the Ukraine, whilst the bulk of the EEC has overspent by well over 500 billion. Is it any wonder that some Ukrainians are frightfully running back into the Russian arms? If we believe the Russia Today, with their headline ‘US wants to destroy Ukrainian ‘bridge’ between EU and Russia – German intellectuals support Putin‘ (at http://rt.com/news/germans-support-putin-ukraine-265/), then we see the view of a struggling USA, who reports a nice number, but when payments are due, America will only be able to do so by taking another debt ceiling hike, which places them well over the edge of bankruptcy. I have some issues with the article for other reasons. Yes, the EEC wants to keep a good relationship with Russia, if only for the reason that most of Europe relies on cheap Russian Gas, which, when absent will push the bulk of the European middle class squarely into the poverty bracket. I am just wondering whether retired German Air Force Lieutenant Colonel Jochen Scholz was hoping to get a free training course in flying the Sukhoi T-50 stealth fighter, making him the first NATO officer to ever be allowed in ‘new’ state of the art Russian equipment (this is an insinuated assumption on my side). The article has a few more issues that are slightly too vague, but the sentiment is not incorrect. The American Anti-Kremlin approach in an age of non-accountability in the era of finance is an issue for too many people. So here is me, the Cheshire cat, all smiling and smirking on events currently playing out.

If the accountability act was indeed a reality on all Common Law nations, certain games would not be played and as such nations (the US, all EEC nations as well as Japan) would be in actually movement out of a ‘debt abyss’ and not at the whimsy of high stakes investor poker games where when it works they get a large bank account, if it fails they will get bailed out by the governments in some unnamed way, which does not seem to get a massive amount of press visibility.

So here we have it, what I evangelised from the very beginning or my blog. The world can be a better place, especially if people are held accountable for their actions. That part gets even more visibility when we notice a lack of press visibility ion some regards. When we see the Standard, a UK newspaper (at http://www.standard.co.uk/news/uk/press-freedom-debate-royal-charters-are-medieval-piece-of-nonsense-8898388.html) where it is all about the issue as “Media heavyweights have branded the government’s proposed royal charter for press regulation a ‘medieval piece of nonsense’“, yet only a little over a week earlier when the Telegraph reported (at http://www.telegraph.co.uk/news/worldnews/asia/malaysia/10720237/Malaysia-Airlines-crash-Suicide-mission-theory-of-MH370-investigators.html), how the MH-370 was a ‘suicide mission’. A piece that was so bad that it’s journalistic value was less than the photo that the Sun used to publish on page 3. This happened before the plane was found, without a black box, lacking in facts, but with a photo of a cabin crew member on page one of the newspaper. At the same time, the issue of the US Congress in regards to the IMF reforms, as stated by Australian Treasurer Joe Hockey has not made any non-Australian papers. So, again, as I have always stated, there should be freedom of the press, but there should also be accountability, which is exactly what Lord Justice Leveson had advocated. Perhaps some regulation would not be too far out of context as we see a lack of informative journalism and a still unhindered tsunami of paparazzi based articles.

If we are truly one debt too far, is it not time for accountability to step in?

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Tagged as Alice in Wonderland, Anna Yemelianova, Cheshire cat, China, CNTV, Common Law, EEC, government, IMF, International Monetary Fund, Japan, Joe Hockey, LA Times, Lieutenant Colonel Jochen Scholz, Lord Justice Leveson, national debt, NATO, Republican Ted Cruz, reuters, Russia, Russia Today, Senator Ted Cruz, Sky News, Sukhoi T-50 stealth fighter, Ted Cruz, Texan Republican Senator Ted Cruz, Texas, Ukraine, Yanukovich

March 18, 2014 · 06:14

Strongarm, Intimidate, Terrorise

As we see the news of sanctions hitting our eyes via the news on TV, the Newspapers and the internet, some will conclude that the third cold war is now officially starting. Yet, some might have the question within their minds ‘who has the moral high ground?’, or better yet, what brought these escalations about?

Now, I have missed the cold war, whether you stare through a sniper scope overlooking Lakhta air base in a video game, or those who needed to take another look at the Arkhangelsk naval base because they serviced the Typhoons (in 1983 a genuine bringer of nightmares to NATO). The Cold War was a war, but one with its own rules, regulations, needs and wants.

But is this the same as the first or the second cold war? The first cold war was in itself about a disagreements in Ideology, there was however another side to it all. This was basically a pissing contest between the Kremlin and the White House on who was trained better, tools were the best and who got away with the most. The 70’s as it was depicted by John Le Carre with ‘the Circus’ and the after the fact knowledge that several members at the top of MI-6 had a better knowledge of Russian then those living in Moscow. Even with that set back, I always felt that the NATO side was victorious! I missed most of it and did not get hit with events until 1982-1984.

This new cold war we are about to face is something different. This is a lot less about ideology and a lot more about the greed of a chosen few. Let us take a look at the Ukraine and the Crimea region. Most will not remember the original Crimean War, even though one of the most famous names in history had her origin there. It was Florence Nightingale; slightly less famous was Mary Seacole who also earned her a place in the history books. In those days the direct reason for the war that was there was all about religion, specifically on access of the holy places in what is now called Israel (an area that was in those days part of the Ottoman Empire). It is the one time that the Russian Navy got it hide tanned (not the best moment in Russian Naval History), even though it held out for a year, dealing with England, France and the Ottoman Empire was a cake that turned out to be slightly too large for them.

I think it is important to ‘trivialise’ that part. It should also be noted that Russia started this fight with the Ottoman Empire because Russia held that it had a right to protect the Orthodox Christians. These events are important, as those contained the darkest days for the Russian Navy.

Now when we go to today we have other issues to content with. Crimea has always been a cultural hot potato. It will take too long to explain the issues (and I am not an expert in that regard), there are several ties that were severed when Khrushchev placed it all within the border of the Ukraine; he never considered the idea that Ukraine would be anything but part of the ‘Russian brotherhood’.

It is the changes in the Ukraine that are at the centre of the Crimean escalation. As I see the Russian side, it seems to me that this would happen no matter what. The entire issue with the Black Sea navy has never been regarded positively by the Ukraine. The issues there have been going on for almost 7 years now, even though Ukraine has valid reasons for ‘demanding’ certain changes, it is a little far-fetched for Russia to accept the security of its Navy (the Black Sea Fleet) thought the Ukrainian security services. If America has any objections in that regard, then consider the issues several people had in the past with the ‘idiots’ patrolling and guarding at the US part of Soesterberg Air base, I had more than one issue with a few US guards, even though I was on the other side of the fence wearing a Dutch uniform.

So, we can agree that like the Americans, the Russians will not trust the guarding and protection of their defence forces by ‘outsiders’. This is one of the issues, which are at the very heart of this. The second one is one I discussed in an earlier blog named ‘Hot air for the Ukraine‘ on March 1^st. The EEC is too much about adding new members and not about maintaining and setting a stable financial and economic platform. That part has been proven by many, but the issue goes wider (at http://www.imf.org/external/pubs/ft/survey/so/2014/car030514a.htm). The IMF is still finalising the fact finding mission and the amount needed for the Ukraine substantial. Another issue in this regard can be found at Reuters where we see the following quote “If the West wants Ukraine to align with them rather than Russia they will have to offer a carrot and the carrot could be better terms on the debt” (at http://www.reuters.com/article/2014/03/17/us-ukraine-crisis-debt-idUSBREA2G0E020140317)

And why does the west want this, Economic prosperity? Ukraine has a massive amount of debt! The only consequence many will initially see is that Ukrainians will suddenly relocate by droves of thousands to get that better future in the west (which is fair enough). That pressure gets added to the issues already dragging many down in Western Europe which are still unstable at present, so adding nations with bad budgets whilst the rest remains in a bad shape is just bad politics and bad judgement. Another view from the IMF can be seen in the Reuters article (at http://www.reuters.com/article/2014/02/25/us-ukraine-crisis-imf-idUSBREA1O1DT20140225)

“The IMF has consistently said that Ukraine’s economic policies would create unsustainable large external and fiscal imbalances. It has called on Kiev to cut its large fiscal deficit, phase out energy subsidies, strengthen the banking sector, and allow the exchange rate to fall. A freely floating hryvnia currency and higher domestic gas prices are unpopular steps previously rejected by the Kiev”

So they want money, but are unwilling to do what needs to be done? How is this in any way a good deal in any shape or form? I will grant that energy prices will always be unpopular, but this is all about a change where the government does not want change to begin with.

Now we get to the good stuff, namely intimidate and terrorise. These are basically synonyms for strongarming, and now it is the west doing this. Sky News reported that more sanctions are in place (at http://news.sky.com/story/1227143/ukraine-sanctions-target-putin-aides)

So basically, individuals are now targeted for alleged involvement of government actions. Is this even legal? It is interesting that these events are calling for sanctions. Consider that in the US one in seven lives below the poverty line. Now also consider the events as we saw the hard working people at Wal-Mart getting hit financially, needing food stamps and needing government support, whilst the owners are multi billionaires. Unless the Honorable African American in charge in the White House (aka President Barack Obama) is a coward, I hereby officially demand and he should officially call for similar sanctions which are to be placed against the members of the Walton family! I understand that sanctions are a tactical choice, yet to ignore your home base, whilst going after a few individuals (whose guilt is still officially in question) is nothing less than a joke. The fact that the advisors are hit with sanctions, yet, the person in charge (President Putin) is not getting any sanctions makes the joke even more pathetic.

Another issue we should not ignore is that the bulk of the people in Crimea WANT to be part of Russia. Now, that would never be my personal choice and I believe it is the choice of many non-Crimean not to go that path, but the idea that their choice is not the choice of the USA and the EEC and therefor rejected is a laughing matter, where is THEIR freedom of choice? In opposition, I do have an issue with the legality of that part too. I do acknowledge that Crimea is part of the Ukraine, yet the Ukraine is ‘only’ 72 years old. The issues we now see in Belgium as that nations is likely to split into two parts, whilst that nations is a lot older then the Ukraine is not causing this level of concern (mainly because it hasn’t happened yet). In my view, it seems a lot more legal if Crimea became independent. Consider the immediate consequence of that act. If the referendum is regarded as illegal, what will happen and what will the reaction be as referendums are called over the next 3 years as parties decide to secede from the EEC/Euro, as these requests are called for by Nigel Farage (UKIP/UK), Geert Wilders (PVV/NL) and Marine Le Penn (FN/FR). Will we suddenly see calls for illegality by the USA and the IMF? Consider that, because these steps are likely to push the EEC and therefor the USA over the edge of bankruptcy.

As a ‘supporter’ of the cold wars, tactically the entire escalation works nicely for NATO. If Ukraine does enter the EEC, then it comes with a nice ‘free’ naval base in a perfectly placed tactical position, with direct striking capabilities on several Russian fronts (still surprised that Russia is so against it?).

My issue remains that the power players in this game are all motivated by greed. You do not give out 35 billion unless you get 70-135 billion in return. The Ukraine does not have such economic prospects in any near future. Consider in addition that once this happens, the cheap gas deal that the Ukraine currently has will then is also be null and void, which means that the people in the Ukraine will have to content with an energy price hike of at least 20%. Look at your own heating bills (especially in the UK). How does it feel to pay 20% more?

The last side to the Ukraine is one that will hit all Europeans (and Americans). Please do not take my word for that, the paper was written by Anna Yemelianova and is called ‘A Diagnosis of Corruption in Ukraine‘ (at http://www.againstcorruption.eu/wp-content/uploads/2012/09/WP-14-Diagnosis-of-Corruption-in-Ukraine-new.pdf). You see, the big business boffins currently whispering into the ears of government officials in the west tend to ignore issues that do not cause THEM any grief, but those who pay their taxes and small businesses alike will get to deal with this to some degree in one way or another. From the very beginning of that paper where we see “Ukraine is a country is with wide scale and systemic corruption which makes a crucial influence on the economic, political, social and other spheres of public life“, it will be clear that whatever you pump into their economy, a percentage will end up with a man like Semion Yudkovich Mogilevich, a man who should be regarded as one of the most powerful men (some state the most powerful man) in the history of the Russian Mafia. Consider the end of the report where it states “21% of respondents in Ukraine reported paying a bribe in the past 12 months according to Transparency International Global Corruption Barometer 2009“.

This gives a clear indication, I might even state, this is in my personal view clear evidence that the numbers reported towards the IMF in regards to the economic support is underestimated by at least 30%. I will be bold enough to take my view one step further. When the Russian powerbase walks away, the floodgates that minimised some of this form of damage will be gone completely. It is a side that so many ignore, yet, when people in the News in the UK and the Netherlands read about these ‘Romanian gangs’, take heed for what happens when the Ukraine is added to the mix. These events are easily ignored by the power players as they remain out of reach, but the rest of the people in those area’s (99.98443213% roughly) will become a target one way or another.

Am I against the Ukraine joining the EEC? No, as I stated, it is about the freedom of choice. I do however have several reservations on why certain elements want to Ukraine to become part of the EEC no matter the cost. They have certain intentions and the press seems to be taking extreme care not to go anywhere near that part of the equation.

So who is strongarming, who is intimidating and who is terrorising? Three answers that call for a name, an entity or an organisation. So who exactly are the players and why are we seeing way too little on certain sides in the press?

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Tagged as Anna Yemelianova, Arkhangelsk, Barack Obama, Black Sea Fleet, EEC, Florence Nightingale, Geert Wilders, IMF, John Le Carre, Lakhta air base, Marine Le Penn, Mary Seacole, MI-6, NATO, Nigel Farage, Ottoman Empire, President Barack Obama, President Putin, reuters, Semion Yudkovich Mogilevich, Sky News, Soesterberg Air base, Ukraine

January 22, 2014 · 22:56

Cooking the books?

Sky News is bringing us another update on how good the economy seems to be. The reporters are so happy and so full of joy to voice the information on strong the economy is growing. It is a worrying turn of events. So, after the IMF had voiced on how George Osborne is playing with fire, now his vision will be bringing the UK a 2.4% improvement sending the UK back on par with the pre-crash numbers (at http://news.sky.com/story/1197837/imf-upgrades-uk-growth-forecast-above-rivals). The one part I do accept is that it is growing faster than its rivals, although, I do wonder how fast the German Economy would grow. Now personally I do believe that the status of the UK has always been correct (the fact that their economy was growing). My non-economic view had been in the area of 1%-1.5%, which would have been a pretty good result considering the mess most European nations were in.

In ‘A noun of non-profit‘ on May 15th 2013 I wrote “I personally join the group “Oh ye of little faith” on that one and if they are able to get the economy up to 0.2% positive in 2014 than they would have achieved quite the small miracle.” This was my view of the Dutch economy at that time. So far I am still to be proven wrong (at https://lawlordtobe.com/2013/05/15/a-noun-of-non-profit/).

The second quote in this regard is “It is the latest boost to the fortunes of the Chancellor, coming barely 24 hours after the Ernst & Young ITEM Club also increased its projection for UK economic growth this year. Although the Fund’s forecast for growth this year will be shy of the 2.7% predicted by the ITEM Club, the scale of the upgrade underlines how quickly sentiment about Britain’s economy has turned in recent months.”

I believe that we are being played! Let me be clear, the UK economy is getting back, it is stronger than most others and I think that this is a good thing. It is that 2.7% that I have a problem with. The number is way too high. I am not stating that the number is impossible, but it is extremely unlikely. (Feel free not to believe this non-economist blogger on this).

Why is this the view I have?

As I quoted in my blog ‘Cretan Independance‘ (on January 10th) “a senior policymaker in Brussels said: ‘The worst of the crisis is over. So the pressure to take tough measures is off. We’ve had enough of discipline, enough of sanctions, we’re sufficiently unpopular already. The worst is over, so let’s stop now.’”

This view seems to hold up, but when we consider the total of debts, whilst we consider the other debt issues I mentioned, we should consider that we are not out of the woods. The UK numbers seem too inflated to me. Even though there is general optimism (at http://news.sky.com/story/1198691/osborne-hails-new-imf-growth-forecast-for-uk), there is also too relaxed a view on the damage we are all still facing. The quote “The IMF forecasts that the world economy will grow by 3.7% in 2014, up from 3.6% in its last forecast.” is one of the most interesting ones.

There are two sides. The one side might mean that the economy is going up, which could be good. Yet, the negative side is the side of government overspending all over the place. Add to that the fact that big business still has way too many loopholes to fly through (avoiding the taxation the governments are already spending), which means that no matter how good the economy, government overspending means that you and me will end up with the combined tax invoice. As balance is lost in these matters, the economy looking up, does not mean that life will get any better for you and me for 16-24 months and even though BusinessWeek had ‘good’ numbers to mention in their article (at http://www.businessweek.com/news/2014-01-22/u-dot-k-dot-unemployment-drops-to-7-dot-1-percent-in-lurch-toward-boe-threshold). If we consider this quote “Unemployment measured by International Labour Organization methods declined to 7.1 percent in the three months through November from 7.4 percent in the quarter through October, the Office for National Statistics said in London today.” we could consider this as good news, yet, until the February numbers are known, any party-hat shown is for now one too many.

Do not get me wrong, I would love to be wrong in this instance. Yet, I have seen several outlets blasting away the good news left right and centre, and 2-3 months after that some unfortunate bad news is thrown our way. Some message like ‘we had expected slightly better news, yet it seems that the numbers for the immediate future will stagnate‘. At that point, you better believe that you are watching a bad news management routine. The UK is on the right track and that is really good, but to weaken resolve anywhere in 2014 is in my view a really bad idea. I prefer to see the UK coming out on top at the end of 2014. George Osborne has shown that his vision was right; I reckon that the UK will be a lot stronger at the end of 2014. There is additional supporting news in my favour in regards to the picture we are getting painted (at http://www.businessweek.com/articles/2014-01-09/investors-are-getting-hungry-for-pigs-debt-again).

It seems that the 4 biggest indebted nations are at it again. The quote “Europe’s having a bond rally and the PIGS are playing host. Portugal, Ireland, Spain—and even Greece, where Europe’s debt crisis began—are heading back to the bond markets and enjoying their lowest borrowing costs in years, as investors appear reassured that the region’s sickest economies are on the mend.” is a little colourful, but it seems to fit with the picture we are offered. First we see messages of the ‘sudden’ light at the end of the tunnel as well as the mention of easing from a senior policymaker in Brussels. I think it is all about the next wave. If these bonds fall through, who will bail others out? This is in my view the fear we should have and as such it is also the fear UKIP is playing on, which is why May 2014 could change the game for all concerned, because the Eurozone will see the shape of an entirely new nightmare, one that will haunt us all for a long time to come.

The Bloomberg article does bear a nice quote “The reduction in the risk perception, and this sort of market euphoria, is leading to a rerating of sectors and countries most penalized during the sovereign debt crisis.” This reads in two directions. The first is that it implies that perhaps the most penalized nations should not have been so and the reduction of risk perception. That is in my view the real fear. It is not just about the reduction that is implied, but the extra shifting of debts. But when payment is due, which will happen and payment needs to come from new debts, what will be left?

This is the one side no one wanted to deal with. Just move on! It just doesn’t work this way, because in the end the taxpayer gets that bill and as such we must make sure that the people realise that these games on the gambling green will cost us all. Politicians and corporations will not have to pay a dime of the debt they all happily bestow onto us, what will happen then?

The entire story becomes even more fun when we consider todays mention in the Guardian (at http://www.theguardian.com/business/2014/jan/21/imf-world-economic-recovery-outlook-weo). The second quote is “Blanchard confirmed the IMF had raised its UK growth forecast to 2.4% for this year, from a previous forecast of 1.9%. It was Blanchard, who last year warned Osborne has was playing with fire with his austerity drive, but the forecast for the UK is well ahead of Europe’s largest economy, Germany, where growth is forecast at 1.6%. France’s economy would grow by a much weaker 0.9% given ‘policy uncertainty is weighing on growth’, Blanchard said.” I stepped over the first quote on purpose. The events are not as they seem to me. The first quote was interesting “The global economic recovery will pick up pace this year but remains ‘weak and uneven’, the International Monetary Fund’s top economist has said.”

This is at the centre of my reasoning. The economy is weak, it is uneven and it will remain that way as long as nations keep their credit cards maxed out. That is at the centre of the issue. Those maxed out credit cards are great for the banks and great for the IMF, but you and me are only hurt by it as our utilities, our monthly costs will gain a rising momentum whilst our income rise remains nearly frozen.

Good for all except for us, the simple taxpayer! This is why I am so against the game that is getting played.

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Tagged as bloomberg, George Osborne, Guardian, IMF, Sky News, UK

September 19, 2013 · 17:53

Greece is for Sale!

This country has roughly 51,000 square miles of development land. It is known for its good weather, for the views that many of the local locations offer, its historical treasures and it comes with a possible workforce of 11,000,000. For the clever investors, this nation can be reverted to the Drachma after sale, if so desired; hence the owner will have its own currency to manipulate. The price of the package is 325 billion Euro. If payment has been made and ownership is transferred the current population can be seen as trespass. Please feel free to dispose of these trespassers as you see fit. In addition Greece has little natural resources. The oil reserves around Thesos are rumoured to have been depleted and the fish supply in the Mediterranean is no longer what it was. Possible quick coin can be made by selling of the national treasures of Greece, including statue and art going back to 1500 BC.

This is the selling pitch! First come, first serve!

Did I get your attention? Good!

I read about another protest in Greece and I thought that it was time to keep a mirror up, one that they will not like, but then at times the truth is truly an ugly entity to watch.

I understand these Greeks, I do get it, they got handed a short straw and they have no options. Yet, instead of blaming the Germans and the IMF, it should be made clear that they did not cut, slice and dice the Greek population; it was their own government who did that. A government that had spent well over 40,000 euro’s for every Greek, money that the Greek government never had and what they did have was never anywhere near that amount of money. For half a decade the Greek government increased spending by roughly 90%, whilst no more than 30% of that was received in taxation. Now if this had been an one year event, then that would not have been too bad, but they continued this for well over half a decade. An important extra fact is that this happened AFTER the Olympic Games. My personal view is that some of these spenders thought that they got some golden credit card that would never demand payment. Such a card does not exist, not now, not ever.

The sad part of all this is that their Austerity measures will not work. The debt is too high for that. Even if the government cuts costs for 80%, it would still take a decade to get rid of the debt. However, at that time Greece will be either without a population of it will have one that is sick, dying and unable to feed itself. The fact that those events are ignored in many places and that we read about is all about the IMF withholding funding, so what to do?

First of all, the entire ‘wealth’ approach towards Greek real estate needs to stop right now. It looks lovely when we see some of these $800K houses all over Greece, yet the amount of people that can afford this, and then the part of that part that will ACTUALLY consider buying it is so small it will not get you anything.

Any realtor coming with some story that it will work is fooling you, and the Greek population has been fooled for long enough. If you are serious about getting tourism and money to Greece then look at creating studio’s and one bedroom apartments in batches of 50 all over Greece. Not stacking them together is also an important part. Think of the next generation that would consider buying a small place now, giving them a holiday spot for years to come. Some will work from there, some will share it. You need to get people there so it means that you need to get them a place where they want to stay. When you start getting 50-100 thousand permanent tourists who will return and who now have a stake in Greece, it means that a connection is made.

Another business is the greying population of Europe. These small places are also a nice option for those who prefer to spend their retirement funds in other places. Those who will happily avoid the UK, Netherlands, Belgium, Germany, Denmark and other places, where the summer is only 3 months, to come to Greece where they can live in summer conditions for 6-7 months a year. We are looking at an optional few thousand of these tourists, able to spend a few hundred Euros a month, whilst enjoying life in a nicer place. That adds up to many millions a month quite quickly. Health care, home care, all options for revenue. These steps are not enough, but they are a start and instead of trying to get impossible prices for houses no one want (because they cannot afford it), look at the options people do want. In Spain similar bad calls were made, placing high end housing that collapsed. Well over a hundred million Euro with no options. Get a grip and start to offer options that will sound good and before you know it, Greece will end up with an additional few thousand people who need a daily bread, a daily piece of beef and some milk. And those retirees often have more than one form of healthcare, which could restart the Greek healthcare system in a very slim lined form. These are elements that start an economy, not the empty protest against facts that can no longer be changed and only make things worse.

These steps will not be enough, but it will be a start. It will take a few dozen more of these options to start making any kind of an impact to restore some sense of Greek economy.

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Tagged as economy, Greece, Healthcare, IMF, Retirees

July 11, 2013 · 22:24

Boosting Pensions

Would you like to lose your pension? This is more than just a simple question. If you live anywhere in Europe, then the danger to your pension is a lot more realistic and will have a larger impact then you thought there would be.

Let’s take a look at a few countries.

Netherlands.
This was already under review, however, at present there are discussions going on to get a handle on accessing pensions for all kinds of reasons. The image in part is that the Dutch government needs this treasure vault to deal with more immediate issues as well as well as the application of spending to start an economy. As reported yesterday by the NOS, the issue at present is that the government thinks it is getting access to billions a year extra. The ABP comes to the conclusion that the changes will in the end cost billions, not save them. This comes as the government is presently trying to cut almost 3 billion Euro in retirement funding. The cut back was based on the fact that businesses and employees will save-up less per year, which might save 1000 euro, which would suit the government, as this gives them a taxation windfall of 2.3 billion. In the new system it is stated that not only do people lose the 1000 euro advantage, they will have to pay more. So there would be zero advantage, even worse, considering the amount of government jobs the treasury would be down a billion, so in the end no savings at all for the poor poor coffer, only additional losses to deal with. At a time when 6 billion in cut-backs are needed, this is not the bad news they want to hear. All this has a few more hooks. Especially when we consider the questions by Hachchi (D66) in regards pension premium raises that the ABP added in January 2012. The costs were raised by 300 million euro, as documented in 2012Z01310 (source: http://www.rijksoverheid.nl/bestanden/documenten-en-publicaties/kamerstukken/2012/03/06/antwoorden-inzake-de-verhoging-van-de-pensioenpremie-door-het-abp/antwoorden-inzake-de-verhoging-van-de-pensioenpremie-door-het-abp.pdf)

It is interesting that a similar issue is now appearing only one year later. There is more!

In one view we read that the ABP in 2010 was set at 105% coverage (which means that if 100% pension is paid out, 5% remains for growth). It is however interesting to read from the NRC (at: http://www.nrc.nl/nieuws/2011/12/01/abp-verhoogt-pensioenen-niet/) we read that in December 2011 the coverage was only 94%, so in one year they went down to some degree. The same can be read at http://www.pensioenbelangen.nl/label/abp/ , more interesting, the numbers state that per September 2012 is was only at 101%. So if we recall the blog I wrote a week ago “The Age of ‘no retirement left’ is coming“, it is interesting that in that case the government is stating so much wealth. As the ABP is considered to be the largest one, we should wonder whether the Dutch politicians have any clue on what they are doing. More important, is this about short sighted cutting avoidance, or is it about more. Do not worry, they are not alone, we will have some fun looking at the UK situation next.

Is there actual evidence to support my theories? Well, the sources above clearly show that the ABP is only marginally above 100%, yet they had remained below 98% for a decent amount of time, so there is a valid amount of concern. In addition, when we consider the questions as stated in

2012Z01310, then certain issues in the recovery measures of pensions were not known, yet the initial billing would have been there, so this again is a piece of evidence that reflects 11th hour budgeting. The fact that this was never completely properly addressed remains a worry and not a reflective concern considering that in part the same issues are now again in the news.

The issues are only part of the entire picture. The fact that the Dutch pension administrator PGGM, has stated that there are issues with Walmart, could have some serious repercussions. Reuters quotes that “PGGM held 2.76 million shares of Wal-Mart as of March 31” (at: http://finance.yahoo.com/news/dutch-pension-group-halts-wal-211416613.html) this was only last week. Should the PGGM pull out then there would be concerns on both isles of the Atlantic river. Those shares represent well over 200 million, which means that Wal-mart might get some renewed problems down the line. Whether this would be due to PGGM is not a given, the fact that questions from a shareholder holding almost 3 million shares are not answered is certainly matter for concern. If we consider the economic downturn the Dutch have faced over the last 2 years, considering the issues the IMF reported in 2011 on Dutch pension funds. In that time, people entering their retirement saw their funds cut and a support capital of 50 billion was needed. So when we read less than 2 years later that those finds are so rich and that they should be opened for additional means, whilst a week later we read on some of the alleged dangers, it seems to me that playing politics with pensions is a very bad and not too bright idea. The 2011 article can be found at http://www.europeanpensions.net/ep/imf-team-recommends-adjustments-to-dutch-second-pillar-system.php

United Kingdom.

So, let’s take a look at Australia’s baby brother UK (as UK is only 3% of the size of Australia). The UK is in dangers no less immediate. The Guardian reported last November that issues would impact greatest on savers and pensioners. Yet, the story behind several issues is not brought here. For that we should look at what is happening now. Part of that is set here as http://www.guardian.co.uk/sustainable-business/capital-markets-climate-change-pension-funds. Is that even a fair assessment? If we read the quote “The way pension funds invest will determine the future, which means that to thrive they’ll need to wake up to climate change” I will wonder whether this is wishful thinking of whichever politician or investor whispered to the author. When we looked at the Netherlands and other places, these nations are all looking at sustainability solutions. Yet at present the ROI of these options are not up to scrap, so WHY use pensions there. These are fields that have been ignored be several administrations. If it is SO lucrative, then why not invest in it yourself (me asking governments)? Yes, it will be the future, but at present too expensive, so getting articles out there for pension funds to invest in the future might read nice, but as ROI reports falter it will not hold a candle up to the coming rage. This view is shared by James Cameron, chairman of cleantech investor Climate Change Capital. I know that the next part sounds dodgy as hell, but when we consider the quote “Future pensioners are going to have to bear more of the investment risk themselves“. In that case Pension funds are much better of owning parts of Raytheon and Northrop-Grumman. It seems that governments all over the world are seemingly ready at the drop of any hat to buy missile technologies, and as such the ROI for pension funds are much better off going to those places. I agree that the statement is less appealing to read, but why should pensions now be put under more and more pressure whilst, those behind the scenes refused to budge when they should have done so. The investment risk reads like a joke considering the article published in May at http://www.guardian.co.uk/money/2013/may/22/one-five-poverty-line-state-pension where it states that 20% of those retiring this year will fall below the poverty line. This is in my mind the consequence of a housing issue never properly dealt with for over 27 years, whilst pensions were left alone. Taking both in the balance, then pensions might cover 80%-100% of the rent for this year, and those will come up short 2014 and later. So that is in the most positive case where people do not need to eat or drink ever. This is only for those not living in London, living there would almost amount to instant suicide. At least the Dutch can claim that their retirement issue had never been THAT bad. So, as there is a collective boost to raise the value of the RBS, that former bastion might be used to actually boost and increase value and strength of British pensions as they focus on getting back on the horse of profit (or at least try to get on that horse). Pensions are being cut in other ways too. That part can be read at: http://www.independent.co.uk/money/pensions/expats-call-for-fairer-pension-payouts-8659717.html. Some of these pensioners (almost 10%), saw the unaffordable future they saw coming their way and as such they moved to other areas. Some saw the light in time and bought a small place on Crete, some left for alternative Mediterranean locations and some went to the warmer regions of South Africa. These people saw the light, saw the non-linear growing costs and chose a better solution. It goes even further. What is less than possible in the UK becomes very affordable in India, where a week’s pension gets you a 2 bedroom secured apartment for a month, considering that rent is the most expensive part, three weeks of pension should keep a person well fed. So why not consider this? Instead of going on an exotic vacation, live in an exotic place, and of course, the Indians are all on average Cricket nut, so not the worst place to be during Cricket season. If these people are forced back because of pension issues, would the British government have the means to suddenly appoint housing to these people? They might not get an option in this as they froze pensions. In that regard, I do hope that the Exchequer George Osborne considered the consequence of even part of those 1.2 million pensioners returning to England and his 2 billion pound winter fuel allowance. That is only one post. On the other side, there is a genuine and acceptable concern of the people who are abusing that system. There had been earlier mention of the situation where UK men marrying Thai brides is a reason for the foreign pensions increase. If we voice the scenario where a pensioner marries a woman under 25 and she then gets the allowance after he is gone, then this would indeed be an unfair use of the system. We could argue that a marriage, not validated in the UK would not be seen as a marriage (I know, the legal nightmare behind this is so not nice). However, that those who never added to the British system, not being eligible for those funds would be slightly better phrased, yet the consequences for consulates to keep track of these people would be almost disastrous. Even though this would be spread over several countries, the fact that they could be required to deal with over 700,000 additional requests a year, is not likely to become a ‘relief’ to the system. Yet I must agree that something must be done. The dangers of cutting the transferred pension, if there was a marriage, could mean that these people might have a claim on humanitarian grounds to receive full Visa and transfers into the UK, which in the end might add up to be a lot more expensive. The only solution could be legislative, yet which of the ‘evils’ to choose from is not really for now. In my mind the options grows to make the pension only transferable if the marriage was longer then a certain period (5 years) or the spouse must have been a UK resident or lived, worked and paid taxes in the UK for no less than 10 years. I am just grasping the 5 years out of thin air, yet this would limit the dangers of UK pension abuse, it would also give a clear message to the valid pensioners that THEY are protected, yet that there are limits on passing over a basic state pension. In regards to those who are valid recipients of the basic state pension and their foreign setbacks there is more information at http://pensionjustice.org/.

Germany.

We should consider the German system, even though it is thought to be strong, secure and to some extent safe. They share the dangers those in the UK currently have. As reported by The Spiegel at http://www.spiegel.de/international/germany/germans-fear-poverty-in-retirement-even-after-life-of-work-a-855352.html, even though their economy is in a strong state, the lost investments, the futures of retirement are almost none existing. In fact, their pensions are a lot worse of then the UK ones. A person there would end up getting a mere 32% of their income. If we consider the Dutch system where 70% does not even foot the bill, the desperation of 32% is a lot less appealing. The question becomes important when we consider the required pension buffers these pension funds need to have. The interesting addition is that a report in 2012 from the labour ministry stated that “the Labour Ministry itself, which indicates about a third of current full-time employees could end up receiving social welfare unless the pension system is changed. Those who have spent 35 years working full time but earn less than 2,500 euros a month would also end up depending on welfare.”

So this is the third country playing politics for non-visible short gain and massive shortages in the long term. This gives serious concern for the bill the Germans adopted that as of January 2013 “for a reduction in the statutory pension contribution rates”. And that helps your citizens…..how?

So this is not just a national issue, this is a European issue on several levels. Unless some strong actions are taken, a large part of Europe will enter living conditions worse than that of several 3^rd world countries, whilst comfortable living would be found for those moving to places like India and Argentina.

Go figure!

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Tagged as ABP, Argentina, D66, Exchequer, George Osborne, George Osborne MP, government, Guardian, Hachchi, IMF, Independent, India, James Cameron, Nederland, Netherlands, Northrop-Grumman, Pensions, PGGM, politics, Raytheon, RBS, Retirement, ROI, Spiegel, Wal-Mart

June 22, 2013 · 16:57

What is an economy?

Yesterday we saw all kinds of movement in the markets. The start of this was a violent sell off in almost direct answer to a message be Ben Bernanke (Source: http://www.guardian.co.uk/business/2013/jun/20/stock-markets-violent-sell-off ). It is a name that ‘shines’ to some extent when we watch the movie ‘Inside Job’. Mr Bernanke has been involved with the Federal Reserve for over a decade and has been the chairman of the Federal Reserve since 2006. Bernanke’s message that started a whole lot was to end QE (Quantitative Easing). Is it wrong? That is the debate that many want to start, yet we are currently in a phase where this approach to bond buying must stop, the question is not just why, it is also current to ask why not sooner, or why would this have such a strong effect on global markets to this effect.

Does this event show that the US is actually getting stronger, or is the rest of Europe’s so much weaker? My initial voice goes to the second part and I will explain why. If we consider the outstanding debts then we must agree that the US remains now and for some time to come on the utter brink of bankruptcy. The total US debts are well over 120 trillion (almost 17 trillion national debt), which is so much outside of the reach of repaying for a long time to come. There is the valid question why the US should support Europe to the extent it is doing at present. Europe is so not getting a handle on their spending and many nations are showing more and more delay to getting it all under control. This is not just fuelling UKIP and the reason that the UK population is more and more intent on leaving the European Community, parties within the US are validly asking, why are we paying for all this? As the US pays the IMF and they keep on pouring money into bottomless pits like Greece, more and more are asking questions as to why this should continue.

It gets even better. If we add the sums of payments by the different parties into getting the economy going (jump starting was the label they used) , we end up with an amount well over the sum of all outstanding mortgages in US and Europe. So if we consider that amount, then consider the option of paying of the mortgage of EVERY household making less than $70K. That amount would be less than the amounts paid to get the economy started. In effect, no mortgage means that people would be spending money everywhere and the US (and also the European Community) would have an economy that is up and running.

So as Ben Bernanke stops QE and as the US is buying back the outstanding bonds the markets will not suffer, but they will reflect the poor position everyone is in.

If we see the past of Rothschild we see: “Amschel Rothschild’s (1773–1855) definition of economy saw this as financing national projects such as wars, goods and infrastructure”. Economy would be defined as a national economy as a classification for the economic activities of the citizens of a state. So our view of economy (you and me in general) sees this in relation to the citizens. As such, the US economy is seen as extremely poor as one out of six lost their house; one in ten had no job. This has now improved to one in 12 (which is really not that good yet), yet the overall considering healthcare (or lack thereof) and other topics mean that the economy is not yet in a state of health. It is only barely starting to be on a road to recovery. The Federal Reserve is considering that dropping QE would enable a stronger wave of recovery. Is that wrong? When we read about the economy in many places, and how much better the economy is doing, we feel we are being lied to, yet, is that true?

that point of view only hangs on what the definition of economy is. In a global market where we look on how corporations are doing in their markets we see a definition devoid of citizens as they only consider the consumers. I think that their definition is wrong, yet it is not incorrect. Many of us seem to look with at the same picture with wrong (different) standards and values.

If the market drops (as it did yesterday) because these sellable items are no longer there, then this is another matter. If a shop loses one item and it drops to such an extent, then we see evidence that are (or have been) living for the most of the ROI of one successful item. Today’s message on the Guardian (source: http://www.guardian.co.uk/global/2013/jun/21/global-markets-stablise-crisis-euro) only gives strength to my views. It shows on how Greece needs another 3 Billion, how can this continue?

The article shows the following quotes that are important for the next part: “EU leaders in Luxembourg are holding a day (and probably night) of talks to create rules that force losses onto large savers when banks fail.”

So like Cyprus, those who saved money for their retirement will see it dwindle? Because in Cyprus those over 100K Euro lost a bundle. After working up to 45 years, their retirement all based on joy of working hard is getting cut because no one has either the guts or the insight to actually deal with the banks and the governments behind these events?

Sweden’s Finance minister Anders Borg emphasised on the dangers of those moves. Also stated in the article by the Guardian was “A draft bill has suggests bank shareholders should suffer first, followed by bondholders and then savers. A new fund could also be set up to oversee new tighter rules.”

Now, I get the shareholders suffering side of this. When you invest in shares, you invest in risk. Yet the one part that needs an overhaul, the banks and their board of directors are still not properly dealt with. So whatever draft will be created on dealing with banks and their path of recovery is still not laid out in full. However, with the promotion of bad bank separation only gives pressure on taxation and tax payers. Who wants to live in such an environment, where what I see as unacceptable levels of risk-taking remaining undealt with. To me it seems that it is more humane to legalise drunk driving as that will only kill of a few people, the fact that banks and risk-taking financial institutions can dump these levels of risk on a population group many times the size over is just absurd.

We see all these ideas and patch jobs, yet the instigators of the harm we witnessed since 2004 keep on getting a pass by ‘the deans of industry’ to walk, talk and deal wherever they want. Especially after Cyprus, where we now see the legal proposals to force losses somewhere, seem to be less vocal on jailing the board of directors of banks when these levels of loss become visible. They apparently did not break any laws. If being drunk in traffic is no defence in court, how can irresponsible short-sightedness in financial institutions be legal? This level of high stakes poker where losses are not punished and winnings go to the individual must stop. In that same regard where the European Community (EC) is adding nation after nation, and when these places start to overspend as banks and politicians that the EC stamp is a free for all for name and fame making is short term and the outstanding debts are all dumped on the tax payers in the end. Perhaps it is no longer about saving failed banks. Perhaps any failing bank should be nationalised. The members of the board are investigated for negligence, whilst their belongings are sold at auction and they are scrapped from the banking and financial industry where they may never work again on any level of authority.
Yes, I agree this is equally an overreaction.

Yet, currently nothing seems to be effectively done. Greece remains a slice of evidence in that regard. It is nice for the Greek population to blame others (especially Germany), yet these levels of non-control into the Greek debts come from Greece. It is their own previous government being so utterly irresponsible, not to mention some of the financial institutions who were residing there. From Bloomberg this quote came: “Let’s begin with the observation that irresponsible borrowers can’t exist without irresponsible lenders“. There is logic in that statement. Can we however also mention that Goldman Sachs had given the assistance to hide the levels of Deficit in Greece? So there were more elements in play. Perhaps, when the Greek banks do go into a toxic bank solution, they should consider adding their entire Greek mortgage portfolio and add that to the bad bank. If you truly want to start an economy, taking away their fear of homelessness will go a long way. Especially when the monthly mortgage could then be spend on items that truly jump start an economy.

When nations and conglomerates are talking about the economy, then you should ask them ‘what is YOUR definition of an economy’. It is the same issue as companies hiding behind revenue. Revenue sounds nice, but the reality is profit and contribution. It is what is left after the costs are removed. You will see that many places are not in a good position and they are not getting better any day soon.

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Tagged as Anders Borg, Ben Bernanke, bloomberg, Cyprus, Federal reserve, Germany, Goldman Sachs, Greece, Guardian, IMF, Rothschild, UK, UKIP, US

June 8, 2013 · 14:01

Privacy and (fake) fears

It has been all over the news. The US government has access to your email and your details. It was quite the show to read this all yesterday and the issues this morning was set in a nothing less than A-level theatre play. A play that would make Robert Ludlum envious I might add.

The issue is that the US Government (NSA in this case) is reading your e-mails. They have been doing that for some time. Basically, it was the Patriot act that opened the (back) doors for them to get access to all this information. As they were dealing with data on a lower level in those days, their task was simple. Find Terrorists! Find those who attack America and deal with them. So readers, here is your fake fear! This is one moment where I agree with President Obama 100%. You cannot have 100% security and 100% privacy. Anyone claiming different is lying to you.

The NSA is not interested in you soliciting erotic acts from a recipient on the other side of the e-mail track. They are not interested in the deals you make offering a quick buck! So those in fear (roughly 99.8932353%) you have nothing to fear but fear itself. The part you are not afraid of is the part that SHOULD scare you. You see all that data that you ‘surrender’ to Facebook, Google, MySpace, and Friendster and so on. All THAT data you gave can be crunched, marketed and sold to companies, corporations and all who would buy them. THAT is an interesting part. That is the fear people need to have when they looked at the dangers that Dutch Equens represent (as reported in the earlier blog: ‘You might soon be sold by the banks!‘).

It is not just that part, it is the possibility that data miners offer as they combine data files in one coherent file that could be a personal ‘danger’ to you.

The NSA issues are not that. They need these abilities to fight the existing and growing threat called ‘the lone wolf terrorist’. These people are guided by sources like ‘Inspire’ magazine, which is created by AQAP (al-Qaeda in the Arabian Peninsula). It is however not that simple. The real lone wolves get their ‘guidance’ remotely from sources most do not know and all that under the eyes of the Intelligence Community. To have a grip on stopping these people, monitoring the internet is essential to keeping us the common people safe. If you think that reading mails was enough, then you are wrong. The further going plans by some to monitor the internet is going to be an essential part. Do not think that this is a fun exercise for those involved. It is pricey, it drains resources and it is never ending. As people move to the cloud the need to monitor upcoming dangers will only increase.

Most readers will have heard of the soldier killed in Woolwich UK. Home Secretary Theresa May was quoted when the mention came that this attack was not from a ‘Lone Wolf’ terrorist. I am not opposing this thought. Yet, it cannot be denied that magazines like Inspire might be central to these events. As such it is no wonder that GCHQ wants to peek over the shoulders of the NSA to see if dangers are hitting their small island (I meant the UK, for those who wonder).

There were additional issues that are growing on several grounds, which give weight to the need of monitoring and in all of these cases people like you and me are not an issue.

For most of you feeling fear of this, your fear is unwarranted. Your fear should be how Microsoft and Sony are very interested on squeezing your details out of you as they are preparing and implementing their Next Gen consoles. That will affect you a lot sooner than the security services ever will. (Blog: ‘Government ministers, be warned!‘)

It looks almost sanctimonious that people are so shouting at these government actions and after that spread their visions with pictures and reveal all they can (and sometimes with way too much info) using Shutterfly/Instagram and Facebook. When their identities are stolen they will whine that it is ALL the fault of the government on how their identity was not safe.

Seems almost laughable doesn’t it.

When we sit on the fence we do see that there is a responsibility to hold parties to account for what they do. In case of the NSA this is Judge Roger Vinson. So, yes, someone does take a look at what is done. When did you last hear a loud scream on what Facebook is doing with your details? How about never? Only when Facebook had certain plans involving Instagram did the inner demon of personal greed scream out stating that the pictures were not to be open for business. Again we see a show of double standards. Judge Roger Vinson, born in the state where the delicious Forest Reserve Bourbon is from (Kentucky). He is the Federal Judge for the state famous for Pina Colada and cool Mojito’s (Florida). He approved the data request that the NSA made. So, yes there is oversight on this. It is however not needed for foreign requests. Is that bad? We give it freely to Facebook, so why are they stopped from sharing that with the government. Are you having that drink yet?

The NSA, GCHQ, DSD, CSE and a few others need these data streams. They would like to prevent people who are eager to get other people blown up. For you and me to stand on ‘principle’ on one side and then we give away our identity to be marketed and spammed to commercial content is just way too weird.

The world is now visibly changing. It is in my mind a little frightful as we are soon to become part of something different. As the finance markets were not contained, and soon no longer can be contained ever, we see a move away from nations and nationalities. We are about to be reduced to a metadata tag. With an added weighting that is soon to be set to ‘useful’ or ‘waste’. This was not instigated by governments and not even by the intelligence community. It was instigated by corporations behind Social media; and as we openly surrendered our details we are now placed in boxes where we can be approached. When we have moved through all the boxes and we are no longer an asset in any box we will be given the ‘waste’ tag. Then what?

These are my words, but funnily enough I was not the first one to mention this. In the Netherlands there was a New-Age entrepreneur called Luc Sala. Even from the late 80’s he evangelized the dangers of the groups “have” and “have not” and how we were allowing ourselves to be placed in these boxes. I wonder if he ever realised that not only was he correct, but that it could even fade national borders? Consider what you heard over the last months, what we will see in the next 13 months. Prime Minister David Cameron was strong about keeping the UK identity safe, to protect it. He was not willing to step out of the EU for this. That step is now being sought after by UKIP and their leader Nigel Farage.

How are these related? This is a valid question that is forming in your mind. And I have been fighting with these thoughts and especially evidence around this. Without evidence all this is nothing more than a bad level of Conspiracy Theory. You see, all these messages we read in the last few days and the next week are in my mind a smokescreen to some level. We are all so shouting about privacy. Yet, who was up in arms when MySpace started to sell their data in 2010. (Source: http://www.pcworld.com/article/191716/myspace_selling_user_data.html).

Did you stop to think about your data on Facebook? Did you think ‘whatever’? So what other ‘evidence’ is there? In that case I point to several blogs I wrote, but more important you should look at more reputable sources like the Guardian and the Wall Street Times, where we faced stories in regards to the pay outs by all towards Greece, Cyprus and other nations to keep the economy ‘alive’. Whilst now we read how the IMF made errors. How a train line sucks up over 7 billion and is presently still not operational in the way it should be. This is a time and place where other nations are now giving aid as budgets are not met in various degrees by nearly all EU nations. So is it such a far stretch to see National borders fade as these issues are ‘resolved’ (read: ‘put on hold’) by group driven options. All this happens whilst we hear ‘voices’ that seem less and less aware of consequences or claim ignorance and error afterwards.

For this train of thought we need to see three parts

In the first part there is last year when this was quoted “The slight uptick is largely due to Europe, which is expected to return to very slow growth of 0.3 percent after the -0.2 percent contraction in 2012” (Source: http://www.conference-board.org/data/globaloutlook.cfm). Yet the guardian in two articles where the 2012 version stated in: http://www.guardian.co.uk/world/2012/nov/07/eurozone-growth-next-year-ec the following “with the 17-nation Eurozone eking out expansion of just 0.1% in 2013”. However 6 months later we read in: http://www.guardian.co.uk/business/2013/jun/06/ecb-eurozone-recession-deepen, where it states “European Central Bank says the Eurozone economy will shrink by 0.6% in 2013 as it considers unconventional policies to kick-start growth”. Numbers change and get adjusted, but the game can only be one of profit by those who have the right numbers (read the better data source). This game is played and replayed, again and again. This has bearing on all the privacy issue in the form of the collected data these predictors require. If the power of voicing the future is based upon data then your privacy is a thorn in the eyes of commerce as they do react to data, but whose data and created how? So as companies are making less, as economic values go down, other paths to revenue must be found and this does have bearing on your privacy, as you are data. This means you are commercial currency, not government currency as such.

This is the other side of data. Many corporations decided to ‘store’ their backup data in some High-Tech solution off-site facility, not unlike the hosting solution Peer1. Peer1 is a Canadian corporation with hosting locations in for example San Antonio (when they acquired ServerBeach). That is corporate data and as such there is an issue in this place. There had been soft voices of concern in those early days on who gets to access these data servers. American linked companies implementing off-site storage options in America from all over their European locations. Was local management realising that they gave their customer base and (financial) details to US insight?

There is NO; I say again NO evidence that these data files were ever ‘violated’ for commercial gain. If we consider the dangers of greed and in the light of what we read earlier, can we be certain that this did not happen, or even whether this is not likely to happen in the near future?

It had been clear that parties like the NSA had access. There is however a side we do need to take proper heed of. If they have access, then who else has access? From corporate documents from these hosts, corporations would have likely read how impossible access was, and how they never give out access. If that part was shown to be ‘violated’, then what other dangers lurk that these companies did not expect? (In this concept violated does not mean a legal violation as the data storage company would have been adhering to their government rules, yet the fact that corporations might not know this is a question for many and as such legal questions should be asked).

So think again, as social media is in their right to sell the data they have in some shape and that it is the price you paid for all these ‘free’ abilities that these places give you. Most do not worry, but then worry about information the government has/looks in to.

For private individuals all this is simply a fake fear.

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Tagged as AQAP, CSE, current-events, Cyprus, David Cameron, DSD, Equens, Facebook, GCHQ, google, Greece, IMF, Instagram, Judge Roger Vinson, Luc Sala, Microsoft, MySpace, Nigel Farage, NSA, Peer1, President Obama, San-Antonio, ServerBeach, Sony, Theresa May, Woolwich

June 6, 2013 · 20:35

The freedom to misdirect?

We see all kinds of information and misdirection, almost at any given day. If one good thing is mentioned, another bad thing is swallowed into silence. So when I saw the message on Sky News that “Latvia to join EU”, I had a look.

So Latvia is now to become the 18th Euro state. That part is however you take it. The average Brit will see this as a fearful motion for another few hundred thousand to seek out the London Limelight on a permanent basis. Others might have their own thoughts and reservations. Not all of them will be negative, as Latvia has a decent record in the shipping industry.

Three parts got my eye, and they are at least worrying, infuriating might be a slightly better word. The first quote was from the European Commission that ‘Latvia is ready to adopt the Euro in 2014‘. An interesting quote, especially as well over 60% of Latvia is fiercely against the Euro. Let us be fair, why adopt a sinking ship. Would you buy the Titanic if you found it parked against an iceberg? At worst it is a 3800 meter walk back to the boat (straight down).

It is the quote from the Latvian Prime Minister that is the second quote of concern: “Prime Minister Valdis Dombrovskis welcomed the news, saying in Riga that ‘joining the Euro will benefit Latvia’s economy by removing currency conversion costs and raising Latvia’s credit rating’.”

Really? You want to adapt even more credit option whilst you are already in a position to drown in current debts? How clueless does that seem? It will take five years to get past the weakness gained by Cyprus, and at least 15 years to get a grip on the financial vise that Greece is giving the rest of the EU. Is this a ploy to remove the option for the UK to remove itself from the EU? If that is so, then the current administration is not just heading towards failure at the next election, at that point we look at a total overwhelming victory by UKIP next election. I have nothing against UKIP, but I do not think that to be a particularly good idea. Mostly, as a large part of UKIP would be seated at senior position whilst having little more than junior levels of experience. (I just call them how I personally see them). They would be elected in charge, whilst becoming a real danger to create an unresolvable mess for two administrations to come (again a personal view of mine). I will here and now state quite clearly that this is an assumption on MY side. I will also happily add information proving me wrong when and if the time comes.

Back to Latvia!

The second quote is nothing compared to the third one. “We think Euro membership will increase investment activity. We need only to look at the Estonian example where investment in the non-financial sector doubled.” (Source: http://www.skynews.com.au/world/article.aspx?id=877664 ).

This I see as a massive misdirection. The only reason that this looks this way is because Skype was an Estonian invention (a brilliant one). It comes from the people who initially came up with Kazaa. So yes, even though their mention might be correct, the fact that one product is the major reason behind the non-financial investment is thrown into the deep left field of unmentioned factors. Of course Tallinn is also famous for the Beer ferries to Stockholm. It is indeed a pretty city to see, uncannily picturesque and of course it has some visibility for the hourly lady rental services (some are extremely good looking and it is perfectly legal in Estonia). So which of these options give that reason for investments? Also interesting is that this newscast from Sky News did not come with the identity of a writer. You see, here is where we take a look at a few things. Especially when we consider the mention by Leveson and in regards to Ethics. I think that this article is missing a lot of facts and some are too far out of context. However, this is again my personal view on the matter at hand.

Danger 1.
The EU economy is as fragile as it gets. I will not debate here whether it is a good idea to add Latvia to the list. It is important to consider the Latvian addition to the Euro. Especially, when we read statements from their PM is strong at mentioning of the option of upping their credit rating. That part will hit back to the Euro sooner rather than later and as such the other Euro nations as well. It only makes a stronger case for the UK to get out of the EU (I am not convinced it is the right option at present), and get out fast. Even if they do not, additional reasoning for better and more complete regulations is required for all kinds of banks and financial institutions. That would be needed BEFORE nations get added to the Euro as it allows for a gap for re-managing all kinds of financial packages, that would require those government to need additional IMF support. We all know where that leads the rest.

Danger 2.
Looking at Estonia? Why, because these nations are neighbours? Tallinn has a direct ferry connection with Helsinki and a ferry connection with Stockholm (amongst others). Non-financial investments are nice, but how many and who? Skype (invented in Estonia) got a strong influx by Microsoft and twice the amount of what? Another nation getting a few taxable Billions for Skype does not put Latvia in the clear (also much of that amount went to a small group of private developers) as Microsoft bought it. There is every chance that Skype will be phased out of Estonia, then what? This does not reflect badly on Estonia as it has several economic options. Latvia does not have those in equal measure. It has options, but which ones exactly? It seems that the initial article does not bear that out clearly at all.

Another quote to mention is “Latvia is a small, open economy” the Latvian Prime Minister said. Anyone remember Iceland 2004? Similar words were spoken then. That did not pan out to well for that island, as well as many of their inhabitants (and a massive amount of places after that). This is exactly why those banking reforms I pleaded for in many situations are needed and needed fast. There is NO indications that this is about to happen here, but it is proven that greed is eternal; people in power have been willing to sell away what they can and remain unaccountable after that. It is clear that the open market industry cannot be trusted the way it is. It is even proven that too many in charge are passing the buck and letting those who are innocent pay for the hardships created by the greedy (Greece and Cyprus are clear evidence of that).

These elements give additional strengths to the UKIP mission to get out of the EU, which also gives inevitable strength to the German group under Bernd Lucke, who will get the power for the last push out of the Euro. With these two elements the UK and Germany, the EU will have more than two little problems floating their way. Should this come to pass then the German chancellor Merkel will end up getting a new job and as things go, there might be a reasonable ‘danger’ for an Early UK election. At that point it will be the EU segregation of coin or nation through possible future Chancellor Lucke of Germany and Prime Minister Farage of UK that will change the EU and possibly even sink it completely. The simple reasoning is that the Euro cannot survive without both. It might survive the departure of one, but no way will it survive both leaving their support to the coin.

So, is this just speaking doom?

I will always agree that these are thoughts (non-positive ones) from me and my way of thinking. Experts will speak out on how wrong I am. Those experts also predicted that the economy was already on the rise in 2013. This has been proven wrong in most EU nations. Where their predictions were right, they were between ½% and 1½% too optimistic. For the EU it is not just about the economy, it is about getting a handle on the current massive debts. Debts so massive that it is likely to take in some cases up to three generations to get back on the horse. To add nations to a coin is one thing, but when we read about raised credit ratings it comes down to pushing many further down a debt driven society. That in a society where on average in the EU nation’s 1 out of 8 do not have a job, in some cases it is 1 out of 4. That is no place to be in a debt driven society. That is not a social structure, that is in my humble opinion seen as the population gnawing on the remaining scraps called ‘their nation’ before those nations become some industrialised economic ownership, where you either work at THEIR leisure, or you perish.

It would be fair of you the reader to dismiss this thought. Before you do, consider that Greece had been holding a fire sale of what is still in their name (for now). This act is to reduce a debt of millions, out of a total debt which surpasses several hundreds of billion. No more than a drop of water on a hot plate. That happened last year (Source: http://www.guardian.co.uk/world/2012/sep/19/debt-ridden-greece-firesale)

So what happens when a nation has nothing left? Is my reasoning that outlandish? Those sales might get them somewhere near 2 billion, whilst 15 billion is due in 2015. Even if ALL savings from the entire Greek population is nationalised (confiscated). It might just be enough to get the 15 billion. So what to do about the other 300 billion not paid? I am not going after Greece; this is not about the Greek debt. This is about OTHER new members not adding to this, and for that certain precautions are needed. Certain regulations for banks and financial institutions need to be in place. Even if the IMF now admits that the damage through Austerity was ‘miscalculated’. (Source: http://www.guardian.co.uk/business/2013/jun/05/imf-underestimated-damage-austerity-would-do-to-greece) In all honesty, I saw that one coming a mile away. It has been known at least since the early 1600’s that a plucked chicken has little feathers left. (And boy did that chook get itself plucked!)

As messages of rephrasing ‘the message‘, it has been clear that there is a real danger that the Euro is way too close to a non-successful triple bypass.

If a new member dumps their domino on the EU and Greece falls, which will topple Cyprus and then the effect will topple France, Italy, which in turn will topple the Dutch and remaining domino stones (read weak economic countries). What will be left? I will keep one eye on the Guardian the next few weeks as people like Larry Elliott and Phillip Inman, who are excellent financial correspondents, add their views to the internet.

If there is any chance of surviving, then it is only possible if credit limits are frozen and debts are lowered. So far no one is on top of that approach and the EU will change as team Lucke/Ferage might remove the little options the EU had left. Are they wrong? I am not sure, but I do not blame these two for getting their nations out of a collision whilst the others keep on failing to successfully manage their budgets.

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Tagged as Bernd Lucke, Cyprus, Estonia, Eu, Farage, Finland, Germany, Greece, Guardian, Helsinki, IMF, Larry Elliott, Latvia, Merkel, Nigel Farage, Phillip Inman, Sky News, Skype, Tallinn, UKIP, Valdis Dombrovskis

May 15, 2013 · 20:52

A noun of non-profit

The EU is getting a few more jabs using jibs, as it sails through the rough weathers of recession. Germany is up, France is down and the UK is about to remove their ship. If the Dutch economy does go up, it will be a plain victory through Nutricia as it shipped several containers of baby milk powder to China. As each container contains 20.000 boxes of Nutrilon (Source: http://www.nos.nl) this could be a first step to stem the tide of some safety for the Chinese baby nutrition. Yes, the article could not leave out the emotional side of crying mothers at the cash register. There is in opposition to the statement in the article little or no guarantee that supermarket hoggers will stop trying to ship baby food to China for now, as it is fast money for those involved and there are additional groups of tourists and foreign students trying to lend a helping hand to their families. This is the one consumer strongly aiding babies and the Dutch economy.

However, they are not there yet. The EU economy is no milk run as it is presently presented. It is not just the economy. If you think that just the local (read national) budgets are a problem, no it gets worse. The EU Budget itself is also coming up short. So that clearly reads that we have nations with a deficit, and now that the group that they belong, which also has a budget is ALSO in deficit. In an interview president of the Euro group Jeroen Dijsselbloem stated on the NOS journal in the Netherlands that the Dutch budget will get hit for up to a little over 500 million Euro (which was stated to be a worst case scenario). In addition the IMF stated the worrying condition of the Netherlands. The Dutch NOS reported the prediction that even though the Dutch economy will shrink another 0.5%, they do predict a growth of 1.1% next year. I personally join the group “Oh ye of little faith!” on that one and if they are able to get the economy up to 0.2% positive in 2014 than they would have achieved quite the small miracle.

The shortage, extra payments and several other ‘bad news’ moments we are likely to hear during 2013 would effectively prevent that 1.1% growth. We will know the actual number next year, but I am putting it out, right here, right now! I must admit that the idea of calling Christine Lagarde next year telling her “told you so!” seems definitely more appealing than a 2 week free for all in the Playboy Mansion (but then, as many have stated before, I was always wired slightly weird).

So, the Dutch government, who was unable to keep their budgets (like several other nations), and after getting a 1 year extension to get their budgets in order, this happens. The Netherlands is however not the only one, and this is not about having a go at the Dutch.

The French are also on the recession list. Or better stated, the French situation might soon become dicey to say the least. Even though their economy is not deep into the dip of bad economy, 0.2% is still an issue, especially as this is a continuing line of sub zero numbers goes on. If we look at the IMF Document called ‘World Economic Outlook‘, April 2013 (http://www.imf.org/external/pubs/ft/weo/2013/01/pdf/text.pdf) shows that these numbers who seem to be on par, are not that accurate. If we take the word from Dutch (NOS) and Belgium (VRT) sources we see that the Belgium shortage is now set past the 3% point, which is a big no-no as the EU had set an upper margin of 2.8%. So the account balance which was set for Belgium in the time range from 2012 to 2014 was supposed to be -0.5, -0.1 to 0.2 is now -0.5, -0.3 and ??? So we need to take into account that these were predictions, yet, if the numbers are off either by registration or by prediction (0.2% national difference is a lot of money), then we have another issue. What else is missed?

This is exactly why governments should not be allowed to skate to the edge of the ice (read maximum budget shortage) to that extent. All these predictors and good weather ‘reporters’ that the ice is good and the ice looks fine and the ice is thick enough feels to me that it would be part of the flim-flam confusion act. The issue is that even though these statements might all be correct, people forget that all involved parties neglected to check the quality of the ice below the surface. That part is now breaking off, in part due to many others jumping up and down on the ice for an extended period of time to the point that the skater now ends up taking a dive in the water and is starting to drown. There lies the problem! Should you doubt this part, than reflect on these events in regards to the Greece eternal debt.

Consider that the big nations are all in debt, even Germany. Yet Germany took a hard handle on their debts and fought it to lessen the power debt had. The issues that the other large players are stuck in a wrestling embrace with recessions and risk taking banks should not be lost on us. In addition several of them like France, Italy, Spain, Portugal, The Netherlands, Belgium and Slovenia are in a less good shape at present. When we then add Greece and Cyprus, we end up in a garden party with large portions of recession and deficits to go around for all players of the economy game.

I am not telling anything I had not blogged before, yet the issue remains and the game seems to be changing at present. If the UK, by pressure of its population is moved to walk away from the EU then we have a new situation. As long as the UK was part of the EU, they had a stable anchor in play.

Consider a large (really large) barge, that barge was kept in place by 4 strong anchors. UK, France, Germany and Italy. Yes, we to do know that most are in shabby state, yet, overall these nations are large, stable and democratic (that matters). They keep the Barge EU afloat in a stable place on the whimsy stormy sea called economy. If the UK walks away, then we have a new situation. None of the other nations have the size and strength of the anchor required and the EU now becomes a less stable place where the barge shifts. This will have consequences, but at present, the actual damage cannot be easily foreseen. Any claim that there is no consequence and they predict no issues, remember this moment! The Barge (as is), will lose stability and the smaller members thinking they are on a big boat are now thrown left to right then left again as the storm rages on. The smaller nations will get damaged and in addition, the weaker ones (Cyprus and Greece) could still collapse, especially if the UK takes a non EU gander.

There is however an additional look. Some could take at a paper by Edda Zoli called “Italian Sovereign Spreads: Their Determinants and Pass-through to Bank Funding Costs and Lending Conditions“. It is an impressive piece of work. and can be found at: “http://www.imf.org/external/pubs/ft/wp/2013/wp1384.pdf“.

The abstract states: “Volatility in Italian sovereign spreads has increased since mid-2011. This paper finds that news on the Euro area debt crisis and country specific events were important drivers of sovereign spreads. Movements in sovereign spreads affect CDS spreads and bond yields of Italian banks, and are transmitted rapidly to firm lending rates.”

Oops! That is interesting, as this is exactly the fear that drives some of us, especially when we saw Cyprus and recently the worries that the Co-Op Banking group is giving us and not to mention to unresolved issues on Barclays, Royal Bank of Scotland, SNS Reaal (now nationalised) as well as possible future issues with Banca D’Italia (The Bank of Italy), who currently seems firm and strong, yet if Italy continues to fend of the Austerity measures we will see an increased wave of issues that could have far fetching and long term consequences.

In regards to the UK, when looking at Barclays I found this with the New York Times in March 2013 By Julia Werdigier. “Despite the bank’s weak profit and legal woes, top executives at Barclays have been richly rewarded in the years since the financial crisis.” In addition it states “The payouts come at a difficult time for Barclays. While the stock was awarded before 2012, the compensation may still give additional fodder for critics, who have complained about the industry’s outsize pay packages.” That is not all! On May 7th Reuters reported that the Citigroup has sued Barclays PLC for over 140 million dollars for the 2008 Lehman Brothers party, a party from which some banks are still trying to recover from almost 5 years later. In addition there is the LIBOR rate ‘scheme’, which costed Barclays in the form of a fine exceeding a quarter of a billion pounds. Then we get Citigroup now claiming, wanting desiring and demanding over 140 million. Oh Joy! Yes the Barclay executives (around 430) ended up with a total bonus of over 650 million. So how much money did Barclays make? (Read on to learn)

This example shows exactly my fear. If we see the paper by Adda Zoli, we see part of the issue. If the national debt grows, the risk increases. The UK has a debt in excess of 1 trillion pounds. That is a lot! Banks seem to have less and less, and as such you and me (you know your average dopey lender) has less and less chance of any future in these dark days. Now, to be clear, Barclays was NOT bailed out by the government. They took the high road and decided to cut down on staff by almost 7000 (over a period exceeding one year). Like that is not additional pressure on the government? Yet, all these bonuses, which might have allowed them to hold all their staff for another 4 years for the price of 1 year of executive bonus.

In addition, Zoli’s paper is specific to Italy, yet that same approach might also be used to look at the danger levels in several EU countries. Take these facts and now extrapolate back to the big barge called EU. We can speculate that as people on the boat are thrown overboard. It changes the weight of the vessel as it loses, not gain stability. In addition, some get such high rewards, rewards that are kept to them, not used to maintain the barge! These factors will impede that barge even more and those additional factors are overseen and given to us in the form of ‘bad news’ moments that just pop up. Remember the extra EU payment at the beginning? So a barge, now less stable and a drowning population, all in the Economic Ocean, a restless pond, that is East of the Atlantic and West of the Pacific.

It is important to realise that these Barclays executives have not broken any laws. They were ‘rewarded’, yet Barclays reported a Nett loss of 1 billion for 2012. Seems utterly wrong doesn’t it?

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Tagged as Adda Zoli, Banca D'Italia, Bank of Italy, Christine Lagarde, Citigroup, co-op Banking group, economy, IMF, Jeroen Dijsselbloem, Julia Werdigier, NOS, Nutricia, NY Times, VRT

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