The Wall Street Examiner http://wallstreetexaminer.com Get the facts. Thu, 02 Jul 2015 21:57:29 +0000 en-US hourly 1 Here Are 3 Reasons Why Chris Christie Earns Biggest Fattest Liar Politician Title http://wallstreetexaminer.com/2015/07/here-are-3-reasons-why-chris-christie-earns-biggest-fattest-liar-politician-title/ http://wallstreetexaminer.com/2015/07/here-are-3-reasons-why-chris-christie-earns-biggest-fattest-liar-politician-title/#comments Thu, 02 Jul 2015 18:05:31 +0000 http://moneymorning.com/?p=187557 On June 30, a journalist who's covered Chris Christie for 14 years -- published a scathing op-ed that flat out declared "Chris Christie lies."

This also happened to be the same day that the New Jersey governor announced his bid for presidency.

Here are some of the "untruths" that were outlined in the op-ed...

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This is a syndicated repost courtesy of Money Morning - We Make Investing Profitable. To view original, click here.

New Jersey Gov. Chris Christie officially announced his bid for presidency on June 30, 2015. The very same day, NJ.com journalist Tom Moran — who has covered Christie for 14 years — published a scathing op-ed that flat out declared, “Chris Christie lies.”

chris christie liesMoran’s article, “After 14 Years of Watching Christie, a Warning: He Lies,” contains a litany of alleged whoppers told by the governor of New Jersey.

It’s important to note that Moran’s 14-year history following Christie is rife with reproach. The two men even seem to have developed a kind of rapport — in a May 24 article, the journalist wrote, “[Christie] regards me now as something akin to toe fungus. But he feels free to joke, and I feel free to laugh.”

Christie appears to keep an eye on Moran. He gets ahead of the op-eds, almost as though he can tell when one’s coming. For example, Christie’s presidential announcement speech – which coincided with Moran’s op-ed – heavily focused on integrity. Christie made statements like:

  • “There is one thing you will know for sure: I say what I mean and I mean what I say.”
  • “We must tell each other the truth about the problems we have and the difficulties of the solution.”
  • “The lying and stealing has already happened, the horse is out of the barn, we need to get it back in, and the only way to do it is by force.”

But all the two men’s adverse history aside, the sheer amount of time Moran has spent on the Christie beat lends him credibility and a unique perspective.

“Most Americans don’t know Chris Christie like I do, so it’s only natural to wonder what testimony I might offer after covering his every move for the last 14 years,” Moran wrote on June 30. “My testimony amounts to a warning: Don’t believe a word the man says.”

He added, “Don’t misunderstand me. They all lie, and I get that. But Christie does it with such audacity, and such frequency, that he stands out… If you have the stomach for it, this column offers some greatest hits in Christie’s catalog of lies.”

And Moran delivered.

Let’s take a look at three of the biggest untruths Moran says Chris Christie has made…

Three Unforgettable “Chris Christie Lies”

Lie No. 1. One of the first topics Moran touched on in his article is public workers’ pension and benefits plans. This dates back to Christie’s 2009 campaign for governor, when public workers’ unions asked him if he intended to cut their benefits.

According to Moran, Christie’s response was that their pensions were “sacred” to him.

“The notion that I would eliminate, change, or alter your pension is not only a lie, but cannot be further from the truth,” Christie said. “Your pension and benefits will be protected when I am elected governor.”

But that didn’t happen. In fact, he made those cuts the focal point of his first year in office.

“He seemed very sincere,” Bill Lavin, head of the firefighters union, said, according to Moran. “Why doubt someone who tells you this is sacred to them?”

Lie No. 2. 7 2 15 gw bridgeNext Moran outlined how Christie “misled” a pundit to believe that the “Bridgegate” controversy was over and done with. Bridgegate started on Sept. 9, 2013, when Christie staff members purportedly collaborated with the governor to create a massive traffic back-up in Fort Lee, N.J. This was accomplished by shutting down toll plaza lanes on the George Washington Bridge.

The scandal was allegedly orchestrated by Christie to punish Fort Lee Mayor Mark Sokolich (D), who didn’t endorse him in the 2013 gubernatorial election. The backed-up traffic blocked thoroughfares in Sokolich’s city, causing temporary chaos on the streets.

Moran outlined an interview from May 18, 2015, between Christie and FOX News anchor Megyn Kelly. Christie insisted to Kelly the matter was over and done with. “The U.S. Attorney [Paul Fishman] said in his press conference a few weeks ago there will be no further charges in the bridge matter,” Christie said. “He said it affirmatively three or four times.”

But Moran pointed out that’s “not even close” to what Fishman said. “U.S. Attorney Paul Fishman said the investigation continues, and that the two indicted Christie aides could wind up pleading guilty, which would yield a new trove of evidence,” he wrote.

Lie No. 3. Moran then homed in on a claim Christie made in February of this year: that he’s personal friends with King Abdullah of Jordan.

Moran pointed out the friendship, if it indeed really exists, comes with benefits — such as a free weekend getaway for Christie’s entire family to Israel.

He also pointed out the friendship was a lie.

“He had met the king once,” Moran wrote, “at a political dinner.”

And Christie was motivated to lie. You see, because Christie feigned friendship with Abdullah, he was exempt from claiming the trip come tax time. This exemption, called the “friendship exemption,” allows friends to offer one another actual gifts (say, birthday presents) without the threat of legal problems. Moran points out that the “gift” enjoyed by the Christie family was worth a whopping $30,000.

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The post “Chris Christie Lies,” Warns Op-Ed from This Insider appeared first on Money Morning

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

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Truthiness Meter Chart O’ Da Month- Wage and Hour Division http://wallstreetexaminer.com/2015/07/truthiness-meter-chart-o-da-month-wage-and-hour-division/ http://wallstreetexaminer.com/2015/07/truthiness-meter-chart-o-da-month-wage-and-hour-division/#comments Thu, 02 Jul 2015 16:14:37 +0000 http://wallstreetexaminer.com/?p=253810 Average Weekly Earnings Growth Downtrend- Click to enlarge

Average Weekly Earnings Growth Downtrend- Click to enlarge

What else is there to do with the insane people spewing Wall Street conventional wisdom on CNBC and the pages of the Wall Street Journal but to ridicule them as the fools and shills they are?

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Manufacturing Jobs Hit Record Low But Here’s What Was Even Worse http://wallstreetexaminer.com/2015/07/manufacturing-jobs-hit-record-low-but-heres-what-was-even-worse/ http://wallstreetexaminer.com/2015/07/manufacturing-jobs-hit-record-low-but-heres-what-was-even-worse/#comments Thu, 02 Jul 2015 15:49:04 +0000 http://alantonelson.wordpress.com/?p=3084 Continue reading

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This is a syndicated repost courtesy of RealityChek. To view original, click here.

June’s 4,000 monthly net employment increase for manufacturing wasn’t enough to prevent the sector from entering its worst seven-month job-creation stretch since April-November, 2013. On an annual basis, moreover, manufacturing’s June 161,000 employment improvement was lower than May’s 180,000 and its poorest year-on-year performance since the previous May.

Largely as a result, manufacturing’s share of total nonfarm employment hit a new record low last month – 8.70 percent. And manufacturing wages fell in June month-to-month (by 0.20 percent) for the first time since December – a worse performance than even the flat line turned in by the overall private sector.

Here’s my analysis of the latest monthly (June) manufacturing figures contained in this morning’s employment report from the Bureau of Labor Statistics:

>June’s preliminary jobs report shows that manufacturing employment rose by 4,000 on net during the month – lower than May’s 7,000 improvement, which revisions left unchanged. April’s 1,000 net jobs gain for the sector remained unchanged, too.

>The decent June manufacturing employment news ended there, though. Last month’s gains were too small to prevent the sector from entering its worst seven-month net job-creation stretch (56,000) since April-November, 2013’s 66,000.

>In addition, the yearly manufacturing job advance revealed in the June figures (161,000) not only trailed May’s 180,000, but represented the worst such increase since May, 2013-2014’s 147,000. the June year-on-year rise was also lower than the 172,000 net new manufacturing jobs created from June, 2013-June, 2014.

>Largely as a result, manufacturing’s share of total non-farm employment dropped to a new record low in June – 8.70 percent. At the sector’s recessionary employment bottom (February and March, 2010), manufacturing jobs accounted for a much higher percentage of the official U.S. jobs universe – 10.69 percent and 10.67 percent, respectively.

>Since manufacturing hit that last 2010 employment bottom, the sector has regained 885,000 (38.60 percent) of the 2.293 million jobs it lost during the recession and its aftermath. By contrast, the private sector overall lost 8.801 million jobs from the recession’s December, 2007 onset through its February, 2010 absolute employment low. Since then, it has since increased net employment by 12.759 million.

>In fact, whereas total private sector employment is now 3.41 percent higher than at the recession’s beginning, manufacturing employment is still 10.24 percent lower.

>Far worse than manufacturing’s June job creation performance was its wage performance last month. The sector’s current dollar wages fell by 0.20 percent on month – the first such drop since last December (0.36 percent). In June, manufacturing wages inched up only by (a downwardly revised) 0.08 percent. Both changes lagged even the private sector’s disappointing on-month wage flat line in June and its 0.24 percent improvement in May.

>Just as important, June’s year-on-year current dollar manufacturing wage increase was only 1.05 percent – the slowest advance since January, 2012-2013’s 0.67 percent. The latest annual increase also trailed the previous June’s 1.85 percent and June 2012-2013’s 1.89 percent.

>By contrast, overall private sector wages increased by two percent in June year-on-year. 

>Since the current economic recovery began, pre-inflation manufacturing wages are up less (8.95 percent) than private sector wages (12.59 percent).

>Manufacturing’s wage performance has been even worse after adjusting for inflation. The latest Labor Department figures report on May, and will be updated later this month. But they showed that in real terms, manufacturing wages flat-lined from January through April (with new revisions wiping out that latter month’s penny increase), and then sank by 0.38 percent in May.

>Real total private sector wages dropped on a monthly basis in May, too, but by half that rate – 0.19 percent. From January through May, they are down by that same amount.

>Year-on-year, inflation-adjusted manufacturing wages rose in May by only 1.63 percent – less than April’s 1.82 percent, which itself was downwardly revised. May real overall private sector wages were up considerably more – by 2.23 percent, though that figure has been revised down as well.

>Moreover, as of these preliminary April data, inflation-adjusted manufacturing wages are down by 1.12 percent since the recovery officially began in mid-2009. Real wages for the entire private sector are up 2.03 percent during this period.

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

This is a syndicated repost courtesy of RealityChek. To view original, click here.

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Here’s How High Americans Not In The Labor Force Jumped http://wallstreetexaminer.com/2015/07/heres-how-high-americans-not-in-the-labor-force-jumped/ http://wallstreetexaminer.com/2015/07/heres-how-high-americans-not-in-the-labor-force-jumped/#comments Thu, 02 Jul 2015 14:10:47 +0000 http://confoundedinterest.wordpress.com/?p=41947 This is a syndicated repost courtesy of Confounded Interest - Online Course Notes For Financial Markets. To view original, click here.

The June Jobs Report is out today and Federal Reserve Vice Chairman Stanley Fischer must be thrilled! Americans NOT in the Labor Force jumped by 640,000 to a whopping 93.6 million. Remember, according to Fischer, America is need full employment. So, Americans NOT in the labor force keeps rising as a percent of the potential labor force (NOT in labor force + labor force) and is above 37% at 37.35%.

nilfp

Other jobs-related information is not very good either. While the U3 unemployment rate dropped to 5.3%, the broader U6 unemployment rate is still above 10% at 10.5%.

unejobs

Labor force participation fell to 1977 levels.

lfpjune15

Wage growth? There was none in June. And the average hourly wage growth YoY FELL to 2.0%. So much for the vaunted “wages will rise!” meme.

avgwage

223,00 jobs were added in June which was less than expected, but that is a drop in the bucket compared to the 93.6 million NOT in the labor force.

Tune into CNBC and Fox Business and you will hear the talking heads singing “Keep Your Sunny Side Up”

MNPC_173_B

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

This is a syndicated repost courtesy of Confounded Interest - Online Course Notes For Financial Markets. To view original, click here.

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Gold Takes A Menacing Turn http://wallstreetexaminer.com/2015/07/gold-takes-a-menacing-turn/ http://wallstreetexaminer.com/2015/07/gold-takes-a-menacing-turn/#comments Thu, 02 Jul 2015 13:03:40 +0000 http://wallstreetexaminer.com/?p=253779 Gold’s cycle projections point lower as the metal continues to threaten to break key support, which would make those projections likely to be reached.

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Technically, Here’s Why Rebound Leaves Doubt http://wallstreetexaminer.com/2015/07/technically-heres-why-rebound-leaves-doubt/ http://wallstreetexaminer.com/2015/07/technically-heres-why-rebound-leaves-doubt/#comments Thu, 02 Jul 2015 03:51:00 +0000 http://wallstreetexaminer.com/?p=253747 Cycle screening measures were stronger on Wednesday. While all 9 measures rebounded, all remain deeply tilted to the sell side. The aggregate measure rose along with prices, but remains at an extremely weak level. Here’s what this means for the market.

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The Coming Era of Pension Poverty http://wallstreetexaminer.com/2015/07/the-coming-era-of-pension-poverty/ http://wallstreetexaminer.com/2015/07/the-coming-era-of-pension-poverty/#comments Thu, 02 Jul 2015 02:04:00 +0000 http://wallstreetexaminer.com/?guid=a76fe55e03fda1603a0572bc19874200 This is a syndicated repost courtesy of oftwominds-Charles Hugh Smith. To view original, click here.

Assuming “growth” will fund all promised pensions and entitlements is magical thinking.
The core problem with pension plans is that the promises were issued without regard for the revenues needed to pay the promises. Lulled by 60 years of global growth since 1945, those in charge of entitlements and publicly funded pensions assumed that “growth”–of GDP, tax revenues, employment and everything else–would always rise faster than the costs of the promised pensions and entitlements.
But due to demographics and a structurally stagnant economy, entitlements and pension costs are rising at a much faster rate than the revenues needed to pay the promised benefits. Two charts (courtesy of Market Daily Briefing) tell the demographic story:
As the 60+ million baby Boom began qualifying for Social Security and Medicare entitlements, the percentage of beneficiaries rose quickly from a decades-long level of about 16% of the total population to 18.5%. This might seem like much, but what’s troubling is the steep rise in the number of beneficiaries while the number of full-time workers who pay the vast majority of the income taxes has remained stagnant:
Federal social spending (entitlements) has almost tripled from 5% of GDP to 14% while federal tax revenues/spending have remained range-bound as a percentage of GDP. In other words, social spending is soaring as a percentage of the economy (GDP) while revenues to support that spending are limited by the slow-growing economy and the correlation between high tax rates and recessions.
The other structural headwind is low investment returns in a zero-interest rate global economy. The only way to increase yields is to take on more risk, a strategy that has potentially catastrophic consequences: Pension Funds Are “Compromising Their Solvency” OECD Warns.
Any criticism of rapidly rising public pension costs quickly draws accusations ofunion-bashing, a favored propaganda technique to divert investigation of blatant abuse of the system. Since I have cousins who have retired from California police and firefighter jobs, I know all the insider games and tricks that many public employees can use to boost their pensions and benefits.
The issue isn’t unions, it’s the systemic abuse of public trust and public funds.
Buying political influence with campaign contributions doesn’t mean promised public-employee pensions and benefits will align with tax revenues and yields on pension funds. The global economy is due for a recession and an extended period of slow growth/stagnation as the Great Deleveraging of credit/asset bubbles strips away phantom collateral and pops all the bubbles. This global deleveraging will occur whether we like it or not, and refusing to consider massive losses in pension-fund owned assets and declining tax revenues will only lead to greater fiscal imbalances/crises down the road.
The usual excuse for insider abuse is “everybody does it.” What this means is “everybody on the public payroll who can get away with it does it.” The private sector doesn’t offer tricks like doubling your overtime in your last year of service to plump up your pension, or getting cashed out of your sick leave and unused vacation time to the tune of hundreds of thousands of dollars:
In the real world, these benefits vanish if you don’t use them within the allotted time.
Promises made in flush times cannot be kept in lean times. Common sense suggests that public employee pension benefits should be tied to the revenues required to pay them and the rate of low-risk returns on pension funds. If common-sense is “union bashing,” then we not only have a pension-funding problem, we have a propaganda problem.
Regardless of what was promised, what can’t be paid won’t be paid. The federal government can print money, but state and local governments cannot print money to pay soaring pension and healthcare costs. Push taxes and junk fees up enough and you will spark a taxpayer rebellion. If you doubt this, check out the origins of Prop 13 limits on property taxes in California.
I have suggested that the federal government eliminate the Social Security payroll tax and just print the money for Social Security pensions: How About Ending Social Security and Paying Retirees with Cash? (November 15, 2013)
The reason why this is practical is the Social Security system is not open-ended like Medicare; costs can be fairly accurately predicted, and SSA pensions are limited. In a deflationary $17 trillion economy, printing $1 trillion and distributing it to tens of millions of beneficiaries, most of whom paid SSA payroll taxes for decades, would not be enough to spark systemic inflation. (The Federal Reserve, so desperate to generate inflation, should jump on the prospect of goosing some mild inflation via broad-based spending by tens of millions of households.)
Assuming “growth” will fund all promised pensions and entitlements is magical thinking. We’re going to have to do better than indulge our Spoiled Brat Economy mindset because “we wuz promised.” What we were promised based on faulty assumptions, faulty projections and wishful thinking no longer matters.
Gordon T. Long and I discuss these systemic issues in a video program:

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

This is a syndicated repost courtesy of oftwominds-Charles Hugh Smith. To view original, click here.

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These Two Levels Should Tell Us Which Way Stocks Will Go http://wallstreetexaminer.com/2015/07/these-two-levels-should-tell-us-which-way-stocks-will-go/ http://wallstreetexaminer.com/2015/07/these-two-levels-should-tell-us-which-way-stocks-will-go/#comments Wed, 01 Jul 2015 22:14:21 +0000 http://wallstreetexaminer.com/?p=253712 One support area has held so far, so the 13 week cycle could try to turn up again. But counts on other cycles suggest that downward tendencies could persist for another two weeks or more. The signals are confusing but this report reveals the key levels to watch that should tell us where the market is most likely to go next.

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Here’s Why Fed Worry About Drop In Liquidity Is Ridiculous http://wallstreetexaminer.com/2015/07/heres-why-fed-worry-about-drop-in-liquidity-is-ridiculous/ http://wallstreetexaminer.com/2015/07/heres-why-fed-worry-about-drop-in-liquidity-is-ridiculous/#comments Wed, 01 Jul 2015 21:33:51 +0000 http://confoundedinterest.wordpress.com/?p=41935 This is a syndicated repost courtesy of Confounded Interest - Online Course Notes For Financial Markets. To view original, click here.

(Reuters) The U.S. Federal Reserve has launched a study to see if U.S. Treasury markets are being hampered by a lack of liquidity, an issue some investors and others have cited as a potential risk to financial stability, Fed board member Lael Brainard said on Wednesday.

Brainard, speaking at a financial conference in Austria, said events like the sharp swing in U.S. bond prices last October and earlier this year in the market for German bonds added to anecdotal evidence that markets for the world’s safest assets are less deep and less liquid than they had been.

If true, she said, that could cause trouble in times of financial stress if investors cannot freely buy and sell safe haven bonds at other than fire-sale prices.

Sorry, Lael, are you saying that there may not be enough liquidity in the bond market?

You are aware the M1 Money Supply doubled since 2008 while M2 Money Supply increased by 50% since 2008.

m1m2F

And The Fed’s Balance Sheet has exploded in size going along with a near zero Fed Funds Target rate.

frC

But here is the real problem Ms. Brainard. Wage growth has stagnated, real median household income is back at 1990 levels, labor force participation is falling, all which is causing M2 Money Velocity to crash.

liqE

She went on to raise a red flag over high frequency traders (HFTs), but ignored the fact that … nothing is really working. Or at least not working too well. Except for creating asset bubbles.

There is so much liquidity sloshing around the banking system that it reminds me of the old Bobby Darin song.

JUNE21

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. No promotional consideration has been offered or accepted. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. Some of the content includes the original publisher's promotional messages. The Wall Street Examiner is not familiar with the services offered and makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

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Good On You, Greece—–But Don’t Waver Now (Part 2) http://wallstreetexaminer.com/2015/07/good-on-you-greece-but-dont-waver-now-part-2/ http://wallstreetexaminer.com/2015/07/good-on-you-greece-but-dont-waver-now-part-2/#comments Wed, 01 Jul 2015 21:33:00 +0000 http://davidstockmanscontracorner.com/?p=58163 This is a syndicated repost courtesy of David Stockman's Contra Corner » Stockman’s Corner. To view original, click here.

Yesterday the embattled Greeks delivered still more body blows to the rotten regime of Keynesian central banking and the crony capitalist bailout state to which it is conjoined. By defaulting on its IMF loan, walking away from the troika bailout program and taking control of its insolvent domestic banking system, Alexis Tsipras and his band of political outlaws have shattered a giant illusion.

Namely, that the world’s debt serfs will endlessly and meekly acquiesce to whatever onerous, eleventh hour arrangements might be concocted by their official paymasters——even when these expedients are for no more noble or sustainable purpose than to forestall a Monday moring hissy fit among the gamblers in the world’s financial casinos.

So at midnight on June 30 the proverbial can was not kicked again as scheduled. Instead, Greek democracy kicked back. And it is to be hoped that the end result will be a mighty boot to the tyranny of the status quo in the form of a resounding “no” vote on Sunday.

The latter would clarify that everything at issue between the parties is false. There is no way to pay Greece’s debts, modify the troika austerity plan, save the euro, rescue Greece’ banking system or stabilize Europe’s hideously mispriced and distorted debt markets.

Its all going to blow and it should. The entire European mess has been concocted by statist politicians and policy apparatchiks who falsely and arrogantly believe they can defy the laws of markets, sound money and fiscal rectitude indefinitely.

The truth lost in all the meaningless “puts and takes” of the latest negotiations is that Greek state was bankrupt five years ago; it can not reform, save, skimp, or grow its way out of its crushing debt, and should stop looking for ways to accommodate its paymasters. It urgently needs to default massively and decisively, and is in a ideal position to do so.

That’s because the clowns who run the troika have taken themselves hostage. That is, they have shifted virtually the entirety of Greece’s unpayable debts from private banks and bond funds to the taxpayers of Europe, the US, Japan and even the unwary citizens of Peru, Senegal and Bangladesh.

Here is the debt in 2009–mostly owed to private banks and bondholders—compared to Greece negligible private external debt today. In the case of the French, German, Dutch and Italian banks and other private lenders, for example, outstandings have been cut from $100 billion in 2009 to barely $15 billion today.
By contrast, here is the pea under which Greece’s massive debt is hiding today. Namely, almost all of it has been shifted onto the backs of the taxpayers of these Eurozone nations.

Moreover, as the New York Times noted with respect to this massive shift, the most aggressive punters have made a killing. One of them noted quite explicitly that when hedge funds started buying Greek government bonds in 2012:

“People made their careers on that trade,” Mr. Linatsas said.”

Indeed they did. And now taxpayers around the planet have been stuck with the due bill. Specifically, $250 billion or nearly 80% of Greece’s $320 billion of fiscal debt is directly owed to the EU facilities and the IMF; and upwards of half of the balance is indirectly owed to European taxpayers because $45 billion of Greece’s T-bills and bonds are either owned or funded by the ECB.

If Tsipras were not so badly advised by his pro-euro Keynesian advisors like Varoufakis, he would realize that there is no point in negotiating with the troika at all because Greek concessions can not possibly lead to the only two things that count. That is, meaningful debt relief or reentry into world bond markets.

In fact, the sole reason for compromising—nay capitulating—-is to keep the euro, and that is a snare and a delusion.

Accordingly, a clean default on this massive burden of official debt is in order for two reasons. First, Greece’s government never asked for the giant bailouts of 2010 and 2012 which transferred their onerous debts to the world’s taxpayers. The $250 billion outstanding was forced upon them by Brussels and IMF officialdom in order to protect the German, French, Dutch, Italian and other banks; and to insure that when the markets opened on innumerable Monday mornings, there would be no inconvenient turmoil on the stock exchanges or in the bond pits.

Secondly, the troika cannot give honest debt relief anyway. That’s because officialdom is now petrified of their own taxpayers—-whom they have betrayed and baldly lied to from the very beginning. Thus, the IMF has now loaned Greece $35 billion in gross violation of its own credit standards and long-standing rules. Were it ever to take the huge write-offs that are objectively warranted by the actual facts of Greece’s economic and fiscal situation, it would be eaten alive in the legislative chambers of its member governments.

Indeed, in the case of the $6 billion share of the loss attributable to the US quota, the Republican congress would have a field day investigating the incompetence and misdirection underlying the IMF’s role in the Greek bailout. The IMF would never again achieve a congressional majority for a subscription funding increase—effectively putting it out of business.

And that’s nothing compared to the political explosion that would be unleashed in the national parliaments of the Eurozone itself—– were proper debt relief to be granted. As shown below, the Germans are on the hook for $56 billion of the direct fiscal debt, but that’s not the whole of it by any means. Through the backdoor of the ECB, German taxpayers have also loaned Greece another $36 billion in the guise of liquefying the collateral of the Greek banking system.

“Liquefying” my eye!

The Greek banking system is hopelessly insolvent; the so-called “Eurosystem” obligations shown below are nothing more than fiscal transfers.  Accordingly, what the clueless Angela Merkel actually accomplished during five years of weekend Gong Shows was to bury her taxpayers under $92 billion of liabilities—–nearly all of which are off-budget and unacknowledged.

Her desperate and mindless temporizing in order to remain in power thus constitutes a monumental political lie and betrayal. Were this to be exposed by a major write-down of the Greek debt,it would lead to an instant fall of her government.

The same is true for the rest of the Eurozone—only the facts are even more egregious.

France’s share of the fiscal debt is $42 billion and its total obligation including the ECB exposure is $70 billion. But France has not had a balanced budget in 40 years; is suffering from record unemployment and a decaying economy that has been suffocated by socialist taxes and regulatory dirigisme; and will soon join the triple digit club on its public debt. Accordingly, its government is petrified by even mention of Greek debt relief.

Then you have Italy buried under a 130% debt-to-GDP ratio and an economy that is 10% smaller in real terms than it was 7 years ago. So it is not surprising that its paralyzed, caretaker government does not wish to contemplate even the prospect of a write-down on the $37 billion of fiscal debt owed by Greece or the $60 billion of total exposure.

Then there is the crook and fiscal phony running Spain. No wonder Mr.Rajoy has practically threatened to take out a contract on Alexis Tsipras’ life. Spain’s economy is still grinding away 15% below its boom time peak and its government is faking its fiscal accounts to a fare-the-well. Still, its public debt continues to rise toward 100% of GDP.

So its cowardly government would rather consign the Greek people to permanent depression and debt servitude than own up to the $42 billion it has loaned the Greek state and banking system in order to keep the European banks and bond funds afloat.

Source: @FGoria 

After generations of fiscal profligacy the Greek government should not worry about re-entering the capital markets at any time soon. It should resign itself to running primary budget surpluses for the indefinite future based on whatever domestic political consensus it can cobble together on the matter of taxation, pension reform, divestiture of state assets and weaning its crony capitalist leeches and special interest groups from their stranglehold on the Greek state’s depleted coffers.

Under such an all-Greek fiscal regime, it need not worry about its $250 billion of official fiscal debt or even the $130 billion of Euro-system obligations. Here’s why.

None of the governments which foisted these obligations on Greece will survive a blanket default. The more likely scenario is that the successor governments—–almost certain to be anti-EU—- will disavow the guarantees undertaken by the EFSF and demand haircuts from the underlying bank and bond holder claimants. Stated differently, a Greek default on its $150 billion of EFSF funding would trigger a domino effect back to the status quo ante.

In any event, the only alternative to this sequential chain of defaults or punishment of Eurozone taxpayers is to send in the German and French armies. But unlike the Ruhr in 1923, there are no coal mines, steel mills or other significant industrial assets in Greece to occupy. The geniuses at the troika have essentially made massive unsecured loans that are uncollectible—–proof positive that, among other things, governments shouldn’t be in the banking business.

So if Syriza gets its “no” mandate Sunday and if meaningful debt relief is impossible, what is it exactly that it would negotiate for from an arguably strengthened position? The conventional answer, of course, is continued ECB support for its banking system and retention of the euro.  But both of these objectives are invalid, and are just gateways back into subservience to the Troika.

Since Greece is already irrevocably knee deep in capital controls it need only complete the process and nationalize the banks since they are irreparably insolvent anyway. For instance, Greece’s three largest banks with available public data—–Alpha Bank, National Bank of Greece and Eurobank Ergasias—–have upwards of $60 billion of non-performing loans, which represent nearly one-third of their total book of $180 billion. In addition, they also have $50 billion of bonds and other investments—much of which was issued or guaranteed by the Greek state.

Against the massive imbedded losses in these totals, by contrast, the three banks have only $9 billion of tangible book equity excluding their worthless tax-deferred assets. In short, neither the stock or the long-term debt of these banks have any recoverable value at all.

As part of a housecleaning at these wards of the state, therefore, tens of billions of bad debts would be written off including the debt of the Greek state. And the massive $130 billion of ECB claims would be primed by the claims of domestic depositors.

To be sure, most of the deposits have already fled the Greek banking system and there is upwards of $50 billion in euro notes and coins in the billfolds and mattresses of Greek citizens and multiples of that in off-shore bank accounts. Nevertheless, under a proper state directed liquidation and clean-up of the Greek banking system, the remaining domestic depositors would be made the senior creditors of a shrunken but solvent banking system. The eurosystem’s $130 billion of claims, including the ECB’s lunatic extension of $90 billion in ELA funding to the Greek central bank, would be forced to take a deep haircut on the subordinated claims it would hold after a restructuring.

Given what needs to be done with respect to Greece’s massive fiscal debt and its insolvent banking system, why would Syriza want to make post-referendum concessions to the troika for the privilege of staying in the euro?

The short answer is that is wouldn’t and shouldn’t. After the necessary fiscal default and nationalization of the Greek banking system the euro is a club no one would want to join.

Stated differently, underlying the present fraught confrontation between Greek democracy and the troika’s financial oppression is an epochal catch-22. The sweeping debt relief on which survival of the Greek economy depends would unhinge European politics, discredit the so-called European project and shatter the flawed and unsustainable money printing regime underlying the euro.

Indeed, if the Greeks do not waver after a successful rejection of the status quo on Sunday they will not need to feel lonesome about returning to the Drachma. The Italian lira, Spanish peseta, Portuguese escudo, the French franc and  countless more will be back in short order.

Think of that. The IMF out of business. Merkel and Brussels gone. The Bundesbank and D-mark restored. The Keynesian money printers discredited. The front-runners and speculators in the casino carried out on their shields.

Now that’s a referendum that the world desperately needs.

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