Thursday, June 30, 2011

Quantitative greasing, China's Self-interest and the oil market casino operators can expect a bonanza....

Quantitative greasing, China's Self-interest and the oil market casino operators can expect a bonanza....
By Chris Cook

Open market operations - the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. In every commodity market there are two types of demand: real demand from consumers/users and financial demand from investors. Both types of buyer affect the market price in exactly the same way, but since financial buyers do not use or consume commodities, they must have some way of storing them.

This is where it gets interesting. Precious metals such as gold and base metals such as copper are relatively easy to store for long periods if not indefinitely. Agricultural commodities may be stored, but are perishable and bulky. But it has long been possible through organized commodity markets for investors in

these commodities to participate in the underlying "physical" market, and thereby to inflate the price.

Oil storage
The only players involved in storing crude oil are governments and corporations with very deep pockets indeed. Corporations store as little oil as possible, since this ties up much-needed capital, and storage in tank on land or on chartered marine oil tankers is hugely expensive.

For reasons of energy security, the consuming nation members of the International Energy Agency (IEA) have built very significant stocks of oil, with a view to covering disruptions in supply, for whatever reason.

The other stocks, which tend to be ignored, are those actually held by producers in the ground pending production. To complete the circle, some IEA strategic reserves are actually held in the depleted oil reservoirs of oil producers who have turned consumers.

Enter inflation hedging.

In or around 1992, the smartest kids on the block - Goldman Sachs - had a brainwave. They created a new index of commodity prices, the Goldman Sachs Commodity Index (GSCI), of which oil was a major component, and went on to create the first Index Fund, which invested in the commodities that made up the GSCI. They achieved this by buying forward contracts to make and take delivery of oil, which are then "rolled over" month to month so that investors remain exposed to commodity prices. Where these forward contracts take place on an organized exchange in a standardized form, they are known as futures contracts.

As a stroke of marketing genius, they invented the concept of "hedging inflation" for those investors who were afraid that the dollar would decline in value relative to the value of commodities.

But the greater stroke of genius was the realization that such investors who are off-loading the risk of holding dollars in favor of taking on the risk of holding commodities are doing precisely the opposite of what commodity producers do when they sell futures contracts to secure themselves against a fall in price - that is, producers who "hedge" production are off-loading commodity risk and taking on dollar risk.

So, from 1995 onwards Goldman Sachs entered into a mutually beneficial relationship with BP, which was cemented by being joined at the top - Peter Sutherland chaired both companies for 12 years, and Lord Browne of BP was also on the Goldman Sachs board for many highly profitable years for both companies.

Since BP were structurally "short" of oil, and the GSCI fund was structurally "long" of oil, the outcome was essentially the first - entirely opaque - example of financial oil leasing, whereby the GSCI investors were able to lend dollars interest-free to BP in return for an "oil loan" sale and repurchase of oil by BP.

Financial oil leasing goes mainstream
In 2005, Shell realized it could directly monetize crude oil in this way and therefore entered into a transparent investment oil partnership with ETF Securities, whose clients were able to borrow Shell's oil in return for lending dollars to Shell.

Since then, accompanied by a great deal of hype from investment banks in respect of "inflation hedging" and "commodity super-cycles" we have seen a tidal wave of risk averse investment pouring into commodity markets generally, and oil markets in particular. This occurred at such a rate in 2008 that the oil available to be leased was unable to accommodate the influx of dollars, and - with the addition of some speculative money - the oil price "spiked" to $147 per barrel and collapsed all the way to $30 per barrel, firstly as speculators took profit, and then further as "inflation hedgers" took fright and withdrew investment from the market.

In early 2009, financial oil leasing appears also to have occurred to the Saudis, no doubt through the good offices of a couple of investment banks. The oil market price was marched back up the hill through judicious and opaque market operations in the Brent/BFOE (Brent Forties Oseberg Ekofisk) forward oil contract which sets the global oil price.

From this point the natural gas price become entirely detached from its historic relationship with the oil price - to the consternation of Russian gas exporter Gazprom - and the oil price reached whatever pre-agreed price band the US could tolerate. The Saudis for their part began to declare themselves "comfortable" at increasingly boring OPEC meetings, and also ceased to use the West Texas Intermediate (WTI) benchmark oil price in favor of the more easily managed Brent/BFOE off-exchange price.

Oil shocks
All was well with the world as the oil market steamed on through 2010, much like a car ferry with its bow doors open and with increasing amounts of liquidity swilling around the car decks. But in early 2011, the ferry was hit by two waves, one a supply shock - as the Arab Spring led to a shut-down of high-quality Libyan production - and the other literally a tsunami in Japan, and the resulting post-Fukushima energy demand shock.

We have therefore seen speculative investors such as hedge funds pouring money into the oil market and the price shoot through the US/Saudi price band "oil peg".

President Barack Obama is clearly keenly aware of the fact that if gasoline prices were to reach 2008 levels this would have dire effects both on the US economy and upon his prospects for re-election. So for the last three months, there has been no more urgent issue to resolve, and there has been at least one failed attempt: a proposed oil swap, whereby strategic reserves were to be exchanged for Saudi production, but this apparently failed on the issue of price.

The intervention this month by the International Energy Agency is the solution that has been developed to use IEA stocks of oil as the basis for what are essentially open market operations in the oil market.

Quantitative greasing
We have seen how "inflation hedger" investors aiming to avoid inflation have actually caused the very inflation they sought to avoid. The game-changing intervention by the IEA increases the supply of oil relative to the dollar, and therefore can be expected to deflate the price, at least temporarily.

The most potent effect of what might be termed "quantitative greasing" with oil was - and was intended to - to deter speculators, and hedge funds are already licking their wounds and adjusting their strategy. But this action will also in all probability act to limit the inflationary expectations of the billions of dollars of "inflation hedge" investment also in the market, and will in all probability lead to a market collapse.

Now, if so, this will be good for the consumer (and President Obama); bad for the producers, and also - some say - the planet; and of course for the oil market casino operators it will, like all volatility, be a bonanza.

Leaving production and consumption to one side, we may then confidently expect financial buyers to re-emerge after a decent interval, for as long as dollar interest rates are at zero.

If my analysis and forecast is correct, such a second iteration of an oil market post-bubble collapse might create a window of opportunity by at least temporarily chastening oil producer hawks such as Iran. IEA consumer nation members for their part will be under no illusions that the days of cheap oil are now over.

So perhaps the dysfunctional and increasingly sociopathic oil market may at last be open to a new collaborative and transparent settlement, involving new market architecture; and new market instruments.
Self-interest in China's helping hand....
By Jian Junbo

LONDON - Just nine months after visiting Greece, Italy and Turkey, Chinese Premier Wen Jiabao set his feet on European soil again. The just-ended five day tour of Hungary, the United Kingdom and Germany afforded Wen the same opportunity as last time to promise that China will do its best to help the region ride out financial crisis. Without question, it highlights the importance China attaches to closer ties with European countries.
Some analysts jump to the conclusion that China wants to take the advantage of the financial crisis in Europe to increase its political influence. However, past experience shows that it is hardly possible for China to boost its political influence on Europe. A closer match to reality would be that by "helping" Europe, China is helping itself with regard to strategic considerations to

diversify its foreign reserves and global interests.

Wen began the first leg of his tour on June 24 in Budapest, the first visit to Hungary by a Chinese premier in 24 years. He signed a number of cooperative deals with Hungarian Prime Minister Viktor Orban, and announced that China was ready to purchase Hungarian government bonds and extend 1 billion euros (US$1.4 billion) in credit. The purchase of Hungarian treasury bonds was hailed by Orban as "historic help" for Hungary.

Three days later, Wen arrived in London to meet his British counterpart David Cameron. At a joint press conference, Cameron cited late Chinese leader Deng Xiaoping's most famous quote - "It doesn't matter if the cat is black or white as long as it catches the mice" - to express his attitude on Britain's introduction of Chinese-made high-speed trains.

Wen Jiabao had earlier said that China was interested in tendering to build a high-speed rail link between London and Birmingham, the so-called HS2. During Wen's visit, the governments signed business deals worth about 1.4 billion pounds (US$2.2 billion). Among them, liquor-maker Shuijing Fang will sell a stake to British Diageo, and China will import British poultry and pork to help strike a balance in bilateral trade.

During Wen's visit to Berlin afterwards, China and Germany signed trade deals worth $15 billion. Wen and German Chancellor Angela Merkel also targeted an increase of bilateral trade to 200 billion euros over the next five years.

China and Germany are the two biggest exporters in the world and Germany is China's biggest trade partner in the European Union (EU). Wen said the focus of his meeting with Merkel was to "boost the growth potential of bilateral trade ... and to once again double our bilateral trade volume in five years". "The wide range of topics up for discussion and the substantial achievements are all pioneering work in the history of Sino-German relations and Sino-EU relations," Wen said during a press conference with Merkel.

Wen reiterated that China had full confidence in European economic stability and viewed ongoing euro zone difficulties as "temporary'', adding that China was prepared to assist Europe by buying a limited volume of sovereign bonds.

Some sound reasoning lies behind the decision for Wen to pick these three countries for his tour.

Hungary held the presidency of the European Council in the first half of this year and China has made considerable investment in the country. More importantly, Hungary's location in central-eastern Europe plants it in a region that China wants to cultivate for trade and investment opportunities, especially at a time when many old EU members have become increasingly protectionist toward Chinese products and investment.

With sound rule of law, the United Kingdom represents a country with some of the best conditions for Chinese investors. It is also a very important trade partner with China. Germany, as a more important economic and technological partner for China, is not only the economic engine of the euro zone, but also a key EU member in dealing with the Greek debt crisis.

From what was achieved during Wen's visit, it is clear he went to Europe again to seek more economic and technological cooperation opportunities with these European partners.

In a sense, Wen's offer to help ease financial difficulties in some European countries may be of help to enhance political trust. But it is too far-fetched to assert, as some analysts do, that Wen's visit, which followed Deputy Vice Premier Li Keqiang's visit to Europe just five months ago, is part of China's efforts to expand its political influence in Europe by taking advantage of its ongoing financial crisis. Such assertion simply sounds like an alarmist call.

If China were to take advantage, Wen might have pressed the EU to lift its embargo on arms sales to China or to grant China market economy status. But his visit concentrated on economic cooperation, practically touching no sensitive political issues.

Given past experience, China can hardly expand its political influence in developed countries by improving economic cooperation with them. In fact, China faces increasingly severe political criticisms from the United States, the EU and Japan - its largest trading partners.

Economic cooperation is a two-way game. A European country has the power of will and capability to turn down any business deal China offers if it considers that Beijing imposes any political conditions on it. It is also illogical to say that political influence would expand with closer economic ties. The EU has more investment in China than China has in the EU. Can we say the EU has stronger political influence on China than the other way around?

One may better say that China has some "selfish'' ambitions to expand its economic interests in Europe and to help ease the financial crisis there.

China had $3,045 billion in foreign exchange reserves as of the end of March, about two-thirds thought to be in dollar-denominated assets. [1] And the Chinese currency is still virtually pegged to the greenback. As such, China is vulnerable to changes in US monetary and fiscal policies.

In recent years, there have been growing calls in China for the government to diversify its disposal of the country's ever-growing foreign reserves, not to put "all eggs in a single basket''. Indeed, the facts, as reported by the Financial Times on June 21, show "China began diversifying away from the US dollar in earnest in the first four months of this year, most likely by buying far more European government debt than US dollar assets'.' [2] And there are estimates that about a quarter of China's foreign exchange reserves are currently invested in euro-denominated assets.

Wen's promise to buy more European countries' bonds helps boost confidence in the euro, which is clearly to China's benefit as an investor in the currency. Also, it was evident on the visit that China wants to diversify its export market to reduce its reliance on United States markets, especially at a time when trade protectionism is growing in the US.

China has little to gain from attaching political torque to its investments in Europe, and helping safeguard the euro from collapse is clearly in its own interests.


1. Chinese official warns on dollar assets, Financial Times, Jun 7, 2011.

2. Trades reveal China shift from dollar, Financial Times, June 20, 2011.

Greek vote does not end crisis, Portugal and Spain are still in precarious positions....

Greek vote does not end crisis, Portugal and Spain are still in precarious positions....

The Greek parliament's vote in principle to support a five-year austerity plan does not end the crisis - not by a long shot.

Prime Minister George Papandreou's government on Wednesday won a first vote by 155 to 138 votes. The second and final bill covering 28 billion euros (US$40.6 billion) in tax increases, spending goals and privatization of state assets, agreed as part of a bailout by the European Union and International Monetary Fund, is expected to pass on Thursday when parliament votes on article-by-article budget provisions. Watch out that the spending cuts actually approved may not be as large as the plan requires and the budget savings are not enough.

The plan also includes a rather ambitious privatization program that is unlikely to be fulfilled. The Greek government is having trouble moving the assets it needs to move, fast enough, and at

the right prices. This is a significant chunk of cash that will not become available to pay bills.

"There are still a lot of unanswered questions about the effective implementation of austerity measures, given the backdrop of increasing public anger in Greece," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, was quoted by Reuters as saying. Greek police clashed with protesters outside parliament early on Thursday local time ahead of the vote, the Reuters report said.

Also, the budget savings likely will fall short of their goals, because the spending cuts will result in slower growth and less tax revenues than expected.

Slower growth and deflation will cause private debtors to default in greater numbers on home, car and credit card loans - those will create new woes and spending by Athens.

Even if other elements of the austerity fall into place, Athens will soon be short of cash again - perhaps next year, or the year after. Then what does it do?

The voluntary private debt rollover remains sketchy. Even if debt rollover deals materialize without a hitch, the amount of forgiveness will prove inadequate, also increasing the likelihood that Athens will run out of cash again.

The debt rollover may well trigger a default call by bond rating agencies, and swap contracts could yet trigger huge payouts. United States banks have written a lot of those contracts. This could be Lehman Brothers all over again, if bond investors then flee Portuguese and Spanish debt enough to force their governments into financing crises. A credit squeeze triggered by Lehman's 2008 led governments in the United States and Europe to bail out financial institutions.

German financial companies late on Wednesday neared an agreement to roll over their Greek debt holdings, and Deutsche Bank chief executive officer Josef Ackermann predicted banks would contribute to help avert a "meltdown", Bloomberg reported. German and French lenders are the biggest foreign holders of Greek debt and their participation is key to the European Union goal of getting banks to roll over at least 30 billion euros of bonds, the report said.

Wednesday, June 29, 2011

SCO's Eurasian energy clubhouse still under construction....

SCO's Eurasian energy clubhouse still under construction....
By Robert M Cutler

MONTREAL - The 10th anniversary meeting of the Shanghai Cooperation Organization (SCO) came and went in Astana, Kazakhstan this month with, once more, much talk during the run-up about the organization engendering some sort of "energy club" and without any specific steps towards indicating what such an indefinite term might even mean.

The publicity around this idea dates back five years to remarks made by Russia's then-president Vladimir Putin. Just one year later, in 2007, there was considerable public chatter of the possibility of a Russian-led "OPEC for gas" that would emerge from a trilateral entente with Kazakhstan and Turkmenistan. (Turkmenistan is not an SCO member and has never evoked a serious interest in becoming one. Full members are China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan.)

The physical basis for the exaggerated suggestions that Central Asia might develop a cartel for gas along the lines of the Organization of the Petroleum Exporting Countries was the agreement signed among the three countries' presidents to refurbish and upgrade the Caspian Coastal Pipeline (CCP, also called by its Russian name the "Prikaspiiskii" and sometimes, by mistranslation, the "pre-Caspian"). The CCP runs along the Caspian Sea coast in Turkmenistan and southwest Kazakhstan into Russia, and is connected to gas fields in eastern Turkmenistan through a separate pipeline.

This top-level agreement was never implemented and talk of a Russian-led gas OPEC in Central Asia slowly faded away. (See
Four-way street in Kazakhstan, Asia Times Online, September 18, 2009; Turkmenistan signals Nabucco intentions, Asia Times Online, September 24, 2010.) Yet, five years after the launching of the SCO "energy club" idea, the latter periodically persists, despite or perhaps due to the very vagueness of the term, which more malleable and indeed subjective than "organization" or "institution".

In fact, the contradiction among the interests of the SCO's member-states makes any "energy club" highly unlikely. Uzbekistan sells gas to Russia and China on the basis of bilateral accords, and recently welcomed increased investment from Russian sources over the next five years, obviating the appeal to supranational or even intergovernmental structures.

Kyrgyzstan could benefit from multilateral mediation of its disagreements with Uzbekistan over watershed use and hydroelectric power, but other international institutions and "track two" (that is, informal) diplomacy have been at work on that question for some time: and likewise Tajikistan. (See
Tajikistan find a game changer, Asia Times Online, January 14, 2011.)

Finally, the SCO's two largest and influential members have interests so divergent that "energy security" does not even mean the same thing to them. China seeks "energy security" in the sense of security of supply of energy raw materials to feed its increasing demand. However, Russian leaders think of such a putative club as an arrangement among producers to control supply (and hence also prices) as well as to plan future energy development so as to maintain such a state of affairs.

The SCO as an organization has failed to overcome certain growing pains that are typical for an institution of its sort at this stage of development. Despite having a permanent secretariat funded by (and, despite the name of the organization, also located in) Beijing, it is not clearly anything more than a forum for representatives of its member-states to encounter one another and explore international cooperation more on a bilateral than on a multilateral basis, whether on the political executive level or the technical specialist level. It is not supranational, as the European Union is for example, and none of its members seeks to give it any supranational competences.

Today, two decades after the collapse of Cold War superpower bipolarity that structured, relatively rigidly, the international system, and following the ease of communications at all levels of global politics driven by the proliferation of the Internet, such sorts of meetings are no longer the rare and spectacular events that they once were.

In the leaders' communique concluding the most recent SCO meeting, one finds no mention of any "energy club" or institutional basis for cooperation, but only an "energy mechanism" that should be "open to all countries and organizations that agree with the SCO's tenets and tasks".

Membership is not a requirement for participation in the newly announced "energy mechanism", but the SCO failed yet again this month to define fully the criteria that potential new members must meet to have their candidacies considered. Such a failure cannot instill confidence in the institution as a nexus for multilateral cooperation. To claim for SCO the credit for every bilateral or even multilateral energy agreement achieved among its member-states (or participants in the undefined "energy mechanism") would further dilute its credibility...

Dr Robert M Cutler (, educated at the Massachusetts Institute of Technology and The University of Michigan.

Tuesday, June 28, 2011

Secretary Of Predation Geithner, Bank Of America, And The Law Of The Foreclosure Jungle

Submitted by a hedge fund manager who wishes to remain anonymous.

Bank of America Discovers Some Trivial Technical Problems With a Small Number of Mortgages....

Bank of America announced that it has discovered a few trivial, easily-remedied technical problems with some of its mortgages. “We will stop foreclosure sales in some states until our assessment has been satisfactorily completed, or until the politicians whom we have compensated so generously do their damn jobs and get rid of those pesky laws and rights that are slowing us down. Our ongoing assessment shows the basis for foreclosure decisions is accurate, except in those few regrettable cases where we repossessed a house that actually had no mortgage on it whatsoever—hey, nobody’s perfect, ha ha,” a Bank of America spokescreature said. “It’s really quite a lot of trouble to verify the address before we take someone’s house,” the spokescreature continued. “Comparing addresses on two documents slows us up by a good fifteen seconds. After all, we have a lot of houses to foreclose on. Anyway, many of those people actually do owe money to us, or to somebody, anyway. I know it is a bit confusing to citizens when our competitor HSBC and another bank simultaneously try to foreclose on the same property, especially when they are in a federal foreclosure prevention program. It’s sort of like one of those programs on Animal Planet where each hyena grabs a leg of the still twitching gazelle and tries to pull it away from the other hyenas. But that’s the way nature works—nobody asks those hyenas petty-minded questions about whether title to the gazelle was properly transferred, and to which hyena, and whether the title was properly notarized by an authorized local cheetah. Sometimes a company just has to sink its fangs into a customer, lock its jaws, which can exert a pressure of 1,000 pounds per square inch, brace its legs, yank, and see what tears loose. If we get the wrong gazelle, we will make every effort to compensate it for our erroneous gnawing, bone-crushing, and marrow-sucking.”

“It appears that some of our process servers may not have actually served the owners with notice of our intent to foreclose. But, honestly, wouldn’t warning them make it a whole lot harder to catch them? It is a myth that hyenas giggle and cackle before they attack. Actually, they are usually quite silent until they get close enough to bite. On the Serengeti, due process means that the gazelle runs as fast as it can and the pack keeps ripping small chunks off until the gazelle collapses due to shock and blood loss and inability to pay for a lawyer. There may have been some trivial, unimportant problems with the relevant documents, but we are confident that many of those gazelles really did owe us money, and we believe that our ripping them into pieces, digesting them, and regurgitating their horns and hooves is ecologically sound and generally in accord with the law of nature. Now, if you’ll excuse me, I will have to go mark the boundaries of my pack’s territory with the musk from my anal scent gland. We don’t want other hyena packs like J.P. Morgan invading our turf. That could be a real mess—those guys know how to sink their fangs in, and they know how to break down the door of a house and change the locks even when they haven’t foreclosed on the property.”

Asked for comment, a J.P. Morgan spokesperson said, “We have no interest in invading the grasslands turf of Bank of America or HSBC because we are not hyenas. We are amphibious apex predators, and our preferred mode of foreclosure is to lurk underwater by the bank of a river. When a gazelle or a wildebeest sticks its muzzle in the water, we surge upward and, um, serve papers on it, or something. Or grab a leg and go into our famous death roll, spinning and thrashing until the leg comes off. Then we like to take the borrower’s corpse up-river for a few days of what we in the mortgage business call ‘seasoning’. We would also like to remind you puny, pathetic citizens that we can grow to twenty-three feet long, we can gallop at up to seventeen miles per hour for short distances, we have maintained our distinctive business culture successfully since before dinosaurs evolved, we have thick dorsal osteoderms which are hard to penetrate even with an axe, and we are much more biologically complex than other reptiles: unlike them, we have features like a cerebral cortex and a four-chambered heart, and many of us have Ivy League degrees. We recommend that AMBAC and Pimco think carefully about all of these features before trying to push their mortgage-backed securities back onto our balance sheet. As for any legislators or prosecutors who might be thinking about going after us, we have very slow metabolisms. We can submerge for an hour and go for months without eating. We will outwait you and probably eventually hire you as a lobbyist. We would also like to note, though, that we are not without compassion. We honor our prey and weep for it: do you see the large tears rolling out of our eyes and down our scaly cheeks? You probably thought crocodile tears were a mere myth or proverb, but we do in fact have lachrymal glands that secrete a proteinaceous fluid. Crying has an important place in our corporate culture: it lubricates our eyes and cleans our nictitating membranes.”

The Senate and the House, with remarkable foresight, passed HR 3808, a bill to facilitate the sharing of taxpayer carcasses across state lines. The bill’s sponsor, Representative Robert Aderholt, an Alabama Republican, said, “It is important to ensure that multiple species of predators can efficiently divide a taxpayer carcass and transport pieces of it from one waterhole to another.” The banking industry suffered a temporary setback when President Obama was forced to veto HR 3808. David Axelrod, an advisor to President Obama, said, “Many gazelles and springboks still seem to be agitated about this issue. But we can ignore them—they are, after all, mere herbivores, and their lobbying efforts lack teeth. We have complete confidence in our ability to find some swift, quiet resolution of this problem now that the election is over.” Iowa Attorney General Tom Miller concurred, saying, “We’d like to resolve this as soon as possible. No predator needs to be seriously inconvenienced, but all fifty attorneys general are united in their determination to see that state governments get their fair share of the taxpayer carrion. Our model is the tobacco settlements, where the tobacco companies got to keep trying to addict precocious adolescents and we got the money we needed to raise the salaries of state employees. Our other model is the marabou stork, a scavenger which mainly eats after the big predators have finished and is happy to eat feces as well as carrion and fish eggs, and which has a naked head and neck to ensure that its feathers don’t become clotted with blood.” Secretary of Predation Timothy Geithner added, “I think we can all agree that our nation’s highest priority is to ensure a steady and increasing flow of protein to our apex predators. Crocodiles and hyenas are actually very delicate creatures, and any regulatory interference with their feeding habits could have a catastrophic effect on the entire ecosystem.” Despite their superficial differences, both parties fervently agree on the crucial importance of making life easier for apex predators....

Global Insurrection Against Banker Occupation — Max Keiser _on Economic Collapse Teach-in

Financial occupation of Greece; IMF Greek Memorandum; financial terrorism; controlled demolition of European economies; credit default swaps; asset grab; lawsuits against bankers and government; Pirate My Film, including crowd funding and copyright free media; new European funding facility in the planning stage; global bank; coming housing collapse and banking disaster; devaluation of the dollar; the wild card. From a Guns & Butter Presentation.

The Economic Collapse Teach-in encompasses upon some of the most highly controversial an crucial subjects of our day—the collapsing economy, the Federal Reserve, the Banks, Wall Street, financial fraud, foreclosures, homelessness, unemployment, workers rights, unions, trade agreements, etc. We scour the world to find and gather debates and presentations that are extremely informative and educational. Related subjects are also discussed. It provides key information for the uninitiated and the initiated alike.

This nearly six-year old interview remains on the mark.

The 'War Against Terror' is a War against the People: Youssef Aschkar Interviewed By Silvia Cattori

Monday, June 27, 2011

China's stepping up and making a commitment to European fiscal and economic stability....

China's stepping up and making a commitment to European fiscal and economic stability....

It is in the interest of cash-rich China to help resolve the eurozone debt crisis, but Chinese premier Wen Jiabao, who is visiting Britain and Continental Europe, will want a share of the West’s buying power in return ....

As Wen Jiabao, the Chinese premier, stepped off his plane in Birmingham on Saturday, it was difficult to avoid the feeling that the UK, and Europe, have never looked weaker in Chinese eyes.

In private, senior Chinese diplomats are now openly scornful of Britain’s economic prospects and have even asked why Mr. Wen should grace such a weak trading partner with three days of his time.

Indeed, it is telling that the first stop on Mr. Wen’s tour is Longbridge, the old MG Rover car factory that passed into Chinese hands in 2005. Once a byword for poor productivity, wildcat strikes and trade union power in its British Leyland and Austin Rover days, the plant is now host to China’s biggest industrial presence in the UK. Owned by Shanghai Automobile Industry Corporation, the factory designs and assembles MG cars in the UK made from car parts manufactured in China.

However, the Longbridge site remains the only major example of Sino-British co-operation, something that the Prime Minister, David Cameron, whose advisers have helped co-ordinate the visit, is determined to change.....

On Mr. Cameron’s visit to China last year, a target was announced for increasing bilateral UK-China trade to $100bn by 2015, from its 2010 total of $63bn and Number 10 sources said yesterday that they believe that “progress has been made” on hitting that figure.

In formal business and personal conversations between Mr. Wen and the British trade minister and former HSBC chairman Lord Green, who is accompanying the premier around Longbridge today, the UK message will be about further strengthening state and business ties with a view to achieving growth and sending that bilateral figure higher.

Meanwhile, Culture, Media and Sport Cabinet minister, Jeremy Hunt, who is accompanying Mr. Wen to William Shakespeare’s birthplace of Stratford-upon-Avon, will be seeking to set up a formal structure of future summits to develop better “people” relationships between the countries with a particular focus on education, science and culture.

In London, where Mr. Wen may go, apparently, for a jog in Hyde Park, the main topics for discussion will be the weighty topics of climate change (China is now one of the world’s leaders in green technology), the global economy, international security and development.

While Number 10 was refusing to comment yesterday on what else could be on the agenda, the Middle East and the economic crisis in Greece are also expected to come up for discussion.

Yesterday, at the start of his European visit in Hungary, Mr. Wen gave a strong pledge of China’s support for the embattled euro, saying that China will buy Hungarian government bonds and “consistently” support the euro as Europe attempts to fight its way out of a sovereign debt crisis. “China is a long term investor in Europe’s sovereign debt market,” he said at a press conference with the Hungarian Prime Minister, Viktor Orban. “In recent years we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.”

Whilst in the UK, the Chinese are determined to be aggressive with their British counterparts in private discussions during three days, demanding access to every area of UK technological expertise. China feels it now has the whip hand, after years of eyeing the West with suspicion. The West’s need for Chinese goods and investment (China has a significant current account surplus) are increasingly outweighing concerns about the way China does business or the low value of its currency. The UK knows it has to compete for business with other EU members as well as North and South America, the rest of Asia, Australia and Africa.

Now only 3pc of export licenses fall foul of the European Union’s “dual-use” regulations, which forbid goods to be sent to China that could conceivably be also used for military purposes.

Instead, it is British companies themselves who have held back their technology, worried that it will simply be pirated once it has arrived in China, and concerned that the playing field for foreign companies in China is still not level.

For Chinese leaders, who are used to instructing their state-owned companies in how to conduct business, the apparently laissez-faire attitude of the British Government towards its companies, is a black mark.

Similarly, the Chinese ambassador to the UK, Liu Xiaoming, has called for China to be handed the contracts to build the UK’s new high-speed rail link. “There’s a lot of talk about getting more Chinese investment but we need more action,” he said ahead of the visit.

“Chinese businesses will compare why they should invest in the UK and not in France or Germany. We need to identify flagship projects and high-speed rail might be one of them”.

Again, there seems to be a culture gap. “They are very keen to do the rail link, and they do not really understand our tender process,” said one source close to the negotiations.

China also has its own issues to contend with. Economic analysts at Credit Suisse last week revised down their forecast of China’s GDP growth for 2012 from 8.9pc to 8.5pc, still well above European levels. They said they believed that persistent inflation, slowing growth and continued fiscal tightening are likely to play out not only in the second half of this year but also well into 2012.

They also expect the financial stress in China’s small and medium size enterprise sector to spread to other parts of the economy. If the situation does not improve soon, they expect weakened demand and rising debt.

The export outlook has dimmed recently and the analysts say they would not be surprised to see zero growth in exports in the second half of this year. Meanwhile, the report expects inflation to peak soon, but say it is likely to stay at elevated levels as services inflation takes off.

So what can we expect to be achieved from the Wen visit, the fourth by a senior Chinese leader to Europe in the past six months? There will be plenty of hand-shaking and even a new slogan: “Partners for Growth”. Officials from both sides will earnestly discuss the “mutual complementarities” of the Chinese and British economies. Some deals will be signed. The Chinese have said they will leave the UK with a bounty of $4 billion worth of deals. The UK, meanwhile, says the actual value is “several hundred million pounds”.

There has been no word on whether a key deal by Diageo, the drinks company, to buy a Chinese spirits maker, will finally go through. Despite ticking all the boxes, and intense pressure from George Osborne, the Chancellor, the deal has been stalled for years by Chinese obfuscations which some say is tantamount to protectionism.

The portents for summits in between EU and China in recent years have been anything but auspicious, however, as Raffaello Pantucci points out in a paper for ISN Insights. He recalls that a 2008, summit was “spooked” by tensions during the Beijing Olympics and attitudes to Tibet. When the French and sitting EU President, Nicolas Sarkozy, made time to meet the Dalai Lama in December 2008, the Chinese responded by pulling the plug on that year’s summit.

2010 also proved tricky when Mr. Wen – who believed that China would be granted the long-awaited Market Economy Status, conferring EU recognition that China is a market economy and providing some anti-dumping protections – was instead handed a list of demands during his Brussels visit. The meeting collapsed and a planned press conference was cancelled.

This time, the constant theme of how to resolve Europe’s debt crisis will run behind the diplomacy. China, which has invested heavily in Greek infrastructure, is likely to cast itself as a magnanimous savior.

Making sure that “certain European nations” overcome their difficulties is “extremely important for us”, said Fu Ying, the vice foreign minister, last week.

But while the Chinese media will sell any intervention as a grand favor to impoverished Europe, it is worth remembering that Europe remains China’s biggest export market. And with the latest surveys indicating that Chinese factories have slowed to almost flat growth, China needs Europe to keep on buying its goods or face difficulties in what remains one of the key pillars of its economy. China may be the world’s fastest-growing major economy, but it still needs moribund old Europe....

This is China's stepping up and making a commitment to European fiscal and economic stability .... and they are putting their money where their mouth is...

Norbert Schwaiger is a true veteran of EU summits. Now in his early 70s, the amiable German recalls with relish the triumphs and disasters from 34 years of service in Brussels as if they all happened yesterday. He chats about Delors, Kohl, Mitterrand, Chirac, Thatcher and the great rows with the British over money. The epic moments of European construction, from the Single European Act in 1986 to the Maastricht treaty in 1992 and the birth of the euro in 1999, are all fresh in his mind.

To catch up with Europe's progress, Schwaiger, a former press officer who retired in 2003, returned to a Brussels summit last week to take the temperature. Much had changed. "The historical idea has faded," he said wistfully. "When we started it was about Germany and France and the Benelux countries building a new Europe to stop the endless wars. Germany, and that generation of Germans, was ashamed of Hitler. It was about creating security, a secure Europe and a secure economy. Then they wanted to have Europe as their new home country."

As EU officials from 27 countries milled around the giant Justus Lipsius building, the venue of a summit dominated by the dire economic plight of Greece and the resulting existential threat to the euro and the EU itself, the contrast in mood could not have been starker from the heyday of integration that Schwaiger had known.

The talk was no longer of high ideals and "more Europe", but of mere survival for the European project. Where they used to talk of "ever closer union" in the commission press conferences, the phrase is so now rarely, if ever, heard except when referring to history. José Manuel Barroso, the pragmatic European commission president, set his sights at this summit on "stability" for the foreseeable future, meaning the EU will do well to steady the ship in the face of Greece's financial implosion and possible exit from the single currency. Never mind any new European dreams.

From Schwaiger's perspective, one of the reasons why Europe has run out of idealism is the passage of time. He argues that Germany's postwar guilt, which did so much to power the European project, no longer drives young Germans to think about the EU as their parents and grandparents did. "In Germany the new generation, just out of school, has no memory of this," he says. Instead the young see a Germany united from its former east and west, communism fallen and a continent no longer haunted by its past or racked by the fear that it could plunge back into war. Much of Europe's original raison d'ĂȘtre has disappeared and Germany is now less willing to be its unquestioning, selfless paymaster.

Greece's plight has greatly sharpened the sense, evident for several years now, that Europe has lost its drive and, in some quarters, is losing its self-belief.

But some things in the European Union, particularly in Brussels, never change, and therein, perhaps, lie the roots of its problem. Outside the unreal echo chamber that is the Justus Lipsius, the building work for the EU empire of which the founding fathers dreamed continues apace. Vast new glass edifices are being erected in the perpetual chaos of dust and noise that is part of life in the EU's capital.

The physical construction of a united Europe seems to carry on in ignorance of the crises unfolding in the wider world. Up the road from the Justus Lipsius they are preparing the home for a new European diplomatic service, where many hundreds of mandarins will be based. Herman Van Rompuy, the first permanent president of the European council, briefed heads of government last Thursday night over dinner about the spanking new £280m base in which he will entertain EU leaders from 2014. David Cameron was apparently incensed and briefed the British press the next morning that European leaders did not "get it" as they showed off their "gilded cages" while Europe's citizens endured austerity and Greece was on the rocks.

Van Rompuy's talk of his new "palace" offered a perfect excuse for Cameron to court popularity at home by attacking a Europe with its head still stuck in the clouds. But whether or not it was political opportunism, the prime minister had a point. Barroso may show refreshing realism, but too many of those at the centre of the EU project still remain in semi-denial. The new pragmatists seem at odds with an old order that refuses to give up. "We do have to respond differently and too often we fail to do so. We all have to rid ourselves of this idea that we are just programmed to march ever onwards," said one EU official.

Early in 1999, shortly after the launch of the euro, Romano Prodi, then president-elect of the commission, was not content with realizing Europe's most ambitious venture thus far, the merging of 11 national currencies into one. Instead he put his foot harder down on the integration pedal. "The single market was the theme of the 80s," he declared. "The 90s was the decade of the single European currency. We must now face the difficult task of moving towards a single economy, a single political unity."

Europe worked in those days on the assumption that if it ever stood still it would fail. As a result, it went at breakneck speed and bent its own rules along the way. In the planning of the euro the desire to create a massively ambitious currency union across much of the EU was achieved only by ignoring its own economic rulebook.

In the run-up to the euro's launch, painful battles were fought between France and Germany to establish a stability pact to ensure members of the currency zone observed fiscal discipline. Euro countries, it was agreed, would have to have debt-to-GDP ratios of no more than 60% and deficit-to-GDP ratios of no more than 3%. "It was about Germany getting a stable euro, a euro like the deutschmark," observed a German official. But when the original 11 countries were admitted in 1999, no fewer than six were allowed in with debt levels well over the required level. The rules were waived as long as their debts and deficits were moving in the right direction.

In the case of Belgium and Italy, their debt was nearer 100% of GDP than 60% – but in they went. The same leniency was shown when Greece joined in 2001, with a debt ratio heading towards double the level required. "We might have been a little too relaxed with Greece," said Richard Corbett, a former Labor MEP who now works as an adviser for Van Rompuy. Within a few years, France and Germany were also busting the stability pact rules.

Twelve years on from the birth of the euro, as the EU prepares to lend more billions to Greece after an initial €110bn failed to do the trick, serious figures in the European debate now believe the euro's crisis could cause the entire EU project to implode. Sir Stephen Wall, Britain's ambassador to Brussels under John Major and Tony Blair – and no kneejerk Eurosceptic – declared recently that the EU was "on the way out". He added: "After all, very few institutions last for ever." A decade ago he could never have predicted he would say such a thing.

On Wednesday, the Greek parliament will vote on a new package of austerity cuts and sweeping economic reforms. If the vote is in favor, the EU will press ahead with its next bailout. No one is sure, however, whether pumping in more EU money will be enough to prevent Athens from defaulting on its massive debts. The fear is that it will not be, and that a Greek default will cause Portugal, Ireland and even Spain to do the same. The effects of that would be appalling, destroying the credit of banks across Europe and further afield that are exposed to Greek debt, wrecking their ability to lend, and landing the default insurance market across the globe with untold costs. The nightmare scenario is another economic crisis on the scale of 2008.

But still the idea – increasingly entertained by economists – that it could all end with Greece being forced out of the euro is not one anyone in Brussels will readily accept. "Greece leaving would just make matters worse, as the Greek currency would devalue, while its debt would remain in Euros," said Corbett. "And people would take fright and move their money out of the country."

Kostas Karkagiannis, the Brussels correspondent of the Greek newspaper Kathimerini, says the Greeks will fight to stay in the euro and the EU because it is their best hope. Greeks, he says, see the EU as a haven. "All these European laws are so much better than ours. At least with the EU laws you have a chance of them being implemented. What will happen if we leave the euro with all our debt in Euros? Think about the devaluation, think about the inflation. We will go back 25 or 30 years."

That may be the view in Greece, but the prospect of throwing so much money to the stricken country is not one that appeals to other states in an EU of supposedly equal partners. Tensions are deepening between the union's wealthier northern nations and poorer south.

The immediate challenge for Brussels is to ease the Greek crisis and hope that its economy can be revived. The aim is to get private banks that are exposed to Greek debt to exchange them for new loans. Then pray the rescue measures work. In the meantime, plans are being pushed through the European parliament to toughen up the kind of rules that were supposed to apply under the stability pact. There will be new surveillance "early warning" measures aimed at ensuring eurozone countries are not heading into economic trouble, such as unsustainable property booms.

Optimists in the EU try to convince themselves that something good could come from the crisis – meaning more economic integration and harmonization of taxes – steps towards the single EU economy of which Prodi dreamed. One of the arguments the commission deploys to calm anxiety is to make out that Europe is no stranger to crises – indeed, it says, it has always thrived on them.

Mark Gray, a spokesman for Barroso, said: "The temptation is to look back at the past through rose-tinted spectacles. But there were always peaks and troughs." He points to the queue of countries wanting to join the EU and the euro as evidence that they are more relevant than ever in a globalised world. Corbett believes that Europe could even emerge stronger. "That is what we hope will happen," he says. "But you don't hear much about that in the British press."


February 1992

The Maastricht treaty, negotiated in the last months of 1991, is signed, setting out a path to the single currency. Britain secures an opt-out from its final stage.

January 1999

The euro is born and begins trading at $1.17. The European Central Bank takes over responsibility for monetary policy in the 11 member states. Currencies such as the franc, peseta and lira continue to circulate for the time being, but as "sub-units" of the euro.


Greece, originally omitted because of its weak economy, joins the euro.

January 2002

Euro notes and coins become legal tender in eurozone countries, becoming the sole currency in all 12 by the end of February.


Following the enlargement of the European Union, several new member states join the euro: Slovenia in January 2007, Cyprus and Malta in January 2008, Slovakia in 2009 and Estonia at the beginning of this year, bringing the total number of eurozone countries to 17.

May 2010

The euro falls to a 14-month low of $1.25 as the growing Greek debt crisis rocks global markets.

June 2011

The International Monetary Fund warns European leaders they must act to resolve the problems in Greece, or risk another financial crisis.

It is not idealism that is lacking, it is honesty. The EU, EEC or EC, what ever they call their grubby institutions, was always founded on dishonesty, lying and grabbing power from democratic institutions to feather the nests of the EU elite. They may have paid lip service to ideals of averting war (another lie, NATO did that), but ideals? Thieves are not idealists

And this bail out is not for Greece. More dishonesty, the bail out is to keep their blessed Euro going along with their lavish lifestyles. The best thing for the Greeks is to get out, disinherit their debts, and start again with a currency that reflects their economy.

The EU elite are all still at it, including Cameron who is another EU lavvy. He says he is not contributing British money to the bail out, another misrepresentation of the truth, he is pumping billions in through the back door through our membership of the IMF. And he backs another EU lavvy to take over from the sex maniac who is awaiting trial in the US on charges of raping a chambermaid (another idealist I hear you say?)

The sooner these cuckoos who stole our democracy are thrown in the bin of history the better. But please, please do not pretend they were ever idealists, they were and remain money grubbing parasites....

French wine consumption drops by three billion bottles to just four billion

French wine consumption has dropped by three billion bottles to just four billion - the equivalent of one bottle per adult each week - in two generations
French wine consumption has dropped by three billion bottles to just four billion - the equivalent of one bottle per adult each week - in two generations....
In a study in the International Journal of Entrepreneurship and Small Business, the pair looked at successive generations and their approach to wine drinking, dividing the demographic into four groups....

June 2011

Researchers fear the culture of wine drinking is being lost in France, with younger generations less likely to savour a bottle over food and more prone to drink simply for pleasure.

They are also less aware of its cultural significance to France.

Just 16.5 per cent of the French population are now regular wine drinkers, according to research from the ESC Pau research centre and Toulouse 1 Capitole University/

Regular consumption over meals has been replaced by the French drinking wine occasionally rather than frequently, often on nights out.

This has occurred within the last two generations, according to researchers Pascal Poutet and Thierry Lorey.

The oldest was those over 65 years who had lived through the Second World War, followed by those between 40 and 65 who lived through a period of growth and worldwide development.

Those 30 to 40 - “Generation X”, who grew up through the French crisis of the 1990s, were next, followed by those under 30 - the internet generation.

“Each successive generation represents a general increase in libertarian attitudes and irreverence towards institutions”, says Dr Poutet.

While all agreed on the value and ’bon homie’ of drinking wine, it was the over 65s who most linked it with French heritage and were more likely to drink it daily and share the experience.

The middle groups are much more occasional drinkers and drink more socially with friends rather than family, and social status is a factor in their wine consumption.

But for the under-30s, wine consumption is very much the exception rather than the rule.

Dr Poutet said: “There is a dual gap between the three generations, older, middle-aged, younger - on the one hand, the consumption frequency gap (from a daily wine consumption to a festive one, and then exceptional), on the other, the pleasure gap (evolution from a genuine pleasure towards a more ostentatious pleasure, more difficult to perceive for the younger generation).”

The younger generations may still take pride in French wine but have little awareness of its cultural place in French history, he said.

He explained: “The generational analysis of the representations of wine in France does seem to be appropriate to explain the deep changes that wine has undergone in the last 60 years.

“It is precisely the progressive loss of the identity, sacred and imaginary representations of wine (nation, region, lesser importance of the transmission of the culture of wine by the father within the family, etc)

over three generations that explains France’s global consumption attitudes, and especially the steep decline in the volumes of wine consumed.”

Sunday, June 26, 2011

Don't be distracted by Greece: America's debt burden is much worse.....

Don't be distracted by Greece: America's debt burden is much worse.....

The real issue is the future of America's domestic unfunded spending, running well over 200 Trillion USD...!!!

Justin Webb

Forget Greece. Or at least put Greece to one side: the real financial disaster waiting to happen is on the other side of the Atlantic. It is a disaster born of self delusion, in a nation that prides itself on plain speaking and openness.

There is much to be celebrated in the United States. They have Osama bin Laden's scalp. They have a vibrant and open political system. The things, material and intellectual, that people want and admire still tend to be American.

But they (and we) face a huge looming crisis. It transcends politics and political candidates – it is much bigger than Michele Bachmann's hair or Barack Obama's thesaurus – and sometime soon they are going to have to face it.

It's the debt.

America's federal government debt is growing at $40,000 per second. It has reached $14 trillion, whatever that means. More comprehensible perhaps is this fact: the debt will soon match the entire GDP of the United States. Outside wartime, that has never happened before.

Even the savings implied last week in the surge home of US troops from Afghanistan, count for little more than a drop - a splash, perhaps - in this ocean of debt.

The real issue is the future of America's domestic spending.

The projections are appalling: the non-partisan Congressional Budget Office thinks that by 2030 interest payments plus spending on pensions and health will take up all the government's tax income. Everything else, from education to war-fighting, will have to be borrowed for. Or cut out.

The thought should send shivers down all our spines.

A nation whose productive capacity, whose support of economic and political freedom plays such a big part in our world could be heading for a period of poverty and introspection.

And the poverty could come quite suddenly – brought on by interest rate rises forced on America by world markets, or by foreign powers selling dollar bonds.

While making my BBC Radio Four documentary Analysis: America's Debt I asked Richard Haass, of the Council on Foreign Relations think tank, whether the fiscal crisis might allow the US to be blackmailed.

His answer: "Yes, and it is ironic that question would come from someone with your accent. What it brings to mind is 1956... when the US and the Eisenhower administration disagreed profoundly with the British, French and Israeli tri-partite decision over invading Suez.

"Essentially the US took advantage of Britain's sterling problem to exercise some economic leverage over the British government, and that led to a hasty retreat.

"So one can imagine a situation nowadays, where say there is a crisis over Taiwan between the US and China - which holds a significant number of dollars - and one can imagine the Chinese might be prepared to threaten the dollar, make some comments to weaken it unless the US backs off some of its support of Taiwan."

So what is to be done?

Here is where it gets really tricky. The problem is not primarily economic. Nor is it entirely political. It is wider, deeper: it is a failing at the most basic level of culture.

Americans, it seems to me, have allowed themselves to become fundamentally deluded about the kind of people they are.

Look at Alaska.

The Pulitzer prize-winning author Anne Applebaum tells me in the documentary that Alaska is a myth. People who live there (encouraged by a famous former governor) imagine that it is the last frontier where rugged all-American individualists grapple with snow and bears and protected only by their guns, come out on top.

In fact Alaska is the most heavily subsidised state in the Union. Social spending and tax breaks are huge – Alaska sucks hard on the teat of the state.

For Alaska, read America.

Americans have a weird inability to see themselves for what they are: deeply involved with the federal government and deeply dependent on it. The myth obfuscates and befuddles. It allows Americans – including the Tea Party movement – to have wonderfully vivid rows about public spending and tax but never really to confront the reality that taxes (my taxes!) are going to have to rise and spending on health and pensions (my health, my pension!) is going to have to be cut.

The Republicans have had a go at it recently – encouraged by the Tea Party folks – but came a horrible cropper in a by-election for a previously safe New York State congressional seat where their voters simply melted away after hearing that their entitlements might be cut.

Americans like to blame their politicians for the mess but the fault, frankly, is with the people. They will not give up their national delusion. How does it end?

Richard Haass invokes Churchill: Americans will do the right thing but only after all other options are explored. Who am I to argue with Haass and Churchill combined? But it is fair to say that they are leaving it rather late.

America is now the Achilles heel for today's world debt/financial crisis. In the past, currencies went up or down but the U.S. dollar was always the benchmark currency that everyone looked up to .... unfortunately .... that day is no longer with us. Inflation will be the net result, and like the inflation that hit the Weimer Republic in the 1920s/30s .... the currency will be irreparably harmed. And while the buildings will still be standing, there will be tens of millions of victims living inside who I can guarantee you will be feeling bitter and angry for what has happened....

The EU-funded culture of greed, tax evasion, scandalous waste, and Big Fat Greek Gravy Train....

.Cracking up: The Euro is at risk of collapse because of the Greek financial crisis

The EU-funded culture of greed, tax evasion, scandalous waste, and Big Fat Greek Gravy Train....

Even on a stiflingly hot summer's day, the Athens underground is a pleasure. It is air-conditioned, with plasma screens to entertain passengers relaxing in cool, cavernous departure halls - and the trains even run on time.

There is another bonus for users of this state-of-the-art rapid transport system: it is, in effect, free for the five million people of the Greek capital.

With no barriers to prevent free entry or exit to this impressive tube network, the good citizens of Athens are instead asked to 'validate' their tickets at honesty machines before boarding. Few bother.

Cracking up: The Euro is at risk of collapse because of the Domino effect of the financial crisis.

This is not surprising: fiddling on a Herculean scale — from the owner of the smallest shop to the most powerful figures in business and politics — has become as much a part of Greek life as ouzo and olives.

Indeed, as well as not paying for their metro tickets, the people of Greece barely paid a penny of the underground’s £1.5 billion cost — a ‘sweetener’ from Brussels (and, therefore, the UK taxpayer) to help the country put on an impressive 2004 Olympics free of the city’s notorious traffic jams.

The transport perks are not confined to the customers. Incredibly, the average salary on Greece’s railways is £60,000, which includes cleaners and track workers - treble the earnings of the average private sector employee here.

The overground rail network is as big a racket as the EU-funded underground. While its annual income is only £80 million from ticket sales, the wage bill is more than £500m a year — prompting one Greek politician to famously remark that it would be cheaper to put all the commuters into private taxis.

‘We have a railroad company which is bankrupt beyond comprehension,’ says Stefans Manos, a former Greek finance minister. ‘And yet, there isn’t a single private company in Greece with that kind of average pay.’

Significantly, since entering Europe as part of an ill-fated dream by politicians of creating a European super-state, the wage bill of the Greek public sector has doubled in a decade. At the same time, perks and fiddles reminiscent of Britain in the union-controlled 1970s have flourished.

Greek farce: Living it up in swanky harbour-side restaurants

Greek farce: Living it up in swanky harbour-side restaurants

Ridiculously, Greek pastry chefs, radio announcers, hairdressers and masseurs in steam baths are among more than 600 professions allowed to retire at 50 (with a state pension of 95 per cent of their last working year’s earnings) — on account of the ‘arduous and perilous’ nature of their work.

This week, it was reported that every family in Britain could face a £14,000 bill to pay for Greece’s self-inflicted financial crisis. Such fears were denied yesterday after Brussels voted a massive new £100bn rescue package which, it insisted, would not need a contribution from Britain.

After running battles with riot police, who used tear gas to disperse protesters, thousands are still camped out in the square ahead of a vote by Greek politicians next week on whether to accept Europe-imposed austerity measures.

Even if this is true — and many British MPs have their doubts — we will still have to stump up £1billion to the bailout through the International Monetary Fund.

In return for this loan, European leaders want the Greeks’ free-spending ways to end immediately if the country is to be prevented from ‘infecting’ the world’s financial system. Naturally, the Greek people are not happy about this.

In Constitution Square this week, opposite the parliament, I witnessed thousands gathering to campaign against government cuts designed to save the country from bankruptcy.

After running battles with riot police, who used tear gas to disperse protesters, thousands are still camped out in the square ahead of a vote by Greek politicians next week on whether to accept Europe-imposed austerity measures.

Yet these protesters should direct their anger closer to home — to those Greeks who have for many years done their damndest to deny their country the dues they owe it.

Clash: Protesters continue to riot in Athens

Clash: Protesters continue to riot in Athens

Take a short trip on the metro to the city’s cooler northern suburbs, and you will find an enclave of staggering opulence.

Here, in the suburb of Kifissia, amid clean, tree-lined streets full of designer boutiques and car showrooms selling luxury marques such as Porsche and Ferrari, live some of the richest men and women in the world.

With its streets paved with marble, and dotted with charming parks and cafes, this suburb is home to shipping tycoons such as Spiros Latsis, a billionaire and friend of Prince Charles, as well as countless other wealthy industrialists and politicians.

One of the reasons they are so rich is that rather than paying millions in tax to the Greek state, as they rightfully should, many of these residents are living entirely tax-free.

Along street after street of opulent mansions and villas, surrounded by high walls and with their own pools, most of the millionaires living here are, officially, virtually paupers.

How so? Simple: they are allowed to state their own earnings for tax purposes, figures which are rarely challenged. And rich Greeks take full advantage.

Astonishingly, only 5,000 people in a country of 12 million admit to earning more than £90,000 a year — a salary that would not be enough to buy a garden shed in Kifissia.

Yet studies have shown that more than 60,000 Greek homes each have investments worth more than £1m, let alone unknown quantities in overseas banks, prompting one economist to describe Greece as a ‘poor country full of rich people’.

Running battles: The riots are threatening to destabilise the Euro

Running battles: The riots are threatening to destabilise the Euro

Manipulating a corrupt tax system, many of the residents simply say that they earn below the basic tax threshold of around £10,000 a year, even though they own boats, second homes on Greek islands and properties overseas.

And, should the taxman rumble this common ruse, it can be dealt with using a ‘fakelaki’ — an envelope stuffed with cash. There is even a semi-official rate for bribes: passing a false tax return requires a payment of up to 10,000 euros (the average Greek family is reckoned to pay out £2,000 a year in fakelaki.)

Even more incredibly, Greek shipping magnates — the king of kings among the wealthy of Kifissia — are automatically exempt from tax, supposedly on account of the great benefits they bring the country.

Yet the shipyards are empty; once employing 15,000, they now have less than 500 to service the once-mighty Greek shipping lines which, like the rest of the country, are in terminal decline.

With Greek President George Papandreou calling for a crackdown on these tax dodgers — who are believed to cost the economy as much as £40bn a year — he is now resorting to bizarre means to identify the cheats. After issuing warnings last year, government officials say he is set to deploy helicopter snoopers, along with scrutiny of Google Earth satellite pictures, to show who has a swimming pool in the northern suburbs — an indicator, officials say, of the owner’s wealth.

Officially, just over 300 Kifissia residents admitted to having a pool. The true figure is believed to be 20,000. There is even a boom in sales of tarpaulins to cover pools and make them invisible to the aerial tax inspectors.

‘The most popular and effective measure used by owners is to camouflage their pool with a khaki military mesh to make it look like natural undergrowth,’ says Vasilis Logothetis, director of a major swimming pool construction company. ‘That way, neither helicopters nor Google Earth can spot them.’

But faced with the threat of a crackdown, money is now pouring out of the country into overseas tax havens such as Liechtenstein, the Bahamas and Cyprus.

Parliament: It could be all over for Greece, which is effectively bust from relying on EU cash from richer northern European countries

Parliament: It could be all over for Greece, which is effectively bust from relying on EU cash from richer northern European countries

‘Other popular alternatives include setting up offshore companies in Cyprus or the British Virgin Islands, or the purchase of real estate abroad,’ says one doctor, who declares an income of less than £90,000 yet earns five times that amount.

There has also been a boom in London property purchases by Athens-based Greeks in an attempt to hide their true worth from their domestic tax authorities.

‘These anti-tax evasion measures by the government force us to resort to even more detailed tax evasion ploys,’ admits Petros Iliopoulos, a civil engineer.

Hotlines have been set up offering rewards for people who inform on tax dodgers. Last month, to show the government is serious, it named and shamed 68 high-earning doctors found guilty of tax evasion.

Hotlines have been set up offering rewards for people who inform on tax dodgers. Last month, to show the government is serious, it named and shamed 68 high-earning doctors found guilty of tax evasion.

‘We will spare no effort to collect what is due to the state,’ said Evangelos Venizelos, the new Greek finance minister of the socialist ruling party. ‘We promise to draft and apply a new and honest tax system, one that has been needed for decades, so that taxes are duly paid by those who should pay.’

Yet, already, it is too late. Greece is effectively bust — relying on EU cash from richer northern European countries, but this has been the case ever since the country finally joined the euro in 2001.

Two years earlier, the country was barred from entering because it did not meet the financial criteria.

No matter: the Greeks simply cooked the books. Two years later, having falsely claimed to have met standards relating to manufacturing and industrial production and low inflation, the Greeks were allowed in.

Funds poured into the country from across Europe and the Greeks started spending like there was no tomorrow.

Money flowed into all areas of public life. As a result, for example, the Greek school system is now an over-staffed shambles, employing four times more teachers per pupil than Finland, the country with the highest-rated education system in Europe. ‘But we still have to pay for tutors for our two children,’ says Helena, an Athens mother. ‘The teachers are hopeless — they seem to spend their time off sick.’

Although Brussels has now agreed to provide the next stage of its debt payment programme to safeguard the count ry’s immediate economic future, the Greek media still carries ominous warnings that the military may be forced to step in should the country’s foray into Europe end in ignominy, bankruptcy and rising violence.

For now, the crisis has simply been delayed. With European taxpayers facing the prospect of saving Greece from bankruptcy for the second year in a row, some say even the £100bn on offer will pay off only the interest on the country’s debts — meaning it will be broke again within two years.

Meanwhile, there are doom-laden warnings that the collapse of the Greek economy could be the catalyst for another global recession.

Perhaps if the Greeks themselves had shown more willingness to tighten their belts and pay taxes due to the state, voters across Europe might not now be feeling such anger towards them.

But having strolled the streets of Kifissia, and watched the Greek hordes stream past the honesty boxes on the underground, it does not take a degree in European economics to know when somebody is taking advantage — at our expense....

As all of my Greek friends like to tell me .... the culture of corruption and personal is so pervasive in Greece that even if their debts are forgiven, and a trillion dollars is given to the country as a gift .... within 10 to 15 years they will be back to where they are today. For Greece to change they will have to hit rock bottom .... but as long as the rest of Europe is fearful of what may happen if the Greeks do financially collapse .... this dog and pony show will continue into perpetuity....

The Credit Default Swaps That Underlie the Greek Crisis....
This interview will help you to understand the problems surrounding the Greek crisis, the intended looting of their public resources, and the model that is being repeated by the banks around world.

Rickards on Regulatory Capture, Corrupt Banks, and the Credit Default Swaps on Sovereign Defaults

Around 2000 I came to roughly the same conclusions that he does. I had the opportunity to study the European money system while it was forming in graduate business school, and it just did not make sense.

The euro was probably going to fail unless the union became a unified federal government with one set of laws and taxation policy, with the kind of revenue distribution that exists amongst states in the US, for example.

A single currency cannot span independent fiscal authorities because it removes the ability of the currency to fluctuate in value based on their independent economic health, acts of God, and social policy choices of the different social organizations. This is basic monetary theory. I was surprised that it lasted as long as it did, but it was to the advantage of the financial world to tolerate the attendant deceptions because they were growing fat on it.

And a similar thing can be said for the global currency trading regime based on the dollar and arbitrary valuations subject to national manipulation. It has allowed multinational corporations and banks to achieve tremendous power and advantage over local governments.

In other words, the currency regime and financial deregulation are the setup, and the credit default swaps are the trigger. Why the politicians permit the naked selling and buying of such instruments by banks handling public money is beyond my understanding, save pure, blind greed.

I always thought that a crisis would be put forward as an opportunity for the 'one-worlders' to once again promote their idea of a one world government, and a universal order of central financial authority that eventually and inevitably evolves into a single political system. And that is still very much in the cards.

For this to happen, national governments must be undermined and absorbed, their people brought down to their knees financially. And then their saviors can begin the work of ordering their lives....

Europe, a byword for waste, financial chaos and unaccountability....

By Dominic Sandbrook

23rd July 2011

So here go again....Regionalization is coming in full force to the old continent...., courtesy of CIA/MOSSAD shenanigans....

With British attention distracted by the phone-hacking scandal, this week the European political elite hurled another £96 billion at the ailing Greek economy, desperate to stave off a financial meltdown that could plunge the entire European project into disaster.

For the time being, the markets have been mollified. But, of course, we have been here before. Once again the deckchairs are being rearranged on the Titanic.

Riot: Greek protestors take to the streets

Riot: Greek protestors take to the streets as their economy stumbles

Indeed, exactly 40 years after Edward Heath's government published the terms for British entry into the European Economic Community, the ancestor of today's EU, there has never been a wider gulf between the privileged European political class and their anxious, bewildered and hard-pressed people.

Back in the summer of 1971, in a moment heavy with idealistic excitement, Heath addressed the British people on TV.

'We have the chance of new greatness,' he said, announcing the ground-breaking European deal.'‘Now we must take it.'

But four decades on, those optimistic words ring terribly hollow. For behind the self-congratulatory backslapping at Thursday night’s Press conference about the Greek bail-out, the facts remain stark and chilling.

Despite its latest gigantic handout, it seems impossible that Greece can stomach the necessary austerity measures to keep the markets happy for long.

Ireland totters on the brink of a second bail-out, while even more disturbingly Italy and Spain, with massive deficits and soaring unemployment, are still dancing on the edge of disaster.

Spain is dancing on the edge of disaster

Spain is dancing on the edge of disaster

Yet almost unbelievably, the Euro elite’s faith in their great project remains undaunted. Despite the palpable costs of federalist idealism, the leaders of Germany and France seem determined to keep moving towards their dream of ‘ever-closer union’ — with Britain, as always, trudging gloomily behind.

The truth is that 40 years after we opened negotiations to join the European enterprise, we find ourselves at another watershed in history, a crucial turning point that could determine the lives of millions of British families.

Conceived in a climate of heady idealism, the euro has become a symbol not of unity and friendship, but of hubris, indiscipline and economic Armageddon. On the streets of Mediterranean capitals, demonstrators daily vent their fury at the politicians they blame for their predicament.

For the dwindling handful of deluded idealists who still believe in a united Europe, the omens could hardly be darker.

So far, Britain has escaped the worst of the eurozone meltdown, and for the time being the Greek deal seems to have staved off a market crash.

But when the financial contagion spreads to Italy and Spain, as it surely will, then British banks, manufacturers and construction firms, the City of London and thousands of exporters will face an almighty reckoning.

It is hard to resist the feeling that public opinion has reached a tipping point. European enthusiasm, never strong in this country, curdled into indifference and suspicion long ago.

But the looming collapse of the euro — a disastrous experiment we would have joined if Tony Blair and Peter Mandelson had had their way — represents something different. Ten days ago, one opinion poll found 66 per cent of Conservative voters would choose to leave the EU if a referendum were held tomorrow.

Ten days ago, one opinion poll found 66 per cent of Conservative voters would choose to leave the EU if a referendum were held tomorrow

Ten days ago, one opinion poll found 66 per cent of Conservative voters would choose to leave the EU if a referendum were held tomorrow

A poll released to the Mail painted an even more compelling picture. Two out of three voters blame the EU for the gigantic debt crisis in Greece, Ireland and Portugal.

And if the British people, as opposed to just Tory supporters, were given the choice, they would vote by 50 per cent to 33 per cent to abandon Brussels.

On the face of it, this looks like a complete reversal since the early Seventies, when a portentous Edward Heath took us into Europe. Yet the slow death of the European project — for that is what we are facing — is a more complicated story than it looks.

At its heart, let us not forget, was a noble motive. After the terrible slaughter of two world wars, European politicians were determined to ensure such bloodshed never happened again.

‘My generation did not have the option of living in the past; we had to work for the future,’ wrote the young Heath, who served with distinction as an artillery officer and witnessed at first hand the trials of Nazi war criminals. ‘We were surrounded by destruction, homelessness, hunger and despair.

The great mistake we made was not in entering the EU in 1973, but in staying out 20 years earlier, when we were still by far Europe¿s richest, most influential and most powerful state

The great mistake we made was not in entering the EU in 1973, but in staying out 20 years earlier, when we were still by far Europe¿s richest, most influential and most powerful state

‘Only by working together right across our continent had we any hope of creating a society that would uphold the true values of European civilisation.’

These were high ideals, indeed, and we should not mock or under-rate them. Yet from the very start, Britain’s relationship with Europe was not a happy one.

The great mistake we made was not in entering the EU in 1973, but in staying out 20 years earlier, when we were still by far Europe’s richest, most influential and most powerful state.

Had Britain taken the lead in moulding the new Europe in the Fifties, as Sir Winston Churchill had suggested a few years earlier, then we could have shaped it in a way to reflect our traditions and institutions. Instead, basking complacently in the glow of victory in World War II, we chose to remain aloof.

The result was that when we finally did join in 1973, we became a semi-detached member of what was essentially a Franco-German club, whose directors were often indifferent to our parliamentary traditions, intolerant of our historical eccentricities and sublimely uninterested in British public opinion.

By the mid-Seventies, Britain no longer enjoyed the strength and status to which we still clung in the Fifties.

We were fast becoming the Sick Man of Europe, mocked abroad for our rampant inflation, terrible labour relations and industrial decline.

When the British people were asked to vote on their European destiny in an unprecedented referendum in 1975, deciding whether to stay in the free-trade European Economic Community, it was no wonder they put aside their traditional scepticism and chose to embrace the principle of Continental unity.

A decade earlier or even a decade later, our long tradition of standing proudly apart from our European neighbours would probably have won out.

But in the summer of 1975, with inflation at an eye- watering 26 per cent, Britain was staggering around like a drunk at the end of a party.

But in the summer of 1975, with inflation at an eye- watering 26 per cent, Britain was staggering around like a drunk at the end of a party. Europe seemed to offer stability, even salvation. Europe was the future.

Europe seemed to offer stability, even salvation. Europe was the future. Even Margaret Thatcher, leader of the Tory Party for just a few months, put on a garish jumper decorated with the flags of EEC member countries and begged people to vote ‘Yes’. So the British people voted by 67 to 33 per cent to stay in Europe.

Very quickly, however, the cracks began to appear, as the original Common Market inexorably took on greater central powers, its grasp extending into all areas of society and culture, indifferent to the claims of national sovereignty.

Though Thatcher famously negotiated a rebate in our contributions to the EU budget in 1984, bluntly telling other heads of state ‘I want my money back’, there was no doubt Britain had become trapped on a federal escalator.

Far from the simple free-trade organisation that had been intended, Europe was rapidly evolving into a bloated bureaucratic empire unaccountable to its various peoples.

In 1992, the Maastricht Treaty transformed the European Community into the European Union, giving it new roles in foreign and domestic policy, and setting a timetable for the euro.

By the early 2000s, swollen by new members from the former Communist bloc, it had become unrecognisable from the idealistic little band of democratic neighbours who had established the first European institutions in the Fifties.

The disgraceful absurdities of the Common Agricultural Policy, to take one flagrant example of EU policy, are well known. It accounts for almost half the EU budget, costing taxpayers a whopping €50 billion a year, most of which goes to French farmers. According to the consumer magazine Which?, it ramps up food prices by £1,000 a year for a family of four.

In 1992, the Maastricht Treaty transformed the European Community into the European Union, giving it new roles in foreign and domestic policy, and setting a timetable for the euro

In 1992, the Maastricht Treaty transformed the European Community into the European Union, giving it new roles in foreign and domestic policy, and setting a timetable for the euro

And it makes it impossible for Third World farmers to export to Europe, effectively blocking them from climbing out of poverty. Then there is the sheer wastefulness of EU institutions.

Once a month, the 736 members of the European Parliament, as well as thousands of officials, have to travel from Brussels to Strasbourg, followed by a fleet of lorries carrying their documents.

You might think they should stay in Brussels, but the French insist they must have sessions in Strasbourg, too.

It is little wonder that for 16 years in a row, auditors have refused to sign off the EU’s accounts. It would almost be funny were it not so depressing.

Yet even as the European empire swelled and the early romanticism evaporated amid the brown envelopes and backhanders, the seeds of catastrophe were being sown.

Whatever you think of Gordon Brown, it is to his immense credit that he foresaw the dangers of the euro and ensured Britain did not join. Had he yielded to Tony Blair’s enthusiasm, entered the eurozone and thus sacrificed our ability to control our own economy, our current budgetary problems would be immeasurably worse.

The truth is that the introduction of the euro, which went into circulation in 1999 and is now used by 17 EU states and 332 million people, was a catastrophic mistake. It was a triumph of idealism and empire-building over prudence and reason.

It yoked together national economies as diverse as Germany and Portugal, Italy and Ireland, denying them the freedom to manage their own currencies and, crucially, to set their own interest rates.

With rates kept low, poorer countries such as Greece, Ireland and Spain went on demented spending sprees, borrowing wildly and throwing money at developers as though it would never run out.

But when the bubble burst, the reckoning was terrible.

With Greece reduced to a beggar, Ireland in hock to the IMF, Spain trembling on the brink and Italy facing the imposition of deep austerity measures, the survival of the eurozone in its current form looks highly unlikely.

Yet WE in Britain have no cause for complacency. Financial analysts predict that if the Italian government defaults on its debts and Italian banks collapse — as could well happen if the markets lose confidence in Silvio Berlusconi’s comic-opera government — then the contagion could leave our banks and institutions facing losses of almost £43 billion.

In the meantime, the EU seems rudderless. For all its armies of officials and consultants, spanking new offices and lofty pronouncements — and the £96 billion hurled heedlessly into the Greek maw this week — the Brussels empire has no long-term answer to the financial contagion sweeping across Europe.

The best thing would be to let the euro die a quiet and unlamented death, allowing poorer countries to set their own interest rates — but, of course, the French and Germans would never stand for that, because of their idealistic commitment to ‘ever-closer union’.

Yet the truth is that very few of us can explain precisely what the EU is for. It was, of course, established to prevent another world war, and in that respect, at least, it has served its purpose admirably.

Yet serious reform has long been overdue. Interfering when it should be aloof, dithering when it should be decisive, toothless and inept when it should be effective and efficient, the EU has become a byword for unaccountability, incompetence and sheer impenetrability.

And the real tragedy is that the original idealism that marked its foundation has long since disappeared, lost in a sea of bureaucratic sleaze and financial chaos. Few of us remember how it started; we only see what it has become.

Now, despite this week’s backslapping and window dressing in Brussels, there must be a serious doubt whether it can survive in its current form.

And given the noble ambitions and high hopes with which the European project began, the greatest indictment of all is that so few of us would miss it.