Tag Archives: reuters

December 4, 2013 · 09:54

Debt and …?

This is a story I find hard to write. Is it a story? That will always depend on your point of view. You see, there is a danger to blindly sight with one person, one group or one vision. We all have it. We think of a certain path being the only one and as such treading of that beaten path is always a dangerous one because we as people do not walk off the path. Some know the horrors that this beaten path protects us from.

This is the story of Israel and an ally, who due to impending bankruptcy had to make a leap of faith. This is how I see the Iran issue. Let me be clear. I have nothing against Iranians. I remain in the belief that Ahmadinejad was an utter idiot and as such no trust could go to Iran. The image of its current President Hassan Rouhani is entirely different, yet, I still have an issue with the dangers to Israel. No matter how good Rouhani is. He will be up for re-election and after two terms, what will Iran get? Will it get another Ahmadinejad? Until the Muslim nations all acknowledges the existence of the state of Israel, giving them nuclear abilities is just too dangerous in many cases. In my mind Ahmadinejad wanted immortality, to be remembered in prayer for all eternity. To get that, he only needed to destroy Israel, something that could be achieved with only one successful nuclear missile strikes. Would Ahmadinejad do this, if he had nuclear abilities during his reign? In a heartbeat! Now, I am fully aware that most Muslims are not like this. But it only takes one elected one to take that step. This is a very real danger! So, I personally do not expect that Hassan Rouhani is like that at all (it is just the image I have of that man). But if we consider that to be elected in Iran, that three of several elements are: administrative capacity and resourcefulness, a good past record, trustworthiness and piety. If Ahmadinejad passed these, then who else will be able to pass these checkpoints?

So what is this about debt?

Well, the US has too much of it and it needs billions each day to stay afloat because the US cannot get a grip on its spending. With an oil filled Iran, the US will be willing to do business and it desperately needs money! If you doubt that reasoning, then consider the Cuban issue. Why after decades is there still so much pressure, both economically and technologically? Consider this pdf from the US military: “Policy Options for a Cuban Spring” (at http://usacac.army.mil/CAC2/MilitaryReview/Archives/English/MilitaryReview_20120630_art014.pdf)

I wonder if this stand-off approach would be there if there were large oil fields under Cuba. A Cuban response, even though I find it slightly too ‘propagandistic’ (is that a real word?) is at http://www.cuba.cu/gobierno/alarcon-tvi.html, where it states as they quoted US senator Warner “The current policy treats Cuba more cruelly than Iraq and North Korea, where US embargoes are less restrictive.” I cannot vouch whether that was said, whether that person quoted it, but there seems to be a ring of truth in the sentence. It seems that Iran still supports Hamas, a known terrorist organisation, but as this endangers Israel and not the United States, the US will deal with Iran. So, is this an act of betrayal against its long term ally Israel? That depends on several matters, but that is how many would see it. That view is endorsed even more if we consider that Cuba is still under the heaviest of sanctions.

So is the US being sanctimonious? Considering the pressures that remain it does look that way. Whatever you think of the Cuban regime that is in place. It has been there for 50 years. So, the approach of half a century that did not work has to change. There are additional questions. This quote gives one view “Human rights advocacy groups have criticized Castro’s administration for committing human rights abuses. Human Rights Watch stated that his government constructed a ‘repressive machinery’ which deprived Cubans of their ‘basic rights’ “. Another view could be that the US had strangled Cuban Economy for half a century and as such certain developments could never take place. It is possible that my view is the wrong one, yet as we see how the pressure on Iran is now faltering, where they endured economic sanctions less than half the time Cuba had, additional questions must be asked. Israel has been placed in a dangerous situation and I wonder what promises John Kerry will make on his visit when serious questions will be asked of him. I wonder if the Cuban situation will enter the discussion at some point.

As for my added label of ‘sanctimonious’?

Consider that the US Tax evasion law (FATCA) which was initially supposed to start in January 2013, has now been delayed until July 2014. There is an interesting read (at http://www.deloitte.com/assets/dcom-unitedstates/local%20assets/documents/tax/us_tax_fatca_faqs_061711.pdf). So as Reuters reported another delay (at http://www.reuters.com/article/2013/10/29/usa-tax-fatca-idUSL1N0IJ1N020131029) the question becomes, who does the US government serve? More and more evidence comes to light that it is not all US citizens, but mostly the Rich and corporate ones. So when things get out of hand, consider the reason why things got out of hand and not just the ‘who’ dropped the bomb (if that happens). Those who allowed for the dangers will have plenty of blood on their hands and history must record and openly name and shame those involved too.

It could be the only true historical manifest to stop greed (nothing else seems to work).

There is a third side to this, if America would be willing to allow for indirect terrorist support (Iran supporting Hamas) through economic windfall, then are we not obliged to pronounce the US bankrupt? If freedom is only gotten through ledgers and by approval of the banks and the wealthy, then how free are US citizen really?

 

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October 4, 2013 · 00:26

Glowing in the Dark

OK, for now enough of economies who are on their last legs. It is time to take a look at something completely different. Whenever I see any news on nuclear reactors, my first thought is on an old sketch by Benny Hill. “Would you like to see your children to glow in the dark? Feed them Windscale porridge!” I thought it was hilarious. Of course, as I was still growing up in the Netherlands, I did understand the nuclear reactor part, but what I did not know was that the joke was linked to the “Windscale accident, accident in 1957 at the Windscale nuclear reactor facility and plutonium-production plant in the county of Cumberland (now part of Cumbria), in north-western England, that was the United Kingdom’s most serious nuclear power accident.” (Source: Britannica).

But issues at present are not that funny. Less than 24 hours ago another leak was spotted at TEPCO’s famous new place called Fukushima. (At http://www.reuters.com/article/2013/10/03/japan-fukushima-water-idUSL4N0HT0BW20131003) Quoting Reuters, we get the following facts: “Leak probably flowed into Pacific after worker misjudged tank capacity” and “Tepco’s efforts to improve water handling not sufficient, govt says“. Really? The word ‘Misjudge‘ is used?

In addition there are these two quotes. “Tepco has been relying on hastily built tanks to hold excess cooling water flushed over damaged reactors at the Fukushima Daiichi site” and “Tepco said the water that leaked contained 200,000 becquerels per litre of beta-emitting radioactive isotopes, including strontium 90. The legal limit for strontium 90 is 30 becquerels per litre.”

Fortunately, I am a technologist and not an economist. Yet, when we judge the news article Reuters comes with, which was DEVOID of the name of whoever wrote it, then I have two issues.

1. Was TEPCO actually this stupid? (Until later in the article I was not completely convinced that this was the case).

2. The Reuters article contains ‘misjudge’, ‘hastily build tanks’ and ‘strontium-90’, I want to see a clear identity on the source. The partially implied information that the ocean is receiving 6666 times the acceptable dose of radiation is leaving me with too many questions. The article ‘implies’ I said, because the wording leaves in the middle what the exact radiation source is. In addition, the fact that they are relying on hastily build tanks 2.5 years after the event is not just unacceptable, in my eyes the non-acting by the Japanese government needs to be questioned on EVERY news station on this planet. Just in case Tim Burton was right, we need to transmit that newscast to Mars too! (Before it attacks)

I know it is ‘only’ a day old and covering bickering US politicians seems a lot more sexy then radiation leaks, the fact that both ‘event‘ and ‘news covering‘ is a little out of whack, the leak should get the spotlight it deserves.

Why is this an issue? Well, in 1945 the Japanese population was set at 71,000,000. After the bombs there, Japan had massive issues, especially food shortages (not sure how much was due to radiation). Now consider that Japan consists of 121 million people. Even though Fukushima in one place, it dumped radiation into the ocean and it seems there is nowhere near the needed levels of control in play to prevent long term damage to fishing waters.

TEPCO does not seem to have its game face on and Reuters implies that it will not change for the better any day soon. As soon as the government walks in, the TEPCO execs will clamp up and the Japanese people will not receive the answers they are entitled to. The implication from Reuters that hastily build tanks were never improved upon within 3 years, so this implies that the problems the Japanese face are long term and might include long term health issues.

What is so upsetting?

In my mind I see a few. First the fact that places like TEPCO did not learn anything from Tsernobyl. Even though nature was the reason for what happened in Fukushima and the damage to any solution due to the tsunami is not their fault, but when I see that people ‘misjudge’, that hastily build tanks were not replaced within mere weeks by a less hastily solution gives me the shivers. If we look at TEPCO’s 1st Qtr. earnings for 2013 (at http://www.tepco.co.jp/en/corpinfo/ir/tool/presen/pdf/130731_1-e.pdf)

We see a consolidated ‘Net income’ of almost 4.5 billion dollar, so the ‘hastily build’ tanks are no way an acceptable excuse.

Now, we must realise that the Reuters source is not known and no way to check who wrote this, but either it was written by someone now in his/her last week of journalism EVER! Or, the TEPCO board of directors need to be openly arrested and get immediately placed in front of the honourable Hironobu Takesaki, Chief justice of the Supreme Court of Japan, with every Japanese TV news camera in that same court. I would like to see the faces as they answer in regards to those hastily build tanks, misjudgement and still report a 4.5 billion dollar net income.

I could accept issues when the net income was ‘ZERO’. I would understand that they are facing a disaster due to natural causes. I would understand that they got financial support from the government in such events. I do not understand the combination of 4.5 billion and utterly lacking acts!

Perhaps it is just me!

The engineer in me understands the nightmare that these engineers face today. The impossible conditions, the lacking resources and no clear solution. But these lack of results in 2+ years draw all kinds of questions, many of them not very positive.

This is not about Japanese worker ethics; this is not about the size of the challenge. It is that the combination and the time passed give nowhere near the lack of results. I do not envy them and no matter what will be done, it will be an expensive and time consuming endeavour. Whether they look at a Dutch water dike system to insulate the area, place 2-3 tankers next to these hastily build tanks to collect water, whether they freeze it all solid with liquid nitrogen. Something else needs to be done.

Last week Bloomberg had a much better article. (At http://www.bloomberg.com/news/2013-08-25/russia-offers-to-help-clean-up-fukushima-as-tepco-calls-for-help.html)

“‘It was clear for a long time that TEPCO was not adequately coping with the situation’, Asmolov said. ‘It looks like TEPCO management were the last to realize this,’ he said. ‘Japan has the technologies to do this, but they lacked a system to deal with this kind of situation’.”

It seems that the implied blame towards TEPCO sounds more justified then I thought, and in this case Vladimir Asmolov is the man who runs the state owned Russian Nuclear Utility. So the man would know his non-glow in the dark solutions.

What the article shows is the one part that many might not know “Russia repeated an offer first made two years ago to help Japan clean up its accident-ravaged Fukushima nuclear station, welcoming Tokyo Electric Power Co.’s decision to seek outside help. ” So Russia was there to help, but (and I am assuming here), TEPCO had a pride issue for 2 years? I get that they will weigh it all for the first few days, even the first month, but the first 29 months? I reckon it is time to ask questions.

No matter how I feel, I do wonder how members of the board of TEPCO can get home safely every night from  Chiyoda, Tokyo, Japan to wherever they live, having to get past 9 million Tokyo residents and many of them with likely not that great an appreciation of these board members as they have to live with the consequences of that glow in the dark mess.

Perhaps we will see a new Sketch in Japan soon:
あなたは暗闇の中で輝きたいのですか？福島フィッシュ
Do you want to glow in the dark? Fukushima Fish. (Via Google Translate)

 

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September 29, 2013 · 21:06

More than just Syria

The news has started to illustrate the issue I expected. I stated in my blog on September 20th “What we know about AQ is that they are about them and their needs“. That part is now coming to fruition. As ISIL they are now the third party in a civil war between two parties. My initial personal view is for President Assad and his opposition to come to an agreement and unite in a hunt for the members of ISIL/AQ, paving the way to some form of a seize fire.

Not doing so, will escalate this civil war in a plain hunt for lives who did not agree with the sharia convictions of ISIL/AQ. As Sky News now broadcasts how the victims of Syrian events are smuggled into Israeli Military Hospital where these victims are receiving lifesaving first aid and operations. A Samaritan act that will never be voiced by the victims they saved in fear of deadly reprisals. (At: http://news.sky.com/story/1147748/wounded-syrians-left-bleeding-with-the-enemy).

Isn’t it interesting that these so called Muslim ‘warriors’ are there just to ‘support’ one very specific version of Muslim faith. More important, the acts give weight to actually start open military intervention. In response to the article by the BBC (at http://www.bbc.co.uk/news/world-middle-east-23925037), which stand point I do support. We are now faced with their tactical blunder which we should exploit. This does however require the support of President Assad. My initial assessment is gaining weight, which was more on the side of the Russian stance that Assad was not the one firing the chemical weapons. As I had stated in my earlier blog, it would make sense that an AQ attack to draw America and Israel into this conflict was the fuse to a powder keg. As the initial attack did not happen, ISIL is now actively attacking ‘their’ enemies. When we consider the September 19th report by Reuters (at http://www.reuters.com/article/2013_/09/19/us-syria-crisis-turkey-idUSBRE98I0C120130919)

This ‘game’ had been about de-stabilisation from the very start. As stated by me “AQ only cares for AQ” and as such, any diplomatic option towards AQ should be classified as null and void.

Yet this will take orchestration of some size, yet as AQ made the mistake of getting too close to the Turkish border, the issues could change if any attack on Turkey commences. At that point the NATO members have no option but to come to the aid of Turkey, also, the Turkish President Abdullah Gul would gain massive support and popularity should it get forced into a direct conflict with AQ forces, now trying to overrun Syrian areas. These events also change the game in other ways. AQ has zero support from Russia (in light of their Chechnyan ‘friends’) and at this point the turning table exists for Iran. If they decide not to get involved, which would be fair enough, the end result remains the same; AQ would have to go it alone, with their former temporary friends as well as the Government forces of President Assad at their throats. The bottle neck comes as NATO/Turkey slam down the box in the final side. AQ will cause massive amounts of damage. That is unlikely to be prevented. This is also where I do not completely support the Guardian article by Sarah Margon (at http://www.theguardian.com/commentisfree/2013/sep/20/sarin-gas-syria-icc). The quote “Opposition forces have also committed serious abuses, increasingly resorting to executions and indiscriminate shelling of government-held areas.” might not be incorrect, but it might be incomplete. If AQ is part of the opposition, then we must see whether this was an actual act by what is called the ‘moderate’ opposition forces, or are these events the work of AQ and AQ minded opposition forces. So Syria is now clearly less clear cut. It is a civil war with three parties, each with their own agenda.

As such the question grows, why should we get involved? No matter how the Syrian civil war goes. If AQ is not dealt with, they will flame out wreaking havoc on both Jordan and Israel. In addition, AQ is pushing forward with pressures against Egyptian forces as well as attacks on Israel. Reuters reported yesterday the Sinai attack (at http://www.reuters.com/article/2013/09/28/us-egypt-sinai-idUSBRE98R09220130928). It will take massive amounts of discipline for Israel to keep their cool for now. Should the IDF face these attacks on the north side, as well as attacks on the Sinai Eilat side, then we, successful or not, will have to face the consequences. There are also financial repercussions. In a BBC newscast, from last November “This still means that as of Saturday night Israel had spent roughly $29m on interceptor missiles in three days.” The IDF has an Iron Dome presence, yet how much financial pressure is it under at present?

There is a linked view, which comes from the Heritage foundation, an American Think-tank. The article was by Baker Spring and Michaela Dodge. Baker is a Research Fellow in National Security Policy and Michaela is a Research Assistant for Missile Defense and Foreign Policy, so they do know their missiles. Their quote “Each Iron Dome Tamir interceptor costs more than $100,000 to produce. This is many times the cost of a Grad, Qassam, Katyusha-style rockets. But there is more to assessing the cost effectiveness of a defensive system such as Iron Dome than a simple calculation of the cost of an additional defensive interceptor compared to the cost of an additional offensive rockets.” is on target. Their assessment makes the issues not as clear cut, but what is clear is no matter which approach AQ is taking, Israel will feel tremendous pressures as these events drag on and they are not the only one.

Jordan is facing massive pressures through the Syrian refugees. The Guardian reported some of this (at http://www.theguardian.com/news/datablog/2013/jul/25/syrian-refugee-crisis-in-numbers-updated). This article is focussed on the numbers. It does mention the fact that Syria is short on roughly $2B to get anything done. What is less shown is that Jordan was never known for an abundance of resources, especially water. With an additional 3 million mouths to fill those resources will dwindle down to nil quite quickly. Consider that it will need an additional 2 million gallons of water a day, an amount that will run Jordan dry really fast. You can see how Jordan’s goose gets dry cooked. If these numbers mean little, then consider that with a water scarcity in place, their population due to refugees has grown by 50%, all because of the Syrian civil war. A possible solution would be if we could find some solution in Aqaba. It is not a quick solution, yet the option of running a pipeline from the Sinai through Eilat to Aqaba, giving all parties relief might be an option. As that part of the Sinai is in MFO buffer zone C, and if both Egypt and Israel would agree on it, then there would be an accessible place that is in ‘neutral’ space for now, allowing relief to both Israel and Jordan as they are trying to deal with water shortages for the Syrian refugees. This option might also allow for some agricultural solutions, which would deal with the long term issues that will pop up. The AQ would have to be hunted out of the Sinai, but in that regard both Israel and Egypt agree.

Why there? If that region is to have any future, then anything we start now; any action that allows for a growth of tourism in that region, like a second Sharm-El-Sheik, but next to (or close to) Eilat, could in time be the financial infuse that could grow that region to some level of prosperity. Europe and America are now in a low curve, but it will not stay that way. In addition, as tourism grows business. This option has all the makings for finding a long term peaceful solution. It could become an option which will always be a better one than non-stop flooding the region with money and goods.

In my mind (oversimplified, I admit), I see this as a solution. The Dutch are massive experts in Greenhouses. Consider that these are build close to a water plant in the Sinai, Around Eilat, Israel and close to Aqaba, Jordan. So if we can get the water there, in some form, but likely via tankers, there could be an actual push for peaceful reform. We need to get food there in several ways. Finding a way to grow some of it will down the track be the cheapest and it would start real change.

Even though this Powder keg known as the Middle East has been lit and AQ is the fuse, would it not be the master of all Ironies if Al-Qaeda becomes the glue that actually sets in place some lasting form of peace? As, whoever is running Al Qaeda, faces a possible future where a peaceful Middle Eastern alliance develops with Israel as an accepted partner by all and it was thanks to AQ. Would the howling laughter of people not drive him (or her) insane?

Graveyards and politicians both love irony in equal measure, let’s make it so!

 

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May 11, 2013 · 05:06

Wanna buy some Junk (stocks)?

OK! I admit that I am slightly over the boil at present. Not only have we seen several banks with their ‘why would I care what happens to others’ attitude, now we see the message that Co-op bank has now ‘ascended’ to the status of Junk!

Several things are happening, yet, let us take a few steps back, so you can see why this upsets me so. The year was 2009; Britannia (building society) gets added to the Co-op bank group. This happens around the same time SNS Reaal had a property finance group dwindle its value by a quarter of a billion Euro’s, and that was not a bad day for them. 2010 would then become the massive body blow to the SNS as their property group would increase its 2009 damage by 300%. So, at this point, is there anyone out there not wondering why this continued for 3 years?

Whilst all these property issues were happening all over on the EU side, the Co-op bank thought it was a good idea to continue in their footsteps? Consider the issues, which are NOW stated as issues, must have been known then too.
That in itself means that more than just a small investigation needs to take place. There is every notion that the involved parties require investigation. If we see the waves continuing from 2009 onwards, we see a wave of mergers, left right and centre with a shifting of ownerships and a shifting of losses over and over again. At the middle is a small group of people who seem to ‘make’ their quota and getting a nice 7 figure commission in the process. Poor Prime Minister Cameron was admitting defeat in the papers at that time. Whilst well over seven billion pounds in bonuses were granted to less than 3000 people. So in this age the noble art of thief, burglar, prowler and cut-throat is gone. Instead, some become bankers, you get the idea.

So, we saw the Britannia merger in 2009. The consequence was that Co-op acquired a company (The Britannia) ‘worth’ 35 Billion, yet, when we look at the value of Co-op, those numbers seem to be completely off the wall. Can anyone explain to me how a bank, who in their financial results of 2008, stating an operating result of 85 Million, with 64 Million of profit before taxation sucks up a company with a stated worth of 35 BILLION? No one seems to be asking the questions many should be asking. Now, as stated before, I am no economist and my degrees do not include economy, yet the Co-op/Britannia combination makes as much sense as me walking into IBM HQ, walking up to Ginni Rometty’s office asking her ‘How much for just the company?’, paying her for IBM, take over her office and have it redecorated. And trust me when I say that her weekly allowance is a lot higher than my pre-tax annual income.

So, as this happened, no one seems to be asking the tough questions. In the meantime to the next time-slice, the following issues occur. Our trusty Dutch nationalised SNS, now values at minus 127 Million and its property market is now reported at minus 600 million Euro. At this time, alarms should have been singing, ringing and clinging on many levels, not just at Co-op banking group. For those thinking that they are just separate banks then I would state that this is not entirely accurate. Consider that RBS took part of ABN AMRO (former one of the big four banks of the Netherlands). In the time (pre purchase of Britannia), Royal Bank of Scotland Group Plc, Lloyds TSB and HBOS Plc needed a massive bailout by the UK government. Soon thereafter Co-op suddenly goes fishing for a great White, using nothing more than a Dinghy and a $9 bamboo fishing rod?

In that same period Co-op is involved with the purchase and annexation (to coin a phrase) of Somerfield stores. It was reported to have a net income of just more than 220 million pound a year, yet, it was purchased for a 1.5 billion pound. That part makes decent sense as the net profit is a little over 10% of the purchase value. Yet, in light of Britannia and other events taking place, I add some serious question marks with these methods of vulture growth through acquisitions. I have seen this happen over the decades, and overall it rarely turns out well. This story turns that way as we see the Co-op food group (name after the merge of Somerfield stores) had reported in 2011 (as stated by The Guardian on 25th August 2011) a 21% fall of profits. Suddenly, the 220 million pound profit shrinks and looks less appealing. The Guardian in the same article also reported: “The Company has committed to investing £2bn in the business over three years, with £280m spent in the period.”

So the initial spending outstretches a full year of profits, with investments stretching beyond the 130% of the purchased value of the food stores. With refitted shops, additional refitting and new shops, the total number of shops seem to go beyond 550 stores. This is happening at times when caution is the only way to go forward.

The additional cost of getting these systems to run and align in an infrastructure would require massive amounts of resources. That part became clear if we look at the story from Computer World (http://www.computerworlduk.com/news/applications/17614/updated-co-operative-bank-losing-customers-through-system-problems/). This story is set to the Bank itself, yet the issues of so many sides and so many systems, and therefore the enlarged infrastructure required is not a relief of costs, but a pressure added to it.

Another side of pressure was displayed by Reuters (http://uk.reuters.com/article/2013/02/27/uk-cooperativebank-lloyds-idUKBRE91Q00E20130227). On the 27th of February this year it was stated that Co-op was somewhat short on cash. They were 1 billion short. (oh, let me get my wallet! Duh!) This seems to be the major reason that the addition of 632 branches of the Lloyd’s Banking group could not be purchased.

These facts are more than worrying. The vulture acquisition game is worse than a game of Texas Hold’em Poker. First there is the fact that the board of directors is gambling with other people’s money, the second part is that the circle of damage increases with each acquisition. Consider that the UK only has a 0.3% economic gain at present and that the economy is extremely fragile for now. Allowing these mergers to continue until a solid block of stability is gained should be disallowed on several levels and not just with co-op. Until the economy bounces back and the costs are more stable, this bank should clearly be placed under scrutiny of the most conservative nature.

It is said that the Co-op banking group consists of almost 125.000 employees. Now consider that any hardship hits this group. A thought that is not too unrealistic, especially as they are on shaky grounds for now. I am not just talking about their Moody status, to which their response was on May 11th 2013 as ‘Disappointing’. I am talking about infrastructure issues, weather related issues and any issues that will drag the rest down if additional write downs will be required to the property group from the Britannia acquisition (consider what happened to SNS Reaal in the Netherlands), a mere 5% write down will come down to over 1 Billion, whilst their cash reserves is already 1 Billion too low. So if that result in shut-downs and lay-offs, then a 10% loss of staff is not unrealistic, which means another 12,000 will be out of a job. That must be prevented at all cost. Such damage could push the UK 0.3% increase down to a lower than 0.1% decrease soon thereafter. In addition, those cut downs will hurt their non-aligned infrastructure even more and that might even start a snowball effect on people and infrastructures. I admit that the previous paragraph is all speculations on my side. I have however seen these kinds of reorganisations and crushing results first hand. I had faced them when the economy was good, under current conditions; these events are a nightmare to consider.

Is there any good news here? Well, I feel that I am not that optimistic on the statements they made, yet, overall Co-op could be in a worse place. The only proper solution for them in my mind is to dig in and weather the storm for now. Getting by the next 2 years is more important than allowing one rash acquisition to endanger it all. You will wonder about my evidence?

That is a fair question!

Many businesses are in a bad shape, and there is every chance that some will fail. Now consider the Property acquisition (Britannia). No matter how high their assets are set. Part of their acquired branch was commercial lending and mortgages. Last December Reuters quoted this, a real issue taking in regards the high pressure on lacking stability funds “At this rate it will take another decade to return to normal – and I’m not sure there is much anyone can do about it.”

So increasing more pressure could in the end result in the taxpayer getting a hefty addition to the outstanding national debt. A national debt, that is currently in excess of 1 Trillion Pounds.

So, from my point of view it is important to consider the story we saw recently in the Netherlands. The SNS Reaal board counted on Government bail-outs as they regarded themselves too big to fail. We need to make sure and make it clear that the Co-op banking group is not allowed to be this arrogant, or allowed such a way to a bail-out.

 

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March 19, 2013 · 17:07

Banking the blame game

Yes, it took less than 72 hours, but Cyprus has broken more than just a little all over Europe. There was always the issue is the situation that the numbers did not add up. Looking at the news as it hits us from Sky News, NOS, Wall Street, Reuters, CNN and a few other sources, we get the distinct impression that politicians have heard of the concept of a spread sheet. There is however a decent chance they have never seen one. Consider that these politicians were involved with the Cyprus deal, we should wonder in how much problems Europe currently is.

First is the issue on the uniqueness of the plan in the first place. Those who saved all their lives, high and low savers, all have to chip in to prevent Cyprus from going bust. So, in this situation the people will be taxed twice. Once on the average of their income their savings will be cut up to an extra 9.9%.

So, how did this get this weird? Well, reporters are giving us all kinds of reasoning; many of them make perfect sense. A good one was the issue that the bail out of Greece had to be paid by banks, and this is where Cyprus got into trouble. I am not judging whether it is ‘true’ or not, but there are two sides. I personally belief that this is NOT the full story and more has happened! The interesting part is that the side as mentioned is not given the visibility it should have. Yes, there is an issue, yes, a bail-out is needed. We can also see those reporters around an ATM with queues. Yet, this issue is naught compared to the question how the $12B is needed, and even more, as they scared people to lose faith in the banks and all are withdrawing of billions of Russian Cash, all really willing to take a hike to a safer banking place. Is no one wondering whether certain ‘made’ miscalculations were really this ‘unexpected’? This is what was stated by Bloomberg on the 16th: “‘Simply to leave Cyprus alone and see what happens would be, in my view, irresponsible‘, Merkel told reporters in the Belgian capital after a two-day European Union summit. In her wake, the finance officials arrived, along with European Central Bank President Mario Draghi and IMF chief Christine Lagarde, for the Cyprus talks.”

The other side is that, should this all be true, then the issue becomes that the bail-out of Greece is not just half baked. The solution the financial experts claim to be a solution, was not only not a solution, it is turning out to be a solution that is now dragging down other nations and the Eurozone as well. As markets opened, both Spain and Italy are feeling that like a painful stab in the back. Consider what was stated on Cyprus. They need $12B, they Cyprus is only 0.2% of the Eurozone economy. Whether they were given a bail out, can someone please explain how a market this small be such a financial tsunami creator?

Take the following facts into consideration

1. If the bailout of Greece has this effect on connected banks, what are the EEC and the IMF not telling us?
2. How can an economy this small be allowed to hold such a chunk of so much debt? Remember that the issues continued AFTER the bail outs. We can seriously ask questions on how the acts by the Eurozone ministers are cut down like this. Also interesting that a lot of this was never loudly questioned by members of the press either (if I am incorrect, please refer me to the evidence I missed and I will happily correct this).

3. The markets are now realising that the Eurozone issues are far from over. Bad management seems to be a clear factor. Perhaps that this scenario and the effects were always envisioned by certain players of the big money game! If so, what are they trying to do? Push savings from banks from place A to place B? Would they intentionally want to weaken banks, especially in Spain and Italy?

We could in my mind come to the thought that either the banks and the bailed out governments are in worse shape than ever reported and the IMF and its partners in managing the banking issues are deciding on issues behind closed doors, therefor missing issues that should have been dealt with, or it is not impossible that the lack of bank regulations on an international level are reason that there is no progress at present, and none is to be expected in the near future. More important, imply that part of this is either orchestrated, of that those in charge are a lot less competent then envisioned. There is one remote third option. I admit that this thought is far out there. What if money is ACTUALLY running out? Consider all these swaps, credit vouchers and derivatives. A derivative is a mathematical future. It is not real. If LIBOR represents, UK and US combined, a value of over $1000T (yes, trillions). Consider all the debt out there; no one can pay for it. What is really left? Traders, still dealing in make belief? Concepts and nothing seems real. Food is real, Land is real, and revenue COULD be real. All those governments all claiming to have so much, yet the US is minus 16T, UK is minus 1.5T, except for Germany, nearly ALL are deep in the negative. Now consider why Cyprus gets such a unique treatment. Is it about the $20 billion the Russians have stashed there? If so, then that would be a weird act, to endanger Euro markets to such a level. Those factors might give a little value to the third option I mentioned. I admit, it is a very thin line of thought.

People all over Cyprus are now considering the fact that their banks are all closed until Thursday. Cyprus seems to be hiding a larger secret. Part of this was reported. The issues on money laundering through Cyprus had been reported before, and last by CNN. This is hardly a secret. I know my lack of knowledge and my naive thought of replacing the ENTIRE banking management groups in ALL the Cyprus banks could have actually increased reliability. In addition, it would have given a strong message out to the banks too. None of this was done, no, the saving of people were initially cut, causing market unease. I feel there are enough thoughts proving more is going on than just a bail out.

Legally? The UK and Germany should step in setting up banking laws immediately (one common law and one civil law nation). Not the penny washing kind, but the kind that has sharp teeth. Real reforms start with laws and regulations. The Wall Street Journal reported by Lukas I Alpert reported this statement 4 hours ago: “Cyprus has always said it abides by international banking laws. Russia’s departing central bank chairman, Sergey Ignatiev, recently acknowledged that Russia saw illegal outflows of $49 billion in 2012”

Perhaps those international banking laws are a lot shakier then banks and politicians are willing to admit to.

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March 17, 2013 · 22:16

Savings from a bailed-out nation?

We all know, hear and get frustrated with bail-outs. So why is Cyprus different?

The bail-out will not just happen in one direction. It is not that the Euro zone and the IMF get out the wallet and give this small Island a $10B voucher. The other side here is that people on Cyprus will be taxed up to 9.9% on their savings. If your savings are under 100,000 Euro then you will only lose 6.7%. This is a new situation. It only effects those with money on a Cypriot bank.

So what is this Cyprus? For those not growing up in Europe, you are less likely to know about it. Cyprus is part Greek, part Turkish and all independent. There is more, the Island has only 1 million citizens, so we are looking at a $10,000 per person support fund.

The natural question following is how this place be THAT incompetent? More important, how can a bail-out be handed to this place without DEMANDING the replacement of that entire government? From my point of view, it is either too corrupt or too stupid to continue. Should we not take a more assertive stance before handing out cash you can pretty much kiss goodbye?

In addition, in my view all banks connected to this situation are to directly report to a Euro zone auditor. The rights of those banks, their managers and its board of directors are to be nullified!

It seems that we are way to ‘forgiving’. It is time to show banks that those who play to this effect get their rights, their bonuses and ego removed.

My method of reasoning is simple. President Nicos Anastasiades stated to Reuters as published on 16th of March “we would either chose the catastrophic scenario of disorderly bankruptcy or the scenario of a painful but controlled management of the crisis” he was referring to Cyprus Popular Bank, the recipient of the ELA facility for months, and Bank of Cyprus, the island’s largest bank. It is time to put all cards on the table, it is time that all its citizens, as well as all others to know the unimaginable bungling by those who claim and should know better. Their rights to trading removed at present and it should only be allowed by a controller of the most conservative and cautious kind. It seems to me that most banks and traders seem to have reverted to desperate Las Vegas gamblers who have one last chance and they gamble it all. Banks should not be allowed to do this. For those thinking these words are empty and hollow. Consider the SNS bank, the Dutch bank that was considered ‘too big to fail’. It is now nationalised. It seems to me that handing out money to a group of people ready to gamble it away at a moment’s notice should not be allowed in these positions.

It is however not fair to blame just the banks on this. All this seems to be directly linked to Government bonds as well. One set at $1.5 billion being due on June 30th. So again, we see some kind of borrowing strategy. Politicians who are spending others people’s money and then some more. Living in luxury and using up cash that place NEVER had in the first place. These kinds of bonds are actually usually very much desired because they are considered to be risk free.

Here is my second thought. ANY nation trading in these bonds, while levied above a certain level are no longer to be considered risk-free. I know that this is what those standard & poor ratings are all about, however they had downgraded the status of Cyprus as follows: “We have assigned a recovery rating of ‘4’, indicating an expected recovery rate of 30% to 50% in the event of a default, however unlikely.” (Source: S&P website)

They valued it unlikely? Well, that might be the case, but others have to foot the bill at present.

I suggest that ALL ratings of bailed-out nations are set to CCC (Yes, I can see the panic now!) until the bail-outs are paid back. Italy will not likely enjoy that either! (Mi scusi Presidente!)

Some will come with the reasoning that this is bad because it does not allow for restoration. Is that true? Look at Greece and Italy. Paying up is not on their mind. They seem to be pussyfooting around, all caught between bankruptcy and civil war. Italy might not be on that train yet, but one promise from politico Berlusconi and suddenly he is back in the political race. Yes, that is what Italy needs, more irresponsible spending at present. It is utterly unacceptable that these places play nice weather, with currently no way of paying back. Greece is likely the best example. They current;y seem to have no way to EVER pay it all back. Its people are rioting blaming all but their own governments and banks. For them, consider the amounts your governments spend while they never had the money to begin with. All those VERY willing to borrow to them should be as per now be visibly named too.

These people are all relying on anonymity. Take that away and they lose the option to walk in the streets thinking that life is great. In the end it comes back to accountability. The only fun part for some in the case of Cyprus is that it is filled with Russian mobsters who are likely to lost 9.9%. They really do not like it when their money is messed with. So, should the government and banks suddenly leave THOSE accounts alone, those involved should name and shamed. See what the local population will do then!

However, I am digressing from the issue at hand. Cyprus and the bonds are only part of the topics. It is becoming clear that the discussion should focus towards the S&P ratings.

Quoting Wiki it starts with “Standard & Poor’s (S&P) is an American financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds.”

Wiki is not really an academic standard, however to quickly find a fact it is just as useful as anything else.

The actual issue is the word ‘analyses’ in the entire sentence. In addition I would like to quote a small part that was published by James Rowe on the IMF site on April 20th 2010. I know it is a little old, but there it does state: “IMF says is the newest threat to the financial system: growing sovereign risk.” This has been known for a while, and yes, not only WAS it a risk. I am stating that it STILL is. The S&P rating shows that very part. I am making the additional observation that the analyses might be flawed on a few levels (assumption on my side) as we look at the Cyprus issue. That view is only strengthened as we look at the rating that S&P still seems to hold as per December 12th 2012. “Ratings On Greece Raised To ‘B-/B’ From Selective Default On Completion Of Debt Buyback; Outlook Stable” (Source: S&P).

This is part of the problem! Consider the headline from Feb 20th 2013 “Greek Workers Walk Out in Fresh Austerity Protest” (Source: NY Times). These people seem to not get it, or at least not accept what is needed. They start riots and they start strikes. I am not blaming them. They got handed a raw deal. Unlike some optimistic analysts, who are claiming to see light at the end of the tunnel. There is serious threat that Greece could still collapse if these events are not stemmed. As such, the S&P rating of Greece (and other bailed out nations too) should for a long time stay in the C-range. Reasoning is that bail-outs are limited and there is NO guarantee that it will continue if debt control in Greece is not successfully done. I think that it is irresponsible to take bail-out money in consideration to up the borrow margins. I get it, as a factor, the bail-out is valid, but the fact that it allows Greece a ‘better’ credibility does not seem valid. Even if we consider ‘renewing’ current bonds, Greece (and others) must be used as an example to make it clear that the current path is running out of space fast. Especially as several other governments keep on overspending, with too small a chance to keep their budgets under control. I am against these levels of overspending and enabling by others whilst we all know that there is no end in sight. And it is not just Greece. These visible steps will show clearly to the other nations like Italy and Spain (to name but a few) that the good times are gone, perhaps forever.

It is time for financial institutions and governments to adjust their thinking and approach.

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March 11, 2013 · 13:23

Start making sense

I have been tossing and turning for most of the night. Something has been bothering me all day, and as it seems most of the night. You see, the Dutch NOS reported on Saturday 9th of March an interesting footnote in their newscast. They suddenly had this short part on the news on how this is possible. (Source: NOS http://nos.nl/artikel/482586-record-op-record-voor-dow-jones.html)

This is interesting, as I asked pretty much the same questions in an earlier blog called “It hurts every time, but we love it”, which I published on Feb 6th, so slightly more than a month earlier. The Dow index is currently at 14,397 (which was a 2007 record). The issue is that we had the crash of 2008; one in six in the US lost their house. So, the economy is not in a good place. There was also the mention in their radio cast (English and Dutch). They seemed to focus on two parts. First was the fact that Economic recovery is gotten through revenue recovery without staffing (so 5 do the work of 10, and they are happy to have a job). Second is that the Dow is based on only 30 companies. Yet, when we look at the number I wonder what game is being played as I look at a 2 year index graph. This graph is Stellar. My issue is twofold. One I am NOT an economist, but a data miner. Second is that the given ‘excuse’ feels wrong. Especially given that the news had this production line backdrop of cars, and none of the 30 seems to be in the car industry. So why not present this with a pharmaceutical backdrop?

So let us take a look at some of these Dow Jones Index companies.

1. Bank of America. A bank, and after 2008, we could wonder in what state it is in. This quote comes from Forbes and was written by Halah Touryalai, one of the Forbes Writers “No bank knows that better than Bank of America which has agreed to pay a jaw-dropping $42 billion, settling credit and mortgage-related legal battles in just the last three years“.

OK, if we take that into consideration, then seems a little weird that their stock graph has the same shape as that of the DOW. (As one of the 30, it would make sense that the graphs are shaped similar, however, such confidence after such a legal fee settlement bill?)

2. JP Morgan Chase. Another Bank! It had two more dips then BofA, yet overall it is in an upwards movement as well. It was also mentioned in the same Forbes article as before on settlement fees, but those fees were a lot lower. The Bank of America had to chew on 66% of the total settlement fees by itself, so for the other 5 big banks, the damage was relatively small in that regard. However, In April and May 2012 they had lost more than six billion dollars on derivative trades that had gone bad. There was a report of 9 billion in total, which also involved Bruno Iksil for part of the mentioned amount, he is also known as ‘the London Whale’. The numbers and the names vary when we look at UK and US papers, but overall they pretty much tell the same story. It is interesting that JP seemed to bounce back within 6 months to stock values higher than before the June 4th 2012 dip. Last on my list is Boeing. It is a giant, but we have all heard of the 787 issues and it’s now named ‘Nightmare liner’. The issue is all about batteries, yet the news from January as reported by Reuters : The new production forecast raised some eyebrows. Russell Solomon at Moody’s Investors Service was forecasting 100 787 deliveries and said Boeing’s forecast of more than 60 was “significantly weaker than we had expected.” Interesting that what analysts expect and what the vibe says Boeing will be delivering is off by almost 40%. Suddenly NOT meeting expectations has almost no impact? 40% less on a firm the size of Boeing should have a very visible effect (imho).

Now the DJI is about 27 other companies and there are only two banks in it. It is also a fact that these banks work with securities and values in the hundreds of billions, so are my concerns just a storm in a teacup?

It is a valid question, and I also ask myself this question. Let us take a look at the two following thoughts.

1. US debt. It is set at 16.6 TRILLION dollars. The total US debt is a lot higher. That one is $59.1 TRILLION.
Can anyone even imagine those numbers? Now consider that someone has that kind of money. To be honest is that really true? Is there a group of nations with that level of wealth? the only nation capable of owning that much is one with an abundance of oil, so basically the United Arab Emirates (UAE) is the only one that wealthy. Either the US is labelled UAE-west, or my thoughts are not that correct in this instance. So perhaps I am wrong (I will be the first one to admit that).
We know that most value trades are now done digital. It is the only way for the market to move such amounts of wealth. However, who checks this?

I have seen my share of digital forms of miscommunication by loads of people in several fields. Often they seem connected to the corporate headquarters of Bloated, Botched, Bungled and Baboon. An always newly formed enterprise, coming to a local public stock market near you. Consider that this is done on the electronic super highway. Now consider that Hackers come at a dozen a dime and greed is eternal, these last two are given facts. Also realise that ANY system can be gotten at. DARPA and the NSA proved that more than once.

The valid question loudly remains: “Who truly checks the validity of trade and the numbers they are traded at?”

2. LIBOR scandal. I wrote about it, the news has talked about it in abundance. Last week in an article by Mark Scott in the NY Times on March 5th the following was stated “The review published by the Financial Services Authority, the country’s regulator, said there had not been a major failure of oversight by local authorities, but it added that officials had become too focused on containing the financial crisis to analyse information connected with the potential rate-rigging”

This is a fair enough statement (it did seem shallow in relation to the handed fines), and them be hefty fines, so why are these two events related? Well, in my mind there are two parts of the LIBOR that were in play. From my point of view there are two variables that might be played with. The first one we know. It is the interest rate; the second one is the bigger issue. You see, those percentages are linked to a total sum of $350 trillion in UK registered derivatives. That is 20 times the US national debt. If people play with one, there is every reason to suspect that they might have played with the other. So again, who controls those totals that are being traded in? If derivatives include hedge funds, swaps and forward rate agreements then we should be worried. Consider as well that the US Bank for International Settlements holds almost twice the value the UK seems to be registering.

So, we are now confronted with just in excess of 1000 TRILLION dollars. How can this even be monitored? Now let us add one more part. The US LIBOR rate is set by 18 banks. The two banks in the DJI are members. Are we all on the same page now? The third bank (Citi) is to be given a fine in regards to percentage ‘tweaking’. According to Reuters, later this year, a new set of settlements will be ‘delivered’. In their publication of March 8th by Kirstin Ridley and Philipp Halstrick it states that: “Deutsche, Citi and JPM are the banks named in regulatory circles as those candidates near the next settlements,” said the second source. So now we have both a DJI member and libor member in this illustrious ‘donation’ scheme. What else is at play?

What if the total value is not correct? What if they did not just play with the percentages, but the total package of the trade able amount? Let’s just take a fictive 5%. Mainly because I feel not so comfortable with the value they say they have and in part because I cannot even comprehend that much, as we get above the $200 trillion range. So, if 5% is taken off the total amount of over $1000 Trillion, would mean that we might all be devaluated by a total of 50 trillion dollars. That comes down to $8400 for every citizen on the planet. Did we sign up for that invoice?

It might be just be me (and I can happily live with that notion), but can bankers and financial corporations be allowed to continue on this track? We have seen clear evidence that those places cannot be trusted with even a small speckle of such amounts. Even though they NEVER broke any laws initially, LIBOR shows that some are very willing to do that. With the US on the edge of bankruptcy (or on the wrong side of a fiscal abyss), with the financial industry in such disarray, what can be done?

So when this all falls over (not if it falls over), what will we be left with?

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