Tag Archives: S&P

Big Oil in the family

We all have moments where we look at the sky and roll our eyes. Today was my moment when I was treated (by the Guardian) to ‘Big oil and gas kept a dirty secret for decades. Now they may pay the price’, in this I start with “Was it really a secret?” You see, we all want to blame someone else for the problems we helped create. And  when the (what I reverently call) the stupid people are bringing about “An unprecedented wave of lawsuits, filed by cities and states across the US, aim to hold the oil and gas industry to account for the environmental devastation caused by fossil fuels – and covering up what they knew along the way”. You see that is is merely one element of stupid. I gave light to ‘Uniform Nameless Entitlement Perforation’ on December 10th 2020 (at https://lawlordtobe.com/2020/12/10/uniform-nameless-entitlement-perforation/), I emphasised on a report by European Environmental Agency (EEA) where. We see that 147 industrial plants create 50% of the pollution, the media seemingly ignored the report I have not see the media go out and bash the nations for these 147 plants, we even had a joke (read: BBC article) by Tim McGrath on how the “Global ‘elite’ will need to slash high-carbon lifestyles”, so how stupid do people need to get?

In case you forgot

This reflects on the now when we see (at https://www.theguardian.com/environment/2021/jun/30/climate-crimes-oil-and-gas-environment) “Coastal cities struggling to keep rising sea levels at bay, midwestern states watching “mega-rains” destroy crops and homes, and fishing communities losing catches to warming waters, are now demanding the oil conglomerates pay damages and take urgent action to reduce further harm from burning fossil fuels”, just when you think that Americans can no longer become any more stupid, we get the next iteration of ‘stupid is as stupid does. Statista shows us that in 1975 the US requires 1.747 BILLION kilowatt hours a year, this went up again and again until that number was well over doubled in 2005 (3.8B KwH), then it roughly stays the same. There was one spike in 2018, yet one source gives us “From 2003 to 2012, weather-related outages doubled”, I personally believe it is not all weather related. I believe that energy delivery hit a saturation point around 2005. This is why the last decade has so many of these failings and outages. Consider that it was not merely oil and gas, it was energy, the underlying need that drives this. If you doubt this you need but to read the entire ENRON scandal papers to get a clue on how it has always about greed and not about big oil and gas. When I see ‘Big Oil and gas’ I personally think it tends to be a hidden jab towards the Middle East. There have been carbon neutral solutions for almost two decades. Yes, they were expensive in the beginning, but how much effort was made to push this? It is about profit margins, it is about cheap and it is about exploitation. Oil and gas check most marks, but are they to blame? We can ignore settings like “In the early 1990s, Kenneth Lay helped to initiate the selling of electricity at market prices and, soon after, Congress approved legislation deregulating the sale of natural gas” that was almost 30 years ago, so how was electricity created? How do we get energy? And why is Congress not in the same accusation dock? Until the late 80’s the idea of Electricity at market prices was a lull and instead of protecting that part, it was left to the needy and the greedy.

So when they have another go at ‘Big Oil’ (to be honest, I have no idea what they are talking about), consider that the drive to have your own car started in the 50’s. Forbes gave us in 2020 ‘Traffic Congestion Costs U.S. Cities Billions Of Dollars Every Year’, which is fine, but that too relies on fuel, so when they gave us “New York had the highest economic losses out of any major U.S. city with congesting costing it $11 billion last year. Los Angeles lost $8.2 billion while Chicago suffered the third-worst impact at $7.6 billion.” And how much fuel is wasted in that setting? Do you want to blame ‘big oil’ for that too? This is a case that will go nowhere, the only thing it enforces is something I will touch on a little later. You see, when we saw the messages on how companies had enough of California, they vacated and left, Texas is such a much better place (it actually might be), and Forbes again gave us in February ‘Texas Energy Crisis Is An Epic Resilience And Leadership Failure, yet how much consideration are we seeing when we get sources feeding us “There are several reasons tech companies shave been moving to Texas – lower housing costs, lower tax rates, less regulations have made it easier for companies to operate in Texas. There is already an abundance of technical talent all over Texas. Any company moving here can tap into a well-experienced talent pool. There is also a well-educated stream of new talent graduating from top schools like Texas, Rice, University of Houston, and Texas A&M.” I am not debating the act, I am fine with the action taken, but when you consider that the following companies moved to Texas, how much of a drain on energy in other places will that give you and when you see the sudden spike in some places requiring a lot more energy, all whilst the other places are not diminishing their offer, because people will always need power, how is ‘Big Oil’ to blame? So lets take a loot at that list and most names moved less then 2 year ago (or are about to move)
Guideline, Contango, Done, Carbon Neutral Energy, Tailift Material Handling, Estrada Hinojosa,  GBS Enterprises, Wedgewood, Verdant Chemical, Ranchland Food, Drive Shack, Invzbl,Markaaz, XR Masters, Elevate Brands, Harmonate, Einride, Green Dot, NRG Energy, Caterpillar,Flex Logix, Leaf Telecommunications, Katapult, Wayfair, Ribbon Communications, BSU Inc, Avetta, First Foundation, 5G LLC, TaskUs, BlockCap, Element Critical, City Shoppe, CrowdStreet, Lalamove, NinjaRMM, Gilad & Gilad, MDC Vacuum, FERA Diagnostics, Roboze, Leadr, SupplyHouse.com, Eleiko, Firehawk Aerospace, International Trademark Association, ZP Better Together, Precision Global Consulting, Loop Insurance, QSAM Biosciences, AHV, Dominion Aesthetics, Sage Integration, Quali, Samsung, Truelytics, Alpha Paw, Sentry Kiosk, ProtectAll, Optimal Elite Management, Ametrine, Digital Realty, Amazing Magnets, Lion Real Estate Group, NeuraLink, Maddox Defense, DZS Inc, The Boring Company, Oracle, Hewlett Packard Enterprise,Tesla, Optym, Longevity Partners, Iron Ox, Palantir, 8VC, Bonchon, Titans of CNC, Saleen Performance Parts, CBRE, Slync.io, Baronte Securities, Omnigo Software, Incora, Vio Security, JDR Cable Systems, FileTrail, Sonim Technologies, Murphy Oil Corp, Buff City Soap, Origin Clear, QuestionPro, SignEasy, Sense, Astura, Charles Schwab, Splunk,  Bill.com, Chip 1 Exchange, McKesson, and Lonza. This is not a complete list and I am not considering (at present) which ones are doing it for all kinds of tax hypes. Now consider how many people will move as well. I get it, California is expensive, but how will this change that represents the population of more than one large city impact the power needs in Texas that is already has it fair share of brownouts, and that is just for starters, how many gas and oil energy producing plants will Texas get? Is ‘Big oil’ to blame, or do they merely offer a commodity that EVERYONE needs? Consider that a powerful computer required a 200 Watt power unit in 1997, today it is 600Watt or even higher. There were roughly 51 million units sold last year alone. I cannot state how the division on laptop and desktop is, but the need for energy is unrelentingly large, how large? Consider all the staff moving to Texas and consider how many more energy issues Texas has in the next two years, that is your marker and ‘Big Oil’ had nothing to do with this. 

So when we reconsider “wave of lawsuits, filed by cities and states across the US”, how many of these claimants voted against wind farms, against solar power and against nuclear power? They did it for all kinds of reasons and we get it, some are expensive and you do not want your children to go to school glowing in the dark (yet in winter that is a case for less accidents), but in all this blaming ‘Big Oil’ is just too ludicrous to mention. So as for a promise earlier in this article. When the US goes on with silly and stupid court cases, how long until the owners of IP and Patents will consider the US to be too dangerous to remain in? Consider that the US has an IP value of $21,000,000,000,000 (trillion), it represents almost 90% of the S&P 500 value, so what do you think happens when a massive slice of that moves to Asia or the Middle East, optionally to Europe? I reckon that over 70% of Wall Street executives are on a floor above the 30th and there is every chance that well over 40% of them will do a (at https://www.youtube.com/watch?v=cEpKcBkkVMY); now consider the stage of blaming the wrong  party. I am not stating that any of the energy delivering components are innocent, yet we are all guilty, in almost every nation. We remained silent when energy prices remained the same (somehow), we have known about alternatives and most people never pushed their politicians, we have known about the dangers of erosion for decades and we see pollution report after report, yet nothing is done. We are all to blame and putting ‘Big Oil and Gas’ in the dock will never ever go anywhere, I reckon that Kenneth Lay set the charter for that. When we realise that we allowed a utility to become profit driven which we clearly get from ‘the selling of electricity at market prices’, we changed a whole range of processes and now that we see the impact we should not cry, we should look into the mirror for blame.

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Witchcraft and/or Calculus

Well as Monday mornings go, this will be a day to try and make you giggle (actually not really). I have always been an advocate for science and common sense. I believe that there is great wisdom in applying science in most occassions, it is the easy path in defining truths. Yet, we cannot explain it all with science. We are all limited, it is a basic truth, it is what drives us forward. It also takes a while to get there scientifically, so from the Penydarren in 1804 to the Virgin Hyperloop in 2021 was not an easy trip. A little over two centuries and we have gone from 10 tonnes at 2.4 mph to 50 tonnes at 260 mph, we can see that there has been forward momentum. We all move forward, not all at the same speed, yet when we consider that I predicted on September 4th (at https://lawlordtobe.com/2018/09/04/democracy-is-dead/) after Reuters gave me the quote “Italian bond yields edged lower on Monday after Fitch left its credit rating unchanged at BBB, revising only its outlook to negative, though mixed news flow from senior ministers and manufacturing PMI data due later this morning could mean the rally is short-lived, analysts said“, to which I gave my personal view of “we need to focus on ‘manufacturing PMI data due later this morning‘ which gives me that the rating was done ‘just in time‘ to avoid having to lower it, which implies to me that it was not a reprieve, merely the application of time management to force an upped rating.

So as we move forward less than 3 weeks, we now see (Source: Forbes 2 days ago): “It is no surprise that Fitch has changed the outlook for Italy’s BBB credit rating to negative from stable“. It is not only ‘not a surprise’; it was clear three weeks ago that this was going to happen. The system was as I personally see it rigged, to give a false optimistic rating to a nation that did not deserve it. The question becomes: ‘Are we abandoning science for witchcraft? If that is true, then I would like to move the motion to make Rachel Riley the high priestess of all economic witches and warlocks on the planet!‘ You see if they abandon common sense, can that unruly mob get managed by someone intelligent and when we are on that setting, it better be a good looking one, so the number of optional choices dwindles down to …. one? And Rachel is her name!

What’s behind this?

You see, we have seen on how S&P played us in 2008 on a few sides and it took until 2015 until a ‘deal’ was struck and they got off with a $1.5 billion fine, so when I am stating that they got off whilst they were getting off, I might be more accurate than I am comfortable with. Moody’s got their load handed to them with a mere $864 million penalty. so whilst some sources (source: Huffington Post) give us that the The 2008 financial crisis cost the U.S. economy more than $22 trillion, we seem to forget the impact outside of it, the impact on Europe and how the overall quality of life returned to WW2 conditions (slight exaggeration),  and even as we see reported that the economy in in restoration, we all seem to forget that the quality of life compared to 20 years ago is still less then what is was in 1998 and in that setting we see Fitch play a managed setting of overly soft on some economies and delaying the downgrades by (what I personally see as) jumping the gun by hours, delaying the downgrade, so basically knowingly assisting in the selling of deflated bonds, that is how I personally see it.

So as we look back at the quote and we consider my view three weeks ago with: “This was done to stretch the game, not truly act on the reported value, if that was done the setting of ‘BBB’ could not have been maintained, it should have been dropped to ‘BBB-‘ (my speculated view). So whilst we think we are being told the truth, in my personal opinion, we are sold a bag of goods, because that is how the game is players and we are all being duped, just like in 2008” and we see again: “Fitch has changed the outlook for Italy’s BBB credit rating to negative from stable“, whilst I do not even have an economic degree, can we agree that if it was this obvious, we need to start doing something about Fitch and these like-minded credit rating parties?

In all this the bad news is nowhere near done. the Financial Times (at https://www.ft.com/content/f9fb99d0-bf23-11e8-95b1-d36dfef1b89a) gave us a mere 7 hours ago: “Italy’s technocratic finance minister Giovanni Tria is coming under renewed pressure to increase the country’s budget deficit to accommodate the expensive election promises of Rome’s populist coalition government“, we can understand that it happens. We get it that promises need to be kept and some spending can never be avoided. Yet at 132% of GDP, with a National debt of €2.3 trillion, one would consider that caution would not be the worst idea. In this, sources are treating us to: “a guaranteed universal income of €780 month for all unemployed Italians“, which in light of the cost of living is a decent idea, yet the fact that around 10.7% of the Italians are without a job, the pressure on government spending goes up and up and that means that the deficit increases and with the interests and budget issues in play, the setting of ‘BBB-‘ might have been a little overoptimistic in the end and the news is not getting better any day soon in Italy. Even as we see that the jobless rate is at a low point (lowest since 2012), poverty was up to 14%, so that number will go down, yet at the cost of the Italian governmental coffers. I get it, it is good if they can find any way to get poverty down, yet they need more, they need an actual economy and the EU is playing around in all the ponds, but they are not getting anything done here and the 3 trillion euro spending bill still needs to be paid for one way or another, so there is are long term pressures to deal with from that side as well.

In opposition

When we look in one way, we need to look in another direction as well. So as we accept the orchestration side, we need to disprove it as well (good luck with that). Yet I did look in other directions, I needed as much data as needed, and when we consider my part to downgrade on September 4th and Fitch to keep it stable (at that point) that whilst Bloomberg gave us on September 6thItalian Banks’ Outlook Cut by Fitch Amid Political Concerns‘ (at https://www.bloomberg.com/news/articles/2018-09-05/italy-banks-ratings-outlook-cut-by-fitch-amid-political-concerns) with the quote: “UniCredit SpA and Intesa Sanpaolo SpA were among five Italian banks that Fitch Ratings said could have their credit ratings cut along with that of the state, should the nation’s populist government relax its predecessor’s fiscal discipline“. This is merely one of the quotes and it was clearly stated as a warning which is fair, yet we also see there: “Last week, Fitch said there was an increased chance that Italy’s government will reverse some previous structural reforms, negatively impacting the country’s credit fundamentals. It also said the relatively high degree of political uncertainty compounds the risk“, so not only was there already the prospect of negativity before the government non-reforms. There was in addition the political uncertainty. So there were already two markers staging the negative twist before the setting to ‘stable’ and the non-change was (as I personally see it) falsely given. There is also the part (which was after the stable setting) the quote “While the banks’ shares were little changed, Wednesday, they have underperformed the national stock benchmark this year, with UniCredit and Intesa both down about 15 percent. While UniCredit is more geographically diversified than the other four banks, its risk profile remains highly correlated with that of Italy“. It is another negative impact, yet the downgrade would not impact Italy for another three weeks, is that not a little too strange for comfort?

I would in addition mention the quote: “Fitch said it believes that a disorderly Brexit (UK exiting from European Union) could significantly disrupt Jaguar Land Rover’s supply chain and affect the company’s earnings and cash generation. It affirmed the long-term issuer default rating of Tata Motors’ at ‘BB+’“, so it had no issues changing the forecast ahead of schedule here, whilst Italy was given an additional 3 weeks of easy does it options. And there are no questions here?

We can accept that there are timelines and that things are done at specific moments. No one will deny that, yet knowingly (according to all the sources) to set the stage whilst the stage was unrealistic is an issue and it seems that there is a need to consider that the Three rating agencies are American companies. In all this, when we consider the past US behaviour, and the fact that there is no call to get at least one rating company added that is either UK or European based is a matter for discussion as well.

From ratings to fashion

Yet it is not all about the rating company. To see the stage I need to take one leap to the far left (or far right depending on what side you are facing). The view was encouraged when we look at the Times 2 days ago. Especially with my lack of insight, is good to take that setting to the forefront. The times started with ‘Brokers can’t wait for Burberry’s success‘ (which could be read in more than one way), yet the text gives us clearly “Burberry left visitors to London Fashion Week in no doubt of the scale of its self-confidence: “Kingdom” was the grandiose title granted to the highly anticipated debut collection of Riccardo Tisci, its new creative director“, with the added “Analysts renewed their attack on the £8.2 billion company yesterday after executives indicated that it could take three seasons for changes to provide sales with a significant boost. Credit Suisse downgraded Burberry from “outperform” to “neutral,” citing a lack of potentially stock-boosting factors on the horizon.

Now, I am not debating the reality of the setting. Yet when we look at a place like Statista (at https://www.statista.com/statistics/263885/burberrys-worldwide-revenue/), we see that even as they are not reaching new heights, we see that they are still doing decently well (if one calls £2.73 billion revenue decent) and the year is not over yet. So yes, we do accept that revenue and profit are two very different types of cake and one must eat ones cake, doesn’t one? That was given to us by the independent last year in November, when they gave us: “adjusted operating profit soared 28 per cent to £185m from £144m a year earlier“, we do not know the profits for this year as the year is not done yet. Even if the profits are optionally lessened, it comes from a 28% high, as we see that, what exactly drives the attack on Burberry and how does it relate to the earlier non fashionable one (even though they have Ferrari, Maserati and of course the Ducati), they also have some fashionable brands and they might not be of the Burberry level, the ladies will still love the Italian stuff. When we consider ‘Analysts renewed their attack‘, it is my personal belief that there is a group of insiders in these places who seem to be pushing the planchette of the Ouija board on where they need it to be (optionally not in line where it realistically could be), which is clearly a foundation of orchestration. The problem is not merely on how it is done, the entire financial setting is one of close to zero transparency as analysts ‘hide’ behind their formula’s (read: magic spells) and refuse to give out the incantation that they are using. Now, that is partially fair enough, most magicians do not reveal their tricks, they did do that in ‘Deception‘, which is optionally why it got cancelled after one season. I touched on the subject before and it remains active because a lot of ratings do not seem to make sense, especially when you see the actions and the fact that in May Burberry did beat their forecast with 2%, and still they are under attack? The interesting part is that the media who should ask a lot more questions are not doing that, not even reporting on it and whilst we accept the Guardian giving us two months ago that sales were waning ever so slightly, we were also given “Instead, they have been shopping in Hong Kong, South Korea, Japan and mainland China, boosting Burberry’s sales in Asia Pacific by a mid-single-digit percentage“, as well as “Sales in the Americas grew by a high single-digit percentage as the improving US economy encouraged more consumers to buy Burberry products“. In this we could accept that analysts might decide to warn caution, the message of ‘attack’ seems too unwarranted at present, especially when it is preceding Christmas and optionally the impact of thanksgiving sales in the US. Yet is all this, we see to pussy foot around the clear dangers that the Italian markets are giving us?

In this, we need to consider that if it is all around science we need to see a lot more clarity and if they want to sell the magic like we saw last week, we might (or not) accept to some degree the dangers that Mark Carney points out. the Business Insider gave us: “Bank of England Governor Mark Carney has privately warned the UK government that a “no deal” Brexit could bring about a housing market crash and a surge in the UK’s unemployment rate, according to several reports“, this makes perfect sense. Even as I have not seen the data, there are companies overreacting and threatening that they would vacate the UK. Some will do that, it is unavoidable. There was always the premise that this would also stop new hires and there would be fewer jobs for a little while. That too makes sense. Now consider that commercial building in London is through the roof and even now we see that things are not great. They have not been great since January 2018 when the Guardian gave us: “Developers have 420 towers in pipeline despite up to 15,000 high-end flats still on the market“, so in all this there is a larger danger and we were given this in April this year with “number of empty homes in London now above 20,000”, all houses well above £1 million that for the most no one can afford. So as houses remain empty, what do you think happens to the commercial places being build? We focus on the Battersea Powerhouse and Apple new stomping grounds, whilst we need to realise that 99% of all businesses are SME’s totalling at 5.7 million of them. Where do you think they will go when houses remain empty? I am not sure that Mark Carney is wrong, he might be a little too negative, but it depends on that data he has (and the question that he was required to answer), which is going to be loads better than the data I have seen. So when we get back to the setting of politics, if given the choice by the optional ‘troll like’ person Jacob Rees-Mogg stating “Bank of England governor Mark Carney is a “wailing banshee” whose warnings about Brexit cannot be taken seriously” versus the ‘goddess’ Rachel Riley who might be known for her ‘Would you like a vowel or a consonant?‘, is no less of a math goddess, implying that the math will add up correctly is she ever replaces Mark Carney, whilst the math quality is already in doubt ahead of schedule in the peculiar case of Jacob Rees-Mogg.

It is important that we take a much deeper look at the math and even as I have great confidence in Mark Carney’s ability to do the math, we also need to consider that he has a job, a job to properly inform the government, especially when the worst case scenarios can be as dire as they would optionally be for the short term. So whilst we see the mention of “Mark Carney is a “wailing banshee” whose warnings about Brexit cannot be taken seriously“, we also see that at present 20,000 houses are not sold and some have been on the market for well over 6 months. I would suggest that JRM gives us his math and back those numbers up on a public place for everyone to scrutinise (hopefully by Rachel Riley).

The issues matter and they connect to each other, the scrutinisers seem to preload the stage in ‘their’ favour, which is understandable, yet the cold calculation formula has kept from us, so we cannot see which factors have been set on a sandwich that had been buttered too heavily; we all have a right to know those facts, do we not? In the end we accept that it is not merely about apples versus oranges and it is not about the amount of fruit we have, it is about the different scales and the setting of a stage where transparency seems to be always missing and that approach is never scrutinised giving us a growing lack of confidence as well as a level of growing mistrust in those ‘reporting’ the result; an issue that has been clearly noticed by many, and was addressed for the most by no one at all.

If you want to try magic with a money charm using green yarn and pine oil whilst chanting:

Knot of one, the spell’s begun
Knot of two, I make it true
Knot of three, prosperity
Knot of four, bring me more
Knot of five, the spell’s alive

If that does not work, try calculus and focus on spending less then you earn. Try 6 weeks of one and half a dozen weeks of the other and see which of the two gave you better results.

Have a great Monday!

 

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A haircut before the guillotine

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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Pushers of media value

We all heard of the name ‘pusher’, usually it is seen in the drugs community. People who prey on children and weak students with: ‘try this, makes you feel good‘. Knowing that as their customer base increases, he can continue his lifestyle of booze and bitches, because that is his only priority, to feel good and to live like a rock star at the expense of everyone and anyone else. So when I saw ‘Alarm for Netflix as shares plummet on worse-than-expected subscriber growth‘ (at https://www.theguardian.com/media/2018/jul/16/netflix-subscribers-numbers-forecasts-wall-street) and was confronted with both “But it also warned that subscriber growth in the current third quarter would likely be around 5 million, again below analysts’ expectations of 6.3 million“, as well as “spooked investors and suggested the company’s explosive subscriber growth may now be slowing. Netflix shares fell 14% to $346.05 in after-hours trading in New York. For the second quarter, Netflix reported a profit of $384.3m, or 85 cents a share, up from $65.6m, or 15 cents a share, a year earlier“, I wondered what the analyst had to offer that gave rise to the situation.

In a world where we see that the quality of life is down, where we are struggling to merely pay the rent in some places, in that world where we learn that “Netflix has almost reached the 100 million mark for streaming subscribers, thereby more than doubling its subscriber numbers from the start of 2014“, so the numbers are showing us an almost 25% year on year growth, that is pretty amazing in many settings.

In this day and age, getting over 10% growth is pretty well done. We all recognise that 100 million users might not be that much on one side, yet the entire business is set against a facade where there is more to the picture. Still, in this the entire setting a 14% drop seems a little extreme. It is set against what I regard to be the pushers of the world (also known as analysts). I have had issues with these analysts before; they are like the drug pushers of Wall Street. They might not see it in this way, but I do. In this setting when we see “that subscriber growth in the current third quarter would likely be around 5 million, again below analysts’ expectations of 6.3 million“, so explain to me where they got that 6.3 million new subscriber issue? Where is the evidence that expected 15 people from Hoboken New Jersey decided not to become a member? Sickness, getting laid off, hospital cost, daughter getting married, all optional reasons where 15 people decided on not becoming a member, now set that number in EVERY zip code in the United States. We can go on with the thousands of additional cases in the US alone, yet the wisdom of some person telling us that a mathematical model should have produced another 1.3 million uses cannot be vetted is merely the setting of a person giving a speculative result and that speculator is the cause of a 14% drop in value?

Now, we do understand that Netflix has responsibilities and with their expected growth is of course linked to the content they can afford to buy. So when I see “Netflix is expected to invest as much as $12bn on content this year, but could face growing competition in the streaming market. Apple is upping its spending on original content in video, music and publishing to $4.2bn by 2022 from $1bn this year. Amazon is expected to almost double its spending on original content from $4.5bn to $8.3bn“, there are two issues. The first is that if we quadruple the quarter and consider the 1.53 billion in profits (or expected profits) for 2018, how come that this year the acquired spending is $12 billion? We get that content is a long term pay off and all the movies acquired now will fuel the customer base for a long time, yet the fact that the profits merely represent 7.5% of the annual content spend is very unbalanced. It also gives us the additional setting that the 1.3 million additional members would not have made a dent there. The setting is fishy and it does not add up. Now, we can all agree that such services are perhaps a lot more complex, but the value long term is also setting the pace that something does not seem to add up. To see that picture we need to realise that Netflix realised well over $11.5 billion in revenue last year alone, so by giving you this, the $20 billion is not only no longer a stretch, it implies that Netflix still ends with $1.5 billion of pure profits, that is nothing to be sneered at, and in that light the spooking of the shareholders make less and less sense and in this, the entire analyst setting comes to the foreground once more, especially when we also add the one small fact that Netflix has $19 billion in assets. It is even more puzzling when we add the NY Times findings with “The company also saw its net income rise to $130 million, well over last year’s third quarter total of $52 million but short of the $143 million that Wall Street expected“, again the analysts now imploding, or is that setting back the market, whilst the records are still showing enormous growth, we see that dark cloud called Wall Street stating that it should have been better. There is nothing that shows evidence of the numbers that Wall Street holds others accountable to. In a system that is unrealistic, punishing realistic growth is not merely dangerous, it tends to be counterproductive in the end.

An additional part seen in the NY Times is now giving another light. They gave “Netflix already outspends its rivals, including HBO, FX and CBS, while Apple has recently signalled to Hollywood it would spend more than $1 billion on original content“, whilst the Guardian treats us to “Apple is upping its spending on original content in video, music and publishing to $4.2bn by 2022 from $1bn this year. Amazon is expected to almost double its spending on original content from $4.5bn to $8.3bn“, so the other two players are also spending billions in a market that is short of resources creating a bubble and bubbles are never good, so then the question becomes, is Wall Street intentionally creating bubbles to overinflate the mess and then short sell the cycle to make it implode in the future?

The fact that three players will represent close to $4 billion a year, each year is already a signal that the big screen, through internet or big screen itself is still flourishing, as the IP is brought through different ways, the only way will be up. So when we consider Australia who gives us “Netflix Australia starts from $9.99 per month for the entry-level, single-stream standard definition package, all the way up to $17.99 for the deluxe, 4K quality, four-stream package“, we see the simple selling point that a month of maximised streaming is close to a mere cinema ticket. That is the simplest of selling points and when we consider that, when we consider that this is not merely on that level, but that the setting also needs to fit the bandwidth that people sign on for, some will not charge Netflix, some do. That is also an influence. So there is more than one player that impacts the Netflix subscriber, all elements in that equation and some we can predict to some extent, but we remains in a setting where the analysts all claim that predictions were outclassing achievement in a place where growth is pretty sweet, it does not add up and that might just be me.

Yet this is where we get the Washington Post with ‘Netflix’s subscriber growth slows, panicking Wall Street‘, this is where we get to the golden egg, the part that Americans never understood, not in 1994 when some made claims on ‘saturation is a myth’, giving us an example with an elastic band, showing that 20% stretch again and again is possible and not today when we see that especially in Australia where housing prices in the big cities are through the roof, where we see that making a budget work is to cut out all extra excesses. In that setting many people can’t merely afford the $18 a month extra. That is supported with: “Professor Muir said it was important to realise that not all of those who live in poverty were unemployed. “One in three people who are living in poverty actually have wages, so we have challenges not just about how we make sure people have jobs, but we also want people to have stable jobs,” she said“. So we have an Australian setting where 1/3 is in poverty and a chunk of that has an actual income. So at that point, who of those people will have Netflix? Will they be willing to sacrifice two meals just to have Netflix? This is not a setting that is only seen in Australia. In America the UC Davis center for Poverty treats us to the setting of a few important characteristics of the 50% percent of minimum-wage earners with an age that is 25 or higher, 50% has a part time job. They have an average family income of $42,500 per year. At this stage it comes down to 20%-25% that live in poverty, when you consider that in 2016  around 43 million Americans were living in poverty, how much of an influence does that stop others from spending sprees outside of the Christmas season? When you see the hardship of anyone in your street, a person who works, fights and does whatever he can to feed his family, often both working, still not making the bills go away. How long until others start to save for the rainy day? I believe that these people are set to the economy as missing values. They do not matter, but they are still part of the total count. I personally believe that there is intent.

When we look at Wiki for a quick explanation, we get the optional view of an economic bubble with the text: “One possible cause of bubbles is excessive monetary liquidity in the financial system, inducing lax or inappropriate lending standards by the banks, which make markets vulnerable to volatile asset price inflation caused by short-term, leveraged speculation“. Yet what happens when it is not the ‘financial system‘? What happens when a bubble is pushed through analysts on the places like Netflix, creating friction with investors that apparently get spooked when a company still reports an optional 1.5 billion annual profit? So what happens when we see ‘volatile asset price inflation caused by short-term, leveraged speculation‘? Now take the leveraged speculation, asset price inflation (due to Apple and Amazon in the market) and it all suddenly implodes as all the analysts stated that Netflix could have easily gotten a million more subscribers that quarter. I hope that you get the drift now!

I am no Netflix fan (I have nothing against Netflix either). I always preferred to watch the big screen whenever I could afford it. I prefer to buy the season DVD/Blu-ray of a TV series I enjoy, that’s how I roll. Some prefer Netflix and that is fine by me too, whatever loads their canon, I say.

So when we see the Washington Post treating us to “they could validate investors’ fears of a company in slowdown mode for the first time in years. Wall Street has already been watching closely as Disney ramps up its subscription-content efforts and HBO, under incoming owner AT&T, is adopting a new strategy to compete“, we are treated to the setting of Pluto and two other dogs competing for the same bone, it is called market saturation and I have had the impression for the longest of times (around two and a half decades) that Americans either do not comprehend that part of business, or they merely do not care and ignore it. Now, we understand that at such points, the stock value of Netflix slows or even halts, yet to see a 14% drop is equally weird, which leaves me to think that Wall Street and all their analysts are in a bubble creating setting, which I believe has been going on for the longest of times. Do I need to remind you of Moody’s and S&P regarding the 2008 events? In the end they paid a fine, but compared to the damage done, it was miniscule. So when we take a step towards FLETC and the ‘Economic Crimes Investigation and Analysis‘ parts. They seem to be all up in arms for investigators, auditors, analysts and individuals serving as direct law enforcement support personnel who provide a foundation for fraud and financial investigations. Yet, when we look closely, how much effort has been done to investigate the Wall Street Analysts and other analysts who seem to be tweaking the expectations?

So when we look at the FLETC syllabus and see: “Successful completion of the ECIA will enable students to:
(1) identify various investigative techniques that may be used to investigate economic crimes;
(2) identify evidentiary documents that may be used to prove the source and disposition of monies;
(3) demonstrate how computer software may be used to organize, analyze, and present information;
(4) identify various ways that an accounting system may be used to conceal the true nature of fraudulent transactions;
(5) demonstrate how indirect methods may be used to identify illegal income; and
(6) demonstrate how effectively present investigative findings

Yet as I see it, in all this the global analysts who are spiking the expectations are all considered not a factor and have the privilege of remaining outside of the scope of all this. That also gives us that unless a 2008 version disaster happens; they and their overpaid asses quite literally get to walk away.

So how does that make sense in any universe, especially when we see the damage others faced over a decade?

Which gets us to the last quote in the Post with “Hastings did acknowledge the second quarter has historically been rough for Netflix, noting another under performance in 2016. “We never did find the explanation [for that],” he said“. In this we need to ask, was this merely a real under performance, or was it all based on a flawed algorithm, one that all the analysts using them will happily silence away?

A group of people never scrutinised, whilst a company making a clean billion plus a year is axed by 14%. Some will say it is all logical and that my lack of an economic degree makes it all my ignorance issue. Yet the Margin Call quote “2 and 2 no longer makes 4” gives the indication that it was not math and according to the math involved the 14% cut is optionally wrong, yet the reality of bubbles and the intentional creation of them is set on greed and that is the one thing that Wall Street thrives on and I wonder how closely some of its players are actually watched, more importantly, once proven, will the events actually be acted on, or will they merely receive a $401K fine in the mail?

 

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Milestones

We all hope to make certain milestones, some through fantasy, some through luck and some through anticipation. Your first threesome, the moment you joined the mile high club and for governments they have their own achievements, for example when they join the 100% debt club. So when we realise that Japan has well over 200% of GDP in debt, the US has passed the 100% marker and it joins those they looked down on for the longest of times. Italy, Iceland, Granada, Eritrea, Greece, Jamaica and Lebanon, all members of that 100% debt club, so when we see the Arabian Business (at http://www.arabianbusiness.com/politics-economics/395741-100-debt-club-set-to-get-new-member-from-oil-rich-gulf), treat us to the facts that Bahrain will soon join Libya and the Sudan as their debt exceeds their 100% GDP. We see more and more messages at present and even the IMF is setting a different atmosphere. We see part of that in equities.com. There we see “IMF (Page 10): Against a backdrop of mounting vulnerabilities, risky asset valuations appear overstretched, albeit to varying degrees across markets, ranging from global equities and credit markets, including leveraged loans, to rapidly expanding crypto assets.
MY TRANSLATION: In the last two major bubbles, the problems were mostly contained to dot-com stocks and housing. That is 100% not the case now. Almost every single asset on the planet – from stocks to bonds to loans and more – is wildly overpriced. There is zero room for error with prices at such dizzying heights
“. This is merely one setting; the field is expanding on a larger field and in all this, the nations that are passing the debt bar. France is set at 99%, so if they cannot contain the debt growth they will pass it this following financial year, leaving only Germany as one of the four large economies that is in a containable situation and there is where we get a partial ‘I told you so!‘ You see I wrote on part of this 5 years ago. (at https://lawlordtobe.com/2013/05/15/a-noun-of-non-profit/), I made a reference in regards to Brexit, but the setting of it all was a lot larger than merely Brexit. So as you get to contemplate “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“, this was predominantly regarding Brexit. Yet the implications are larger as I stated. The UK is taking on Brexit and now we see that the German anchor it the only anchor giving some stability, the UK is taken away, Italy has lost its footing as it surpassed the 100% debt and now France is pushing that boundary as well. All because it was easier to play the popular fool than taking a hard stance on their debts, France is not alone, Italy and the UK are all there, the smaller ones have no options to give strength to the large 4 and as the UK figured out that going it alone is much better for the economy, we see a dangerous setting.

Even now, when we merely consider Spain in all this (not the smallest economy), we see (at https://www.southeusummit.com/europe/spain/spanish-economy-returns-grade/) that Standard & Poor’s is still playing (what I personally see) as ‘their little game’. Perhaps you remember ‘S&P reaches $1.5 billion deal with U.S., states over crisis-era ratings‘ (at https://www.reuters.com/article/us-s-p-settlement-idUSKBN0L71C120150203) the one quote (one of many) needs to be considered “S&P parent McGraw Hill Financial Inc MHFI.N said it will pay $687.5 million to the U.S. Department of Justice, and $687.5 million to 19 states and the District of Columbia, which had filed similar lawsuits over the ratings“. So when I see “S&P notes that Spain’s overall economic and budgetary performance has not been hampered by political tensions in Catalonia, as many had feared. The country’s GDP increased by 3.1% in 2017 and last week the Bank of Spain raised its economic forecast for this year to 2.7%, up from a December forecast of 2.4%“, you see, the numbers are not really in question, yet when we see the image below (source: Trading Economics).

When we realise that none of the EU nations has a grasp on their debts, in addition, the GDP for Spain went down whilst it is still below the numbers of 2016 and before, there is actually no reason to see the credit rating for Spain go up. I am personally speculating that the EU will be so much more hardship when France hits the 100% debt marker. It matters, because this will soon become the academic exercise that the question: ‘What is the difference between cooking the books and creating a false positive wave through inflated credit scores?‘ I actually do not have the answer here, but I guarantee you that the quality of life in Europe is not moving forward any day soon, not until some issues are seriously reconsidered. In addition, the US-China trade war isn’t helping anyone, not even the Europeans so that will also become a factor of debate soon enough. It partially relates to “We have revised upwards our GDP forecasts, with an intense rate of employment creation and an economic model based on the external competitiveness of our companies. With this scenario, we will achieve our objective for 20 million employed people by 2020“, the issue is that it is misrepresentation, you cannot rely on the unemployment figures and then state we will have 20 million employed, because on a population of 46 million, he might be implying that the unemployment numbers will skyrocket from 17.4% in 2017 to 56%, that would be crazy, yet that is what we are told, is it not? The best lies (read: miscommunications) are done through statistics, so that the feather matches the bird one would say. Still, back to my speculation, I believe that Spain is not the only nation in this setting; I think that some numbers in pretty much every EU nation are beefed, weighted and set to make Europe (or basically themselves in the European setting) look much better, so when the UK leaves they will not look as weak and feeble as they have actually become. It is a setting that is way too dangerous. There is no way that Mario Draghi is not part of this, so when we look at the Financial Times of last week we see ‘Mario Draghi acknowledges ‘moderation’ in Eurozone growth‘ (at https://www.ft.com/content/3e20b49e-4939-11e8-8ee8-cae73aab7ccb). So with “Analysts said that Mr Draghi’s guarded language suggested that the ECB may wait until July — a month later than previously expected — to provide the markets with updated “forward guidance” on its plans to phase out the crisis-era stimulus“. I am a little less optimistic in regards to the quotes, and when we see ““Better safe than sorry was the motto of the day,” said Dirk Schumacher, economist at Natixis“. I personally tend to see that as:

Better safe than sorry
It allows for another day without worry
As we pile the worries and woes
To a stack we can blame on crows
Those at the London Tower are best
Because when they leave the EU we can make them the jest
And when our barge is no longer secure
We move to Wall Street where we can endure

You might think that I am merely making light of all this. The issue is that people in Europe seem to ignore that over €2,000,000,000,000 was printed without the validation of treasuries or consent of the people whose funds got devaluated even further. Do you think that printing money has no cost? It is money that the EU never had, so why did you think it came without consequence?

This partially (and I mean partially) is seen in different ways when we look at an article from Reuters merely two weeks earlier (at https://uk.reuters.com/article/uk-ecb-policy-draghi/stock-volatility-no-big-factor-for-ecb-so-far-draghi-idUKKBN1HG1VR) ‘Stock volatility no big factor for ECB so far – Draghi‘, now I agree that volatility will come and go, so the ‘so far’ part is perfectly fine. When we see ““While we remain confident that inflation will converge towards our aim over the medium term, there are still uncertainties about the degree of slack in the economy,” Draghi said in the ECB’s annual report“, now I can agree with that. There will always be a certain amount of uncertainty, that is all good, no issues there, but it is set on a certain premise. When we see that Spain (the only visible one) suddenly in opposition of what I see as real has its credit score increased and as such we see the start of an optional bubble, when others do the same we see the forecast on unreal values, so we see the bubble is not set to the reality of the actuality, at that point, when a lot more start realising that some numbers do not make sense, the uncertainty grows and the closer the UK is to leaving the stronger that uncertainty becomes. At that point we see a run and a total collapse, when that happens, when the people realise that pensions before 78 is no longer optional, do you think that the people will remain calm? When they realise the impact of €2 trillion printed cash is impacting the 26 nations, how much value decline will they face? When that happens, how will people react in all this? Now we get to two elements, one is the mention in the Financial Times where we see: “But the weak economic data for the first quarter have triggered increasing speculation that the first interest rate rise will be delayed until later in 2019. A smaller number of analysts are expecting the bank to continue QE into the new year“, the second is that the entire stimulus was to set the economy right, which did not happen, now set that against inflated credit scores, inflated economies and the downturn that follows, that will happen, it can no longer be contained, merely delayed to some extent. When it does hit Europe would not have a penny left to balance against and it will leave the bulk of Europe destitute. There would be no defence against the next downturn and that is when disaster will truly strike. So as the story is pushing towards ‘protectionism’ and ‘patent values’, we should also consider that impact. Now, as a University graduated Master on Intellectual Property rights, I do comprehend some of the issues, yet I am not a patent attorney, so there are parts that I will ignore or not look at. Consider that a national economy is now more and more dependent on the national patents and the represented value that they hold. Now we get European Patents, the Unified Patent Court (UPC) allows for a simpler way to get it all registered and to some extent enforced. So it is a good thing overall, there was never too much fuss about that side, yet the one strong economy (Germany) is now setting the stage to oppose the UPC, we see this (at http://www.ippropatents.com/ippropatentsnews/europenewsarticle.php?article_id=5725), where we also see “Alternative für Deutschland (AFD) has called for the repeal of the convention on a Unified Patent Court (UPC). AFD “rejects the EU patent law reform”, according to the German Bundestag, which announced the motion on 7 March“, I believe that overall the UPC is a good thing, but there will always be small interests that are not perfect, no EU setting is 100% positive, yet overall, to get one filing for all EU nations, in light that even the UK agreed (and ratified) is a good thing. So when we see “It was based on three grounds, mainly how the UPC Agreement violates EU law, the majority requirements of basic law, and does not comply with the rule of law principle related to judicial impartiality. The complaint was scheduled to be heard in 2018 by the second Senate, appearing as the 11th item on its agenda. In Germany’s 2017 federal election, the AFD won 12.6 percent of the vote and received 94 seats, the first time it had won seats in the Bundestag“, there is an academic setting, yet with 12.6 of the council in hands of the AFD, a very Brexiting minded party, or is that Berlout or Deutchleave, we need to realise that the patent issue is a lot more biting in Germany and that cannot be ignored, as they give rise to uncertainties. So when we get back to the uncertainty there, as well as other uncertainties, and whilst we saw Mario Draghi accept that uncertainty results in stagnation, how much more stagnations are required for the next downturn, even a short term one, whilst the economic reserves have been already been drained.

Now we have a much larger setting, the EU was never about everyone agreeing on everything and the economic setting that requires that to happen at present is also making the dangers of waves that sinks the barge called EU. Now, that seems like an exaggeration, but when you realise that the German anchor is the only one giving stability, you can see the dangers the EU faces and more important, the dangers of no reserves and an utter lack to keep proper budgets in place, a setting now in more danger for the reasons that I gave supported by the economic views of many others. I believe some are downplaying the impact, yet when we realise that EVERY European Union government is downplaying the economic impact (as every nation always wants to look as good as possible, which is a PowerPoint setting of the human ago) we get a much more dangerous setting. We accept that the smaller nations have a negligible impact on the whole, but on a ship that can only remain truly stable with four anchors, losing three is a much bigger disaster than anyone realises, and that downplay will hurt all the players that are part of the EU, so when the downturn starts, we will see kneejerk movements from all the nations, all the big players and we can only speculate the fear mongering speculations that the IMF will treat the European audience to. I have no idea what form it will take, but when it happens I will take a deeper look. In a setting where every negative economic milestone could lay waste to whatever reserves its citizens wrongfully thought they had in the first place.

 

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If at first you don’t succeed!

That was the first thought I had when I saw the article ‘Academics attack George Osborne budget surplus proposal‘ (at http://www.theguardian.com/business/2015/jun/12/academics-attack-george-osborne-budget-surplus-proposal) and the title reflects on them as well as on me. You see, as stated more than once before, I have no economics degree, but I have insight in data, I am not a bookkeeper, but I know how to keep my own register (I’ll let you boil down that conundrum by yourself).

So as I have a go at 77 of the best known academic economists, I present the first quote, which is: “George Osborne’s plan to enshrine permanent budget surpluses in law is a political gimmick that ignores “basic economics”, a group of academic economists has warned“, here we see the first failing of these economists. You see, the first rule of a basic economy is plain and simple:

Do not spend more than you earn!

That has been a massive need for over 20 years! Some ‘academics’ convincing that the budget could be X (whatever the amount is, now they tell us that X = Y (part of our costs) + Z (the interest and minimal payback on a massive loan that allows us to do more). At some point, one politician was stupid enough (or forced) to do this, but then the next one did it too and so on. Now we have a game, because of a group of flagellationists, we are all whipped into a place we never wanted to be, which is deep in debt!

Were those economists wrong?

They were not IF (a very loud if) the politicians would have diminished the debt, which is now 1.5 trillion pounds. You remember the first formula (X=Y+Z), now let’s take a look. You see, the numbers have been shifted again and again. Some now state that the interest is £42.9 billion per annum (2013 numbers), So now we get X = Y + (42.9 + 30), which is the annual interest and the paying down the debt at 2%, let’s not forget that at this pace it will still take 50 years, that is, if we get a budget that is actually set!

There are other complications that will make ‘Z’ higher, or ‘X’ a lot lower, when we consider maturing bonds and all other methods of ‘borrowing’ funds. You will see that the only winner is the bank. Whomever gets paid 42.9 billion is getting that as a guarantee without ever working for it. You the readers in the UK are doing all the work for that bank. The economists are not trying to tell you that. They come with ‘it is a very complex situation’ or my favourite ‘it would take too long to explain it all’. Yet, in their own words, ‘basic economics’ is actually really simple.

Do not spend money you do not have!

Now we get the quote “the chancellor was turning a blind eye to the complexities of a 21st-century economy that demanded governments remain flexible and responsive to changing global events“, which I see as a half-truth! You see, economics are quite complex, but they are only complex because economists and their friends in the financial sector MADE it complex! They get all this money for free from governments all over the world. They do not want to change that ever!

For the sake of the United Kingdom, the Commonwealth and our sanity, George Osborne is making that change. If previous Labour (especially Gordon Brown MP) had not spend the massive amounts they had, the UK would be in a much better position, but that is not the case. The economic view of ‘flexible and responsive’ is a valid point, but previous events turned ‘flexible and responsive’ into non-accountable overspending of funds that were not available. It will take a generation to clean up. The issues in Greece got so hairy that the President of the United States put his foot down, 2 days later the IMF walks away. An economy so deep in debt, an economy only representing 2% of the economy of the EEC could be able to topple it all. That is what many do not want to address!

This gets us to a linked quote in the article ‘Greece running out of time to avoid default, leaders concede‘ (at http://www.theguardian.com/business/2015/jun/12/greece-running-out-of-time-to-avoid-default-leaders-concede), where we see: “Greece has less than a week to strike a deal with its Eurozone creditors to avoid defaulting on its massive debts and perhaps being kicked out of the single currency area, with German leaders and top European Union officials now conceding that default is the likeliest outcome“, so as you might recall that Greece claimed that a solution was ‘almost’ there, I will show you the ‘flexible and responsive’ side to the word ‘almost’.

You see, “I have had sex with Laura Vandervoort almost every night!” Monday almost, Tuesday almost, Wednesday almost. You get the idea, ‘almost’ here is like ‘as soon as possible’, at times it means ‘Never!’ (it would be so much fun to get a mail from Laura stating that she will be here ‘as soon as possible’, I am not beyond irony and it will make me chuckle for weeks!

Why this example? Well, I have been telling the readers for months that Greece has been screwing us around, you see how the words just fall into place? The economy does not! This is the clear evidence that the law must change. While all the players getting nice incomes were saying ‘tomorrow’ ad infinitum, George Osborne is saying ‘Now!’

The fact that this is essential is also seen through the acts of President Obama. Tax evasion was high on the G-meetings (G-7, G-20, take your pick), yet, when Australia introduced the Google Tax, we see the us Treasury making waves to stop it ‘US Treasury pressures Tony Abbott to drop ‘Google tax’ ‘ (at http://www.afr.com/news/policy/tax/us-treasury-pressures-tony-abbott-to-drop-google-tax-20150428-1mu2sg). They stated it as: “Mr Stack said it was critical that Group of 20 countries like Australia that were participating in global tax negotiations did not pass laws on their own that would contradict international agreements“. In my words, my response would be: “Mr Stack, you and your administration are a joke! You have not acted for over three administrations in reigning in corporate greed, your American corporations were cause of a financial meltdown 11 years ago, a meltdown we are all still feeling. In addition, you have not set ANY solid ground in countering tax evasion, other than the windy speeches we have expected to see, all speech, no action! It is time for the American administration to put their actions where their mouths have been for too long!” Not too diplomatic, but the message is coming across I reckon. The commonwealth can no longer adhere to the irresponsible acts of a nation that is 18 trillion in debt!

So as I see it the quote “they argued Osborne was guilty of adopting a gimmick designed to outmanoeuvre his opponents“. You see, this is not a gimmick, this is a direct need where the banks are no longer in control, the Commonwealth is a monarchy, that is there to give a future to the people and to keep them in a place where they have a future. For now Greece basically no longer has a future. It has spent it all, unless the US treasury comes up with 50 billion (quoting Jean-Claude Juncker), it only has time to find a solution that will not end the existence of Greece.

This is the massive difference that the people keep on forgetting. The UK is a monarchy, with a sovereign ruler who has accepted (or: was given) the responsibility to keep the nation thriving and its people moving towards a happy place that has a future, America is a republic, where the elected official is depending on large contributions, especially from the wealthy. It has given in to big business again and again for the last 20 years. As we see the USA, a nation more and more drowning in civil unrest, we should consider how they got there. The got there by lacking in laws that held big business and government to account of spending. Here we now see “George Osborne’s plan to enshrine permanent budget surpluses in law“, this is an essential first step to get us all back on a decent track where we are not in debt!

Getting back to the formula. The last step we were at was: X = Y + (42.9 + 30), you see, the people all over the place have been ‘deceived’ to some extent. Deceived is hard to use, because the word ‘misrepresented’ is a much better word. X is what the UK receives. With large corporations ducking their fiscal responsibility, the value of X goes down, with unemployment issues and zero hour issues, the people get less money and as such they pay less taxation, so X goes down even further. Now we get the set costs. (Y), more and more elderly, means more costs and they do not pay taxation. So the elderly drive down X a small bit and drive up Y a large portion. I do not hold that against them! They worked, they made Britain (and Australia) great! They did their share, so they get to sit down to enjoy the tea and biscuits (an additional fine venison steak would be good too). These are all elements that the economy is confronted with and as these economists have been to enabling to big business, we see that we must put a stop to what is happening. We have no other choice, or better stated we have less and less options. These economists are all polarised into one direction, one direction that has not worked for over a decade. We get misrepresented by ‘managed bad news’ and other forms of information we can no longer rely on.

Consider that I have been on top of the Greek case for some time now, so when we see (at http://ec.europa.eu/economy_finance/eu/countries/greece_en.htm) the fact that the forecast of Greece is 0.5% in 2015 and 2.9% in 2016, I wonder how they got to it all and if such misrepresentation should not be a cause for liability? Is it based upon raw data that we can trust? You see as these economists all rely on the ‘formula’ and all concede that it is a good model and a real predictor, my gut has been a lot more accurate and these economists had to adjust their numbers downwards time and time again. The last part for Greece is seen in the Financial Times, it reflects on what I stated earlier (at http://www.ft.com/fastft/343532/eurozone-financial-fragmentation-hits-5-year-low)!

Initiatives such as the European Stability Mechanism, a permanent rescue fund designed to limit financial chaos that might arise from an event such as a Grexit, as well as the €1.1tn quantitative easing programme, have helped insulate the rest of the Eurozone from Greece“, to ‘limit financial chaos’, is that not weird? Many players downplayed the impact of Grexit (especially France). So this ‘rescue fund’, how much is in it? You see, that will become a debt too and where does it go? France, Italy? They are in deep financial waters. So how much more will be needed to stop France and Italy to go over the edge?

Simple economics is to lower debt, now to throw money from other sources at the interest of debt, which solves nothing! George Osborne was right before, he is right now. The fact that the Economy players, the IMF and America do not like it when others are out of debt, that does not mean that we should adhere. I showed how USA adheres to big business (including banks), it is time to be self-reliant! So as rating agencies set the outlook bar to negative, we should start to wonder, who do they serve? You see, if the ratings are about the ‘now’, so the outlook is moved from Negative from Stable for an event that is not happening until 2017. Guess what, the UK was always stable, and when these ratings are shown to be ‘flawed’, then what?

To be honest, S&P has an interesting paper on this (at http://www.standardandpoors.com/aboutcreditratings/RatingsManual_PrintGuide.html). Here we see the quote “Credit ratings are opinions about credit risk published by a rating agency” and “Standard & Poor’s ratings opinions are based on analysis by experienced professionals who evaluate and interpret information received from issuers and other available sources“. Now we get the final part. The first quote is clear. It makes it known that this is a matter of opinion. The second quote is how they get it. Now tell me, how many of these ‘77 economists’, who were thumping George Osborne on all this, are involved in setting economic predictions? Are they linked to people who do set the ratings? I am not certain of the first premise, but I am decently certain of the second premise!

So are these economists, who claim that it is about ‘governments remain flexible and responsive’, is that it, or is the game getting rigged because the few are willing to sell the larger proportion of a population down the drain for the interest of self?

Consider the information given and work for a place of common sense. You will soon realise that the path of George Osborne is the right one, moreover, when in your life, has debt ever been a good thing and how is the debt working for Greece?

 

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Is it all Greek to you?

Let’s take a look at the issues!

First there is Bloomberg who on April 11th headlined ‘Greek Bond Sale Tops $4 Billion in Return to Markets’ (at http://www.bloomberg.com/news/2014-04-10/greece-readies-bond-sale-as-athens-car-bomb-reminds-of-upheaval.html), a nation with 11 million have notched up their debt by hundreds of billions, no options at present to repay it and again they are allowed to push new bonds into the market.

My first issue: I want to see a list of names of people that allowed for this. There will be no excuse, no non-clarity; they are to be presented by a panel of economists explaining the rationale for this and it should be presented live! (I wonder how long it will be until we hear ‘carefully phrased denials on lack of clarity‘ in regards to who drove this).

I already gave my view on May 18th on my article ‘Are we getting played?‘ (at https://lawlordtobe.com/2014/05/18/are-we-getting-played/), where I stated: “The investor relies on information like credit ratings (from places like S&P and Moody for example) to make an assessment on how realistic the investment is. The fact that almost a month later the quote ‘Greek lenders are likely to face large losses over the next two years’ is seen, gives rise to the question whether any upgrade to the credit rating was valid“.

It seems clear to me that Greece is unable to manage its economy, its debts and its options to repay the debts. Can we please have a vote whether Greek economic affairs should as per January 1st 2015 be managed by either Germany or Turkey (Turkey is not that great an idea, that’s just me being mean)? It seems clear to me, for a long time now, that pouring money into a hole, whilst people keep digging themselves deeper will not result in any resolution. There has been clear evidence of gross negligence for over a decade; as such other measures will be required.

The Bloomberg article states: “Greece today took one more decisive step toward exiting the crisis,” Samaras said. “International markets are now expressing in the most undoubted way possible their confidence in the Greek economy”, I state that this is not the case, Greece is nothing more than an upgraded vulture option, todays information clearly sees this, let’s just be clear, this is just a little over 6 months AFTER that so called vote of confidence.

The second part we see with “The government and European Union predict that the Greek economy will expand 0.6 percent in 2014 after six consecutive years of contraction that has cost about a quarter of the nation’s economic output and sent the unemployment rate surging” I believe we are being intentionally misinformed here. If we look at http://www.tradingeconomics.com/greece/gdp-growth-annual, we see that this year Greece’s GDP annual growth rate is growing by 1.9%, a growth of 1.5% in a year, whilst this nation is in such disarray, such debts and such levels of unemployment, there is, what I see to be an intentional attempt to misinform people. The standards used are no longer applicable. With a little over 1 out of 4 without a job, this nation is a mess; numbers are withheld, or misrepresented, not unlike the entire Goldman Sachs issue in 2010. If you doubt my word against that of those economic ‘boffins’, then look at today’s news.

 

We see ‘Grexit fears send Greek bonds and shares sliding‘, which the Guardian stated 10 hours ago. The quote “The Greek stock market is plunging to new depths, after the prime minister issued dire warnings of chaos ahead if his party were ejected from power“, as well as “Greek Prime Minister Antonis Samaras on Thursday accused opposition SYRIZA of bringing back Grexit fears and sending a message to the markets not to lend to the country by declaring its sovereign debt unsustainable“. By the way, in my view, the debt was never sustainable. When we consider 300 billion, over 11 million, we see that every Greek needs to bring 27,300 to the table, one out of four has no job, so that costs extra, as well as bring the cost per working Greek now to a little over 33,000. If the average Greek brings home a little less than 10,000, you can see that they come up short by a lot. By the way at 5%, the interest to be brought in would be 20% of a Greek income, whilst at present Greece cannot even properly budget its nations. So, as we look at these numbers, can anyone explain how Greece considers its debt to be sustainable?

Those who allowed Greece to fall in this deep hole should be made public and named, and we are talking Greek names here. Someone signed up for unrealistic debts, misrepresented presentations and the Greek government presented it. The Greek people have a right to know who were behind this titanic blunder. The fact that Austerity measures are not kept and the system is not cleaned up only helps to make a case that Greece should not be allowed to continue to be part of the EEC, because at present they are not in a small measure, the risk, which they could now enable the Euro to collapse completely.

If we consider the reasoning of a quickened election by PM Samaras and the message “Athens exchange has now tumbled by 7%, meaning it has shed 20% of its value since Samaras decided to accelerate the presidential election to next week“, we should wonder why this change is now being made. There are conjectures in play too (partially by me at this point). When we consider another (non proven source, at http://www.zerohedge.com/category/tags/greece), we see ‘Greece Suffers Biggest 3-Day Crash In 27 Years‘, here we see the quote “Did we just get a glimpse of the ugly reality hiding behind the veil of status-quo-maintaining central-bank-sponsored manipulation?“, I have written similar thoughts, but mine were not founded on economic knowledge, just on the data I looked at. One response there was “Central bankers have lied to a false prosperity and zero interest rates as if there is no risk remaining“, which is in line of what I have noticed with economies all over the EEC, I call it ‘managed bad news‘, which seems more apt, but when we see a 20% crater in what is laughingly called ‘Greek valued bonds’, my euphemism of carefully cautious labelling can be thrown out of the front door and perhaps it should be called ‘intentional manipulation for the profit of a few‘. Proving that part takes a little more time, yet those behind the curtain will not be held to account in any way, shape or form and legislating these events seems to be a large ‘No No!’ as well.

So where to look?

Well, if we look at the news CNBC gave us on November 19th, we see “Yields this week have not reached the 9 percent level hit in mid-October when negative sentiment surrounding Greece spread to global markets. However, rising debt yields do highlight that the country’s economic woes are far from over, with a crucial deadline in early December looming large on the horizon” (at http://www.cnbc.com/id/102198319), we also see the following quote “The country managed to exit recession this year and post a positive gross domestic product (GDP) figure last week, but political wrangling has continued nonetheless“, so ‘manage to post a positive…‘, positive by what standards, as well as the part ‘managed’, managed how? Through manufacturing or through manufacturing the books (aka cooking them) with possible assistance from Goldman Sachs or a like-minded institution? The lack of clarity as well as the lack of clear numbers give pause to consider how bad an idea it was to let them back onto the bond market last April.

The final part we get from the Guardian (at http://www.theguardian.com/business/live/2014/dec/11/russia-central-bank-interest-rate-hike-ecb-loans-live#block-54899bc7e4b09dc257b7f1fe), where we see “The 10-year Greek bond is now yielding over 9%, up from 8.7% last night. And the three year bond is now yielding more than 10%, as nervous investors demand a bigger premium for holding debt that matures sooner“, so from a mere 5% to almost 11%, doubling the dividends, is ‘sponsored manipulation‘ THAT far-fetched? I want to see names of those behind the curtains, they are no Wizard of Oz, they are what used to be called the ‘Gnomes of Zurich‘, yet in this day and age, they are virtual, and none of them reside in Zurich, that’s just too old school.

In the end where it their (and our) money, in the form of dividend going to?

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Rated into immorality

Can anyone explain something weird to me? The news is given (at http://www.theguardian.com/technology/2014/nov/14/twitter-given-junk-credit-rating) to impress upon us a combination of values and steps that are beyond immoral. Consider the tweet, tweet twitter engine. I use it almost every day, it is the one unbiased part where we can follow events, people and companies so that we keep up to date, small messages that bring the actual information. A company that had a massive idea, is making money, when we see the quote “Jim Prosser, a spokesman for Twitter, pointed to S&P’s own words as comment: “Twitter will continue to experience very strong growth and not encounter a significant increase in competitive pressure.”“, we see issues, but is anyone seeing the question behind it? Then we see the one little gem hidden in all the text “The rating is unsolicited“, is this part of the issue? You see, as we look at companies, their revenue, their profit and some might consider their contribution, so as we look at it why is S&P suddenly decided ‘Twitter given junk credit rating‘? It seems to me that there is an economic shift going on. As companies are doing well, they are now getting downgraded for not meeting the expectations of some analysts.

Yet, where is this world going to?

Consider the application of morale (a word not found in a financiers dictionary) and reasoning for my thought train at present is the following: ‘Forex-rigging investigation: George Osborne gives full backing to SFO‘ (at http://www.theguardian.com/business/2014/nov/14/forex-rigging-investigation-george-osborne-sfo). Libor, Forex, Tesco and there is absolutely ZERO indication that this is just it. At the edge of reason we see the quote ‘Because I don’t want you to see any of my wobbly bits‘, which sounds ample and applicable as the financial district of happily ‘screw everyone over‘, it is all about the wobbly bits, according to Bridget Jones!

Consider the Forex articles. The second one is http://www.reuters.com/article/2014/11/14/us-banks-forex-crime-idUSKCN0IY0LV20141114. The issue is not just the events, the quote “Royal Bank of Scotland, HSBC, JP Morgan, Citigroup, Bank of America Corp and UBS were hit with penalties. Barclays is still in talks with authorities over a settlement“, which not just how far the issue has overstepped, but the issue is where banking laws are falling short, short to the extent that we have in access of half a decade. The issues continued after the banking collapse as the financial population continued to be nothing more than an eager courtesan to the bonus they so crave. The end result is a malignant decay of morals, standards and all this now (as I personally see it) on the standards as the poor are left with less than none, so Standards & Poor it is!

We now get back to what I regard to be a new level of exploited levelling. Consider the hidden simplicity that Libor held; now consider that debt ratings Moody’s, S&P, Fitch and the relative newbie Egan-Jones decide on ratings. Combine ‘how to lie with statistics‘ (a famous book by Darrell Huff) and the need to manipulate the market for 23 billionaires and we see the light of junk status made Twitter in a whole new light. Consider the basic state of an economy. A company sells, makes profit and pays taxes, a nation flourishes! This is a naive (remember my non-economic degree?) approach towards the worlds cloud of business. Investors, shareholders, analysts and raters are a cog within a machine of cogs. Yet this inner circular machine is different. It inflates, malleably changes and coaches towards a change that seems to be intent on syphoning and draining virtual cash flows into a different premise of profit, which is then turned to actual money. In an age of debts that go beyond the total of all treasuries, virtual numbers that have little to no foundation. The foundations and the levels they have been compromised towards are of a dimension we never imagined possible. Consider that the big banks have been fined in excess of 2.3 billion (at http://www.forbes.com/sites/halahtouryalai/2013/12/04/big-banks-fined-2-3b-over-illegal-libor-cartels-more-fines-on-the-way/), I wrote about it in ‘60% confiscated and counting in Cyprus!‘, on April 1st 2013, yet do not think this article to be a joke. I stated “If this is what frightens the US, then consider the consequences of a system like LIBOR being manipulated through the total value of trade. If that would have been off by 11.2%. Out of $1000T (UK and US combined) then that difference would be $112T“, several people laughed out loud then, yet now consider not just Libor, but the audited events of Tesco, the $5.3 trillion market of Forex and the fact that morality might be found in a church, but as we see the evidence, morality is not found in banks and financial institutions, where will it end?

With the Twitter events that question becomes more debatable and the impact that rating companies now impress upon profit turning companies have. Is it just about profit, or about the stated ‘anticipated statement of profit’? As certain ‘analysts’ claim that events are not exceeded, stock becomes junk, waves are created and as such, the welfare of companies are tweaked into a state of artificially changed state, some are inflated, some deflated, but always towards the claim of raters and analysts. The bottom line set towards an algorithm. Consider these states as we have seen not just the change of Tesco, but the events as they also gave way of downgraded profits with Sainsbury, which was not so vocally seen before that day in September. Interactions on many levels, based upon foundations that no one seems to question. Consider how the expectations were set by ‘analysts’ based upon data given to them and data available to them, now consider how Tesco had a quarter of a billion inflated and how the Pricewaterhouse Cooper auditors were ignorant of the inflated condition, now consider how Analysts used that element in predicting waves, the raters predicted and set the value and they are now setting the anticipation of investors and shareholders, an artificial pool with tidal wave creating capacity, and the two elements that have the ability to set the power and size of the waves. So how is your view of financial morality now? Consider the final part in this story. When we consider a story on Fortune titled ‘Twitter is junk, while Alibaba is class, ratings agencies say‘ (at http://fortune.com/2014/11/14/twitter-is-junk-while-alibaba-is-class-ratings-agencies-say/), why is that? Twitter is still holding its own, is it perhaps that the waves of Alibaba can be more easily influenced? Companies valued at the ability where the waves can be decided by the financial cogs, the stability of Twitter is less interesting to them, so they make way for whoever can aid in creating the waves these financial people want. (The last part you read is all speculation on my side), yet speculation or not, when we see the waves of Libor and Forex, are my thoughts so far out of bounds? How Twitter making millions is downgraded, how Tesco, beyond the inflated profits, still made a billion, it’s downgrade of 90% seems excessive beyond punishment, but Tesco is not a good example (because of their own internal manipulation), Consider the Fortune quote “And the fact that Alibaba is 90% dependent on a home market that is slowing, while acknowledged as a risk, doesn’t seem to scare the agencies“, it does not scare them, or it appeals the dependency of Alibaba to make certain decisions down the line? There is a side that seems ignored by all, I personally still have a hard time believing that (as my calculation went in ‘Price Waterfall Blooper‘ on October 25th) the price for 199 auditors could not find two events of inflation of each well over 100 million. Are my suspicions in regards to manipulations that far-fetched?

I wonder how long it will take for the law to catch up, for the Department of Public Prosecutions (DPP) or Crown Prosecuting Services (CPS) to get a handle on these events and deter these actions to such a degree. There should be additional questions as the raters are all American, in light of their shortfall that approaches 18 trillion at present. It seems that the US has no options, no solution and no resolution strategy, yet we see that the big four give ratings are all American. The last part is not an accusation in any way, yet the fact that the Auditors need new oversight, especially in the light of American auditing firm Pricewaterhouse Cooper as they will face questions regarding Tesco. As the 4 largest auditors include UK and Netherlands, why are there only American raters (of the proportions of the large 4)? With the risk of manipulation, should there not be a British and even a French or a Dutch rating service? Let’s not forget that PwC faces possible investigation, not because they are more likely than not guilty, but because their innocence needs to be proven beyond any doubt, especially in light of the amount of companies audited by them as well as the issue of 199 auditors (as I calculated them) not finding anything. When we consider the length of time that PwC has had Tesco as a customer, yet, these are two separate issues, there is no inkling of suspicion that auditors are part of any manipulation, yet the auditor’s data is essential to such steps.

Where is the solution?

Not sure if I know of one, laws can be made draconian to give much harsher sentence to the transgressors, but the issue is not the transgressors, the issue is that these ‘manipulators’ have by definition of law not broken any rules. Yes, we see the fines of Libor and soon Forex, these transgressions are seemingly clear, but what of the raters and the analysts? The issues of data are at the foundation here. That what is raw data and how it becomes processed data is now at the centre of it all. That what is construed to be the creator of waves through analysts, raters and auditors; Auditors collecting the data, analysts to manipulate (which is what they might see as a simple application of personal preference and weighting) and raters to set the pace for investors and shareholders.

So tell me, how wrong is MY view and why have these influential cogs not been dealt with through legislation?

 

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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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