Links 3/4/15

Netanyahu Doubles Down Against Obama With PowerPoint On Perils Of Affordable Care Act Onion (David L)

A Visit to Aoshima, a Japanese ‘Cat Island’ Atlantic (furzy mouse)

Creative genius driven by distraction ScienceDaily (Chuck L)

Coffee linked to ‘cleaner’ arteries BBC (David L)

Peter Thiel: Google’s lucrative search monopoly may be about to end Business Insider (David L)

Climbers Leaving Everest Shit-Covered Biohazard, Sherpas Warn Gawker

Nobel Peace prize chairman removed France 24. Chuck L: “They should have instead withdrawn the prize and asked for the money back.”

This is nuts, where have all the bonds gone? FT Alphaville. I wish I had time to write about the insane new normal of negative yields.


Greece blocks construction at Eldorado’s Skouries mine Globe and Mail (Nikki)

IMF abdication on Greece FT Alphaville (Scott)

Why the drachma can’t save Greece: Goldman CNBC

Greek government has twice the support of Germany on social media PR Week (Swedish Lex). The headline is misleading, since every single prominent figure in the Greek crisis is far more disliked than liked, so we are talking about levels of antipathy, not support.

How the Troika and Piraeus Bank Sealed Cyprus’ Fate Der Tagesspiegel (Richard Smith). We mentioned in passing in our detailed coverage of the Cyprus banking system meltdown that the Cyprus resolution shifted assets to branches of Greek banks, in effect serving to prop them up. This investigation provides far more detail.


US to Deploy Six National Guard Companies to Ukraine This Week Sputnik News. Heresy 101: “Hopefully, this is Russian propaganda because the brigade ‘was the first major United States Army ground formation deployed in Vietnam, serving there from 1965 to 1971 and losing almost 1,800 soldiers.'”

Ukraine sharply raises rates to 30% Financial Times

Beyond the ninth circle of hell: what changes are waiting for the Ukrainian society after the war Vineyard of the Saker

The Creation and Abandonment of Kosovo Common Dreams (Chuck L)

Eurozone faces first regional bankruptcy as debt debacle stalks Austria’s Carinthia Ambrose Evans-Pritchard, Telegraph. The Austrian banks were all bust after the crisis. How that was finessed is beyond my ken, but it appears whatever was done then is coming a bit unglued as the mess in Ukraine and the economic impact of sanctions against Russia are creating new pressures.


Bibi’s misleading Congress clapometer Financial Times

Netanyahu presents Congress with a warped view of the Mideast Haaretz (RR)

Noam Chomsky: Opposing Iran Nuclear Deal, Israel’s Goal Isn’t Survival — It’s Regional Dominance Democracy Now

Honduras Is Sold as a Libertarian Paradise — I Went, and Discovered a Capitalist Nightmare Salon

The “pauper president” of Uruguay steps down BBC

Big Brother is Watching You Watch

Body-camera maker has financial ties to police chiefs Associated Press (martha r)

CIA Urged Rebels to Assassinate Their Own In Order to Create “Martyrs” George Washington

The Embattled First Amendment American Scholar (furzy mouse)

Using Private Email, Hillary Clinton Thwarted Record Requests New York Times

Top U.S. officials brief House Democrats on Pacific trade pact Reuters. Translation: The White House arm-twists recalcitrant Dems. EM: “Gotta love the delicious vagueness – ooh, we get to ‘set objectives’ in exchange for a carte blanche!”

White House Plans No Rescue if Court Guts Health Care Law New York Times

House Republicans want to legally forbid EPA from looking at science it doesn’t like Salon (Chuck L)

House breaks impasse, passes security funding without provisions Reuters (EM)

Lawyer In California Proposes Killing Gays With ‘Sodomite Suppression Act’ Huffington Post (Chuck L)

Alabama Supreme Court Orders Judges to Stop Gay Marriages NBC (furzy mouse). The Alabama Supreme Court elections are far and away the biggest-ticket judicial races in the US. The amount spent in Alabama well exceed that of the gubernatorial race.

Feds Raid California ‘Maternity Hotels’ for Birth Tourists NBC

Ferguson Police Routinely Violate Rights of Blacks, Justice Dept. Finds New York Times

Environmental groups sue Port of Seattle over Shell oil fleet Reuters (EM)

U.S. millennials post ‘abysmal’ scores in tech skills test, lag behind foreign peers Washington Post. Even if true, this serves as justification for the McJobs economy.

KOO: The Fed may be telling us something by characterizing the first rate hike as a ‘liftoff’ Business Insider (David L)


How fraudulent blood money makes the world go round Medium (Richard Smith)

Brazil probes link between HSBC Swiss accounts, Petrobras scandal: sources Reuters (Richard Smith)

Brazil Petrobras probe sees politicians targeted BBC (Richard Smith)

Class Warfare

The Right Thing to Do: Homeless edition Ian Welsh

The Perils of Privatization American Prospect

Antidote du jour:

snow squirrel links

See yesterday’s Links and Antidote du Jour here.

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  1. Clive

    When I rule the world, I’m going to impose a blockade on Everest and put a stop to this ridiculous ego-massage “mountaineering” tourism. Come on you morons, just go to the bloody beach (or the lake shore, the campsite in the national park, Anne Hathaway’s eff’ing Cottage — any one of an infinite variety of tourist trap places) like everyone else. Can’t they leave just one place on Earth alone ?

    1. frosty zoom

      “Can’t they leave just one place on Earth alone ?”

      they do. it’s called detroit.

    2. craazyman

      Or they could build a base lodge and gondola like so they could get up and down in a few hours and crap in the restrooms next to the lounge.

    3. Jef

      “Climbers Leaving Everest Shit-Covered …” Boy is that a metaphor for humanity on several levels.

      “To go where no man has gone before…and shit all over it.”

    4. MyLessThanPrimeBeef

      Not just ‘ego tourism’ but ‘ego pioneering.’

      “Why do you want to become the first human to climb it?”

      “To inspire others, to test the limits of human endurance and to show how much we can achieve.”

      “Why not, then, be the first to migrate, or trek, from Central America, all the way to Alaska, and run across every freeway possible? It’s just as inspiring a physical feat, and just as deadly – compare the death rates of crossing Interstate 5 and of climbing the highest peak in the world. And that’s what you’re after, right? That adrenalin rush. But you are not interested in that. Is that too lowly for your social class? Is that something only the credit-score-challenged 99% would do?”

  2. guest

    Lawyer In California Proposes Killing Gays With ‘Sodomite Suppression Act’

    Headlines start resembling Onion spoofs with such a noticeable frequency… It certainly should tell us something about our society, and it possibly signals the inevitable demise of the satirical press.

    1. Ulysses

      Good point! The Onion’s fictional account (linked above) of Netanyahu’s visit to Capitol Hill was in many respects less of an absurdist farce than what actually happened!

      Another case in point: The Salon piece in this morning’s links reveals that Congress is actually attempting to make it nearly impossible for real scientists, as opposed to paid Energy Industry shills posing as scientists, to testify before their committees!

      At the State level, some legislators are trying to ban the teaching of A.P. American history because they fear that students might actually learn about what really happened here in North America over the last few centuries.

      1. GuyFawkesLives

        That’s nothing. In the WA State legislature, three of the Senators from the Financial Institutions Committee introduced a bill that would allow banks to foreclose even if they don’t own the underlying debt.

        Top that for farcical.

    2. Llewelyn Moss

      Well, the govt fascists normalized torture to the point a majority of Mericans think it was “ok”. So it doesn’t surprise me to see new horror boundaries being tested. The frog is on slow boil. I wonder how close Nazi Germany was to its tipping point when its citizens said “ok” to torture.

    1. ambrit

      Oh Bloody H—! This is how the Vietnam Debacle started. More frightening yet, the circumstances are closer to the beginning of the Korean ‘Police Action.’ I can see overzealous Ukranian “Freedom Fighters” purposely crossing the eastern border into Russia proper in ‘hot pursuit’ of “rebels.” Then Putin will have no recourse whatsoever. To stay in power he will have to chase those pesky FFs off of Russian soil with the real Russian Army. He might be good enough to engineer that it stops there. He will be resisting his own ‘superpatriots’ calls for War in the West. If America isn’t careful, it will find itself in the worst tactical and grand strategical fix of all; fighting at the end of a long supply chain against a foe with short supply lines and compact internal lines to boot.
      Atlantic Resolve? Half a continent away from the eponymous body of water? Give us all a break.

      1. DJG

        Agreed. Between Netanyahu wanting still another land war in Asia and this bizarre idea of a police action against the Russians, you have the quagmire of quagmires. I’m having trouble seeing how the USA can survive such blatant stupidity. At a certain point, the economy is going to give out (and we have plenty of symptoms already).

        1. c

          sorry but there is a war economy on! the MIC is thriving
          security is up or down (optimist/pesimist)
          gdp is growing, stock market is up, money is cheap if you’re rich
          USof A has plenty of dollars
          business as usual

      2. Yonatan

        Absolutely. The Ukrainians have run so many false flag events (Madian, Odessa, MH17, Volnovaha, Mariupol, Kramartorsk, Kharkov and possibly Nemtsov), it seems almost certain something will happen. The only good news is that is troops will (officially at least) be located in the far western Nazi heartland around Lviv.

      3. craazyboy

        Don’t worry. They are just a brigade of military advisors. They’ll be home in 6 months. :)

        1. Brindle

          The reality being open-ended FU’s (Friedman Units).
          Is Obama just gullible—easily swayed by NeoCons or a true believer?, a combination of both best answer.

          1. hunkerdown

            Careerism being a precarious balance between gullibility and true-belief, Obama’s just pushing paper, like any other middle manager.

    2. Llewelyn Moss

      And so the Planet’s Biggest Debtor Nation dives head first into yet another Pointless War. Aren’t we bankrupt yet?

      1. Jef

        The only way we can prevent war is if we all do our patriotic duty, take out big loans and GO SHOPPING!

      2. MyLessThanPrimeBeef

        Never, as long as we borrow in the global reserve currency, which we can always print, at will.

        1. James Levy

          Excellent point. Britain’s imperial hubris was always limited by her population and the gold standard. Too few trigger pullers and too costly to borrow and print her way to global dominion. The US suffers from neither of these restraints and acts accordingly. Yes, right now it is limited by the all volunteer armed forces, but given a big enough screw-up and we have millions of young men and women with crap jobs and no future prospects who could be Hoovered up in a draft. American elites will be stopped in their push for world domination only by a complete economic meltdown or a tremendous natural catastrophe.

          1. MyLessThanPrimeBeef

            Sounds like a committed hegemon who takes his job seriously, very seriously.

            ‘I will give all I got to achieve hegemony.’

            Usually they hire people like that. I know, because I have lost a few job interviews to them.

            1. ambrit

              Yep. Been there, been done in by that. As an added bonus, if you have a purple heart, or have done your Twenty, you get a monthly check on top of what you make at work! (One of the backroom boys at the Lowes I suffered in had a Purple Heart and a service related disability. He was getting around $3600 a month on top of what he earned at the job. That was the figure he volunteered. If so, more power to him!)

    3. MyLessThanPrimeBeef

      I worried that this would be Vietnam II.

      “If you don’t first succeed,…”

      1. VietnamVet

        The 173rd Airborne Brigade is now serving as a tripwire in Poland and the Baltic States. I served in it for a year towards the end of its deployment at LZ English. Since history rhymes, there are frightening similarities and differences. The Brigade was the first army unit into Vietnam to provide security for Bien Hoa Air Base. Not willing to just guard the perimeter they went off to find Charlie and ended up with 6000 purple hearts before leaving. “Restrepo” is an excellent documentary of their tour in Afghanistan. In Ukraine they are moving the tripwire that much closer to the front lines and a shooting war with nuclear armed Russia and WW III. This is senseless; war for war’s sake; to pillage and plunder. Russians will defend their homeland against fascists and western invaders as they always have.

  3. generic

    As Keynes said:
    “A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.”

    This particular Austrian bank had the bad luck of blowing up before its peers.

      1. MyLessThanPrimeBeef

        We live inside a Large Greedion* Collider.

        Right now, they are trying to recreate the Original Big Bubble experiment. We have to blow it up as big as possible. But don’t worry, it won’t destroy the world; luckily, you will be dead and won’t feel a thing, if otherwise.

        *Greedion is the fundamental stuff greed is made of.

      2. James Levy

        Wow, the financial meltdown of 1873 started with the collapse of the Ringstrasse property bubble and the trigger for the chain of events that took Britain off the Gold Standard in 1931 began in Austria, too. Is three a charm?

  4. diptherio

    We are pleased to report that our Squirrel Indoctrination Program has so far been a resounding success. After several days of being forced to listen to the national anthem on ‘repeat’ while watching back-to-back episodes of “Hannity and Friends,” 9 of 10 squirrels are now reciting the pledge of allegiance on a daily basis with no prompting from our operatives. A sizable minority even weep profoundly while doing so. On the basis of these results, we recommend the immediate adaptation of the Squirrel Indoctrination Program for application to other small rodents as well as the domesticated primate population…

    1. Sufferin' Succotash

      It’s the right paw over the heart, not the left one!
      Clearly, that squirrel doesn’t love America.

      1. diptherio

        The Squirrel Indoctrination Program has two phases. Phase 1: separately train half the squirrels to recite the pledge with left paw over right breast, and half with right paw over left breast. Phase 2: Bring both groups together and have them recite the pledge–measure the amount of time it takes for the two groups to tear each other apart.

        The SIP model has been used successfully in combating various subversive movements…

      1. diptherio

        Never understood the “lid” terminology. Like, how big of a lid, man? Like the lid to my toothpaste or the lid to my crock-pot? Took me forever to figure out what a “key” was…

          1. MyLessThanPrimeBeef

            Another trick question.

            Which is heavier – a lid of cotton or a lid of iron?

            This is really tricky trick question – which is more evil: one ounce of bad deed* by the Republicans or one ounce of bad deed by the Democrats?

            * Using the scale from the Egyptian Weighing of the Heart ritual

            1. craazyboy

              Neither – a lid equals a nickel bag.

              I think. Also, pot has no adverse effect on memory.

              1. MyLessThanPrimeBeef

                You’re wrong.

                The correct answer is one ounce of bad deed by the Republicans.

  5. frosty zoom

    i feed the squirrels walnuts. if they don’t get fed, they knock on the windows.

    the squirrels have indoctrinated me.

    this is kinda a reply to dipth.., but when you try to reply to the last comment, it starts a new thread.

    1. diptherio

      And so the keeper becomes the kept; the trainer becomes the trained.

      FZ: This is so cute! I’ve got these squirrels trained to come running whenever I bring them walnuts!

      Squirrels: This is so cute! We’ve got this monkey trained to give us its food. When we knock on the window, the funny little thing just comes a runnin’!

  6. Brooklinite

    Hello Yves,
    You have been doing great covering the financial sector. As an Indian I disappointed that Rajan has succumbed to the Low Interest Rate Mantra for forward growth in India. It didn’t take long for him to cut rates. I used to be a hypocrite accusing Yellen, Bernanke, Greenspan and all the american economists for meddling with Interest rates instead of choosing the organic path of market places.
    We are officially now following the fed in a slower way. I can see the end of this low interest rates only when every one in the world has 0.0% Interest rates. By then America will have -5.0% Interest rates. I honestly sick and tired of these central bankers. They are thinking that this is economics. They think that this is the mantra. As a person who saved lots of money to live comfortably when I retire without depending on the system of Social Security is not looking good. Eventually you can’t save. Even if you save you lose money at the inflation rate. So depend on the government. Thanks for listening to my rumblings.


  7. timbers

    “Nobel Peace prize chairman removed France 24. Chuck L: “They should have instead withdrawn the prize and asked for the money back.”

    Hasn’t Obama bombed more nations than Adolph Hitler?

    (I don’t mind invoking Hitler because Dems do….”Putin is Hitler….” – Hillary Clinton).

  8. diptherio

    Re: Peter Thiel on Google

    Earlier in the interview, he pointed out that in order for companies to be great, “the key is to do what nobody else is doing…you always want to aim for monopoly.”

    But, but…I thought corporations were all about competitive markets…I must have been misinformed…

    1. Jim Haygood

      He meant de facto monopolies, of course. The politically correct term is ‘moats,’ meaning barriers to entry.

      The stalking horse for monopoly is intellectual property. Patents last for 20 years, then they’re public domain.

      But Disney has locked up Mickey Mouse for 150 years or so, using an absurdly abusive extension of copyright terms. This is legal monopoly, courtesy of Sonny Bono and the 534 Congressional Dwarves.

    2. trinity river

      diptherio, that’s what you think walking into B school, but if you learned anything, that is not what you walk out thinking. If you go to an Ivy, you walk out armed with ways to hit the government for subsidies as well as strategies to change the laws and regulations. So we ask again, what are the advantages of capitalism w/o regulation and laws to tame it?

  9. NV

    In yesterday’s essay about Greece our humble blogger claims that the Greek government said that Tsipras’ comments on Portugal and Spain had been misinterpreted. I did not recall this from my own reading so checked with a friend who reads the Greek press- the government never made that claim.

    Jamie Galbraith (friend of Varoufakis, as the readership knows) has recently been interviewed, however his point of view does not fit in nicely with the case our humble blogger is making. Nevertheless, it is well worth considering. For a short essay
    and for interviews on the RNN:

    1. MyLessThanPrimeBeef

      Would a deal have been agreed on already had we used robot negotiators?

      Negotiator-robots arrived this afternoon at Geneva on driverless cars to begin their conference…

    2. Oregoncharles

      Per Galbraith: they did pretty well given the parameters – and they bought time for further political movement. The Left is gaining rapidly in many parts of Europe; whether it will be enough, and what role the right-wing National Front will play, remains to be seen.

  10. Fool

    Antisemitism! You can’t link to Noam Chomsky criticizing Israel unless you put up a link of Alan Dershowitz criticizing Hamas.

    -Adam Levitin

      1. MyLessThanPrimeBeef

        Fascism takes many forms.

        Idea-fascism is the intolerance of other ideas.

        By the way, ideas don’t kill other ideas.

        People kill people.

        And people kill other people’s with ideas.

        Finally, people try to kill ideas.

        But ideas don’t kill ideas…they live in a non-violent world.

        Going back to Idea-Fascism, the best anti-dote for that is to doubt as much as one can…doubt science, doubt math, doubt logic, doubt everything…and go from there.

        1. ambrit

          Good practice would counsel “not going.” (The unfolding of the Eightfold Path is the Heart of the Lotus.)

          1. MyLessThanPrimeBeef

            Hui Shi on going or setting off: “I set off for Yueh today and came there yesterday.”

  11. alex morfesis

    Bad Goldman Drachma math

    Themos Fiotakis is a nice enough guy but I think he is off base on his conclusions as mentioned on page 2 of his note:

    “5. Drachma Would Prove An Unsustainable Means of Taxation
    Ultimately as we discussed in our note on Friday, it would be very hard for Greece to introduce a viable new currency unilaterally. Baring the complications of actually printing a new note,…”

    first off….in no which way shape or form do I have ANY interest in expanding the conversation of how the drachma can come back from the grave…

    in 1978 the draxma was at about maybe 30-35 to the dollar…by the time the euro came to replace it, it sat at over 330 to the dollar…

    the king is dead, long live the king…

    but why would “in a modern world” anyone “print” drachmas…there are, depending on who you want to accept as accurate, 650,000 to 900,000 businesses in Hellas…at least 65% have some form of capacity to “swipe” an ATM or credit card. And by now, about 70% of the Hellenic households have some form of ATM card, and 90% have a smartphone…the problem in respect to the missing links in the system for a closed loop drachma card system are fairly easy to piece together…issuing new atm cards is a technology that exists, and those 3 dollar loadable cards one can buy at the checkout counter at the local pharmacy in the USA would certainly fill in the needs and allow for the few weeks it might take to get a closed loop system firmly in place…

    maybe Themistoklis will blame the findings in “the note” on the intern who is named on the bottom of page 4…

    In my Useless opinion…the drachma would bounce to 500 to the dollar…and then range from 500 to 800 and then would hold there for about 24 months…litigation is a two way street and last I checked…it would take a few years to shake out…in effect creating a suspension of payments…Hellas is too important to NATO to be allowed to reduce its military position too much, and if it did not have the resources to patrol its waters, there would be a massive influx of immigrants who would swarm into europe through the disruption…Greek citizens would not approve of German or even Italian naval vessels patrolling the aegean….so…

    oil imports are already scheduled to drop by 5 billion (50%) and cars, trucks and buses that eat up another 6 billion per year in imports could wait a year. Again, not suggesting it would be some intelligent idea to move to get out of the euro…but the problem will not be “printing up” new drachmas…its much more serious than that…

    What is confusing to me is what is Themos mandate at GS…he seemed to suggest last year at a Maritime Conferencethat the official Goldman Position is that the emerging markets globally will flat line for 15 YEARS…15 YEARS…and he is talking much about Germany and the USA…so when does he have time to focus on Hellas…and at 37 minutes he seems to suggest the pain being felt by Greece being pushed on it by the “Institutions” would not work in Italy

  12. ambrit

    How bad is the “fix in” regarding the trade ‘deals?’
    Exhibit one: Cokie Roberts column today in my local paper is a really cheesy bit of prop-agit trying to make opposition to the trade deals look like juvenile hand waving. It even throws in a ‘shout out’ to Paul Ryan!
    When supposedly “mature and balanced political pundits” from what is perceived to be the Left shill shamelessly for the rich, you know things are dire.

    1. Llewelyn Moss

      Whatever Neoliberal scumbag thing their Dem deity, Obama, happens to be pushing.

      Liberalism is dead. Long live Neoliberalism.

      1. andyb

        But you DO have a choice at the voting booth, and since JFK it’s been either keep the status quo of corruption and treason or retain it. Don’t see a real difference? Neither do I.

    1. Llewelyn Moss

      Nice painting. However, they missed Senator Baccus sailing away in a chinese junket to accept his ambassadorship payoff.

      1. Jim Haygood

        Baucus’s other misbegotten creation, Fatca 2010, is an Orwellian horror that imposes a paperwork nightmare on U.S. citizens who live overseas. It serves the same purpose as the Soviet Union’s former exit taxes, which implicitly treated people who wanted to live abroad as hooligans, criminals and traitors.

  13. Jim Haygood

    From AP:

    ‘It was unclear whom Clinton hired to set up or maintain her private email server, which the AP traced to a mysterious identity, Eric Hoteham. That name does not appear in public records databases, campaign contribution records or Internet background searches. Hoteham was listed as the customer at Clinton’s $1.7 million home on Old House Lane in Chappaqua in records registering the Internet address for her email server since August 2010.’

    C’mon, that’s easy. ‘Eric Hoteham’ is simply an amalgamation of ‘Eric Holder’ and ‘Rodham,’ Hillary’s maiden name.

    Holder’s been helping the Clintons behind the scenes for years, such as signing off on the Marc Rich pardon which netted the Clintons a cool $400K, back when they was so poor.

    Naturally when you need a ‘convenient guy,’ you think of Holder. What the media’s not reporting is the domain reserved for Hillary’s presidential correspondence:

  14. Ronald Pires

    I wish I had time to write about the insane new normal of negative yields.

    Does it end well?

  15. john bougearel

    Someday a fuller discussion of negative yields on sovereign bonds is warranted. I will kick it off by saying this was unimaginable to me and to many others until 2H 2014. To a large degree, these unconventional monetary policies fill me with a sense of personal disgust.

    Since the ECB has set the NIRP on deposits at -0.2% they can buy sov bonds with neg yields down to -0.2% without taking a loss, as long as deposits exceed their bond purchases. Other EU CBs have set lower NIRPs on deposits, so their bond purchases can be lower than -0.2%. In Q4 last yr, ECB members were saying that any and all assets except gold (with no neg yield) were being considered by the ECB. By this, they mean regulatory policies set by BIS, Basel II & III etc determine what asset classes qualify as Tier I Capital & or high quality collateral… yada yada. These regulatory policies thus have a herding effect into preferred asset classes such as sovereign bonds and equities. Stuff we should all be pretty much familiar with.

    To this end, the appetite or demand for high quality collateral by [Global Public Institutions known as the CBs, SWFs, and Pension Funds] , i.e. even bonds with negative yields has been skyrocketing, perhaps parabolic or exponential at the moment. We need a few more quarters of reporting to be sure of the trajectory. But BoA reported roughly $1.2T of sovereign bond purchases with neg yields at end of Q3 2014, and about $3T by end of Q4 2014. Won’t know Q1 2015 until sometime in April I suspect.

    We also know that this appetite for negative yields by CBs is expected to be so strong that the CBs are going to suck up 100% of the net global issuance of sovereign bonds in 2015. And we also know there is a the risk that EU banks and banks in general may not be willing to sell their sovereign bonds to the ECB at negative yields less than -0.2%. Why? Cuz they need the high quality collateral of those sovereign on their balance sheets. If they sell to their sovereign bonds to the ECB, they will have to allocate the proceeds to something other than deposits, or they will incur a loss. This may prompt a rotation into gold at a later date by EU banks, but maybe not, cuz it is not HQC or Tier 1 capital. They may be forced to keep buying equities as they rotate out of EU sovereign bonds. Tough to call. But are thoughts to consider and ponder.

    Remember too, the ECB QE program is tentatively scheduled to end Sept 2016. But that could be reintroduced or extended indefinitely as need be, until some sort of debt capacity constraints are reached, along the lines of something similar to what is expected to happen to China over the next 3-5 yrs according to Pettis. Or say the BoJ, which is reaching some sort of limits with its bond purchase programs (see their recent comments re policies having adverse effects at home – suggesting a change in policy should be coming sooner than later).

    Obviously, all these considerations suggests the financial markets will probably carry a great deal more uncertainty over the next 5 yr time interval than the previous 5 yr interval. And this suggests more mkt volatility – something that can only result from a peak in the global central bank unconventional monetary policy narratives as outlined by Epsilon Theory Ben Hunt.

    Be forewarned, we should expect to be thoroughly revulsed in the years ahead, and at some point in time, there will also be an investor revulsion as the peak in CB monetary narratives begin to weaken to the point of complete and utter ineffectuality. We are not quite there yet…..

    1. Jim Haygood

      ‘this was unimaginable to me and to many others until 2H 2014’

      In the mid-1980s I discussed negative rates with a colleague. What neither of us could imagine was how the negative yield would be collected from the victims investors.

      For sovereign bonds, it’s simple. You buy them at a premium to par. For instance, pay 102 for a bond that matures at 100. As the premium is amortized, the sovereign collects the prepaid negative interest.

      In the case of bank deposits, you deposit $100. The bank pays no interest, and periodically dings your account with a negative interest fee. So you are charged negative interest over time, rather than prepaying it.

      Once you get used to the concept, and the choice of prepaid or paygo, you’ll be delighted with the results!

      1. CraaaaazyChris

        Haygood, I’m beginning to think you got reincarnated as the bond market … before Carville!

  16. MyLessThanPrimeBeef

    Creative genius driven by distraction.

    We are all capable of being distraction…unless you are a Zen master, living always in the moment, complete attention to what you are doing.

    Thusly, we can all be just as creative. Like I have been saying, we all have greatness inside…except Zen masters, who just chop wood and carry water….everyday is a good day.

  17. MyLessThanPrimeBeef

    Raiding Maternity Motels.

    That’s going to hurt lots of local obstetricians, gynecologists and pediatricians (‘my job is to bring life into this world. To heal. Wait, you can’t cut Medicare reimbursement. I have a upper middle class lifestyle to maintain. I went to medical school, you know). Bad for the local economy:<

    On the other hand, perhaps this is an opportunity to be seized by sunny Greece.

      1. MyLessThanPrimeBeef

        A lot of people invest that (this being a financial blog) – they sell winners and keep their losers.

        In the same way (not a surprise to the reader, I hope), people sell their babies, instead of their aging grandparents. :<

        (EOS – end of sarcasm).

  18. docg

    re: “Why the drachma can’t save Greece”

    Here’s what I wrote, back in 2009:

    At some point, with millions of people literally starving and homeless, there will be a breakthrough. A moment of truth. It will come only when the value of all the world’s money finally reaches zero. Goose Egg! This will be the great awakening, the fall over the precipice, the opening of the “gateless gate,” the resolution of the aporia, the passage into economic Hell . . .

    This is the point where the governments of the world must step in. And in my opinion, will step in, because at a certain point it will be clear that, like it or not, there is no other possibility left open to them. Hopefully, the world’s leaders will anticipate the outcome soon enough so that a meaningful transition can take place, easing as much as possible the tremendous difficulties of moving from a money-based economy to a managed one. et seq,

    Seen from this perspective, it looks like Greece is destined to be the pioneer of this radically new development. But make no mistake, the same dynamic will soon enough be forced upon the entire world. Managed economies, based on the rational and equable rationing of resources, will take the place of money-based financial systems, based on “free markets” and competition — not because socialism is necessarily superior to capitalism (though imo it is), but because it will, under the circumstances, be the only option. Currently it is the only option for Greece. But Europe as a whole is headed in the same direction. As will, eventually, the United States.

    1. MyLessThanPrimeBeef

      It’s always this:

      Competition at the low ends. You brutes.

      Joint cooperation at the highest levels. Why? They are ‘civilized’ (Sarcasm).

  19. Lamarr

    I am tired of scrolling past news about Greece. Blow by blow accounts of a falling state seem pointless; each grain of sand brings us a step closer to the avalanche I guess. Is there daily summary somewhere?

    1. Yves Smith Post author

      You are in a decided minority about this. We get a huge number of appreciative comments on our posts on Greece, and the commentariat also adds plenty of information. And in case you missed it, this is not just about Greece, this is about the inherent problems with the structure of the Eurozone and whether they will be remedied or whether the Eurozone will continue on its path towards inevitable fracture. And the breakup of the Eurozone would be a crisis-level event.

      Are you not capable of reading past topics that don’t interest you? I never read the sports section, yet, I don’t feel compelled to hector a newspaper for having one.

      1. Oregoncharles

        And once again: thanks for the thorough (and to my knowledge, unmatched) reporting about Greece. This is the first openly left-wing government elected outside S. America, and a deep crisis for neoliberalism. In the end, it will affect us all.
        And it’s the biggest financial story going.

  20. different clue

    The Obamastration needn’t worry about the fate of Obamacare in the Roberts Court. Roberts will uphold the “federal national government” definition of “state” in order to keep the subsidies flowing to Big Insura.
    (Unless the whole court turns on Roberts and defies him by striking subsidies in states without their own State Obamacare systems down. Maybe I should reword my prediction to “Roberts will do his very best to see this gets upheld and he will vote to uphold it. That much is clear”.)

  21. Charles 2

    The CNBC article on Greece doesn’t deserve a link. The author doesn’t even know that the NBG has its own printing presses…

  22. Demeter

    It took the Nobel Committee 6 YEARS to remove this guy? SIX YEARS???

    I don’t care what Korean arteries look like, I don’t like coffee and never drink it. I don’t like mocha. Caffeine rips my guts out. And I hate really crappy, pointless “science and health” studies like this one.

    And while I like cats, I firmly believe in moderation.

    US boots on the ground in Ukraine…the State Dept/White House are going for the insanity defense. Assuming we survive nuclear war. It’s really too bad that the Homeland Security Scam will continue to be funded by the US taxpayer. Still, if the Obamacare Scam goes down, that will be a good start on reform.

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