REMEMBRANCE DAY REVISITED

REMEMBRANCE DAY REVISITED

I have not been making Blog posts over the last days as I had an operation to my hand, a necessary tool for operating a computer keyboard. The operation was to release blocked nerves which were increasingly paralyzing my fingers, and was performed at Hospital La Tour in Geneva. The hospital has almost as good a reputation for its restaurant and hotel like facilities, as it does for its surgical teams. One could even say my hand was in good hands!

As the anesthetist slowly and smilingly anesthetized my upper arm weaving skillfully between my veins and arteries, targeting each nerve individually, explaining the process as it evolved, I watched on the computer screen in fascination. At the end of the process I saw my arm totally immobilized, and even when summing all of my mental and physical willpower was completely unable to move.

I reflected afterwards how similar has been the process in forming the EU and how similar the outcome. The individual state members have been anesthetized by a potent cocktail of BarRomputhol and Trichicillin, while watching the whole process on Euro News. At the end when they summon all their strength to exert their national sovereignty they realize they too have become completely powerless.

We need only look at the “Technocratic” governments foisted upon Greece and Italy by the elitists to realize the extent of loss of sovereignty. The members of these Governments barely include an elected official, and they all come from the same impeccable sources, the Central Banking Fraternity, Goldman Sachs otherwise known as the Vampire Squid, the EEC commission, the High Priests of the unelected bureaucrat order. They are also all long standing members of opaque elitist groups such as the Council of Foreign Relations, “CFR” Trilateral commission “TLC”, and the Bilderberg Group.

Is it credible that a group of Central Bankers, International Bankers and unelected bureaucrats will put the interests of the ordinary citizen before their own? I do not think so.

This approach is however doomed to failure. Having worked in many businesses both healthy and in trouble, taken over by external shareholders, banks etc. with no feeling for the organization, its people and its culture, the dynamism to succeed is eviscerated and the energies are then devoted to  rejection of the intruder.

This truth can already be seen by the demonstrations in the streets in Greece and the rejection of the new team, by the political class in Italy. At the end of the day the European project is too financially and morally bankrupted to be saved, and this desperate attempt to gain time and appease the markets, by changing a few faces on the bridge of the sinking ship, before it goes under is a complete farce. Worst of all the popular retribution exacted against the perpetrators will have dire long term consequences.

In my case, fortunately the anesthetic soon wore off, and my recovery was greatly enhanced by an excellent gourmet menu of food and a bevy of equally charming very attentive young nurses. My convalescence was continued at home before I became too comfortable and my wife became too jealous!!

Thus on Remembrance Sunday, I found myself sitting, my arm still immobilized in plaster, watching the Queen placing the wreath to the War dead, in a moving and dignified ceremony that in my view only the British  know how to do.

One Army officer interviewed on TV had been in Iraq and following an explosion in which several died, he was in a now in wheelchair, and in addition had lost his arm. Listening to him and knowing personally for a few short days what that could mean, I was deeply humbled by his courage and by the extreme good fortune I enjoy only because of the terrible sacrifices over many generations of good people such as him.

I would like to dedicate this Blog titled: Remembrance Day Revisited to them all.

HAS THE MOUSSAKA FINALLY HIT THE FAN

HAS THE MOUSSAKA FINALLY HIT THE FAN

Nobody could possibly have invented, and equally nobody would ever have believed the spectacle of the last few days, if they had not witnessed it on live TV with their own eyes. The motley crew masquerading as our G 20 leadership that gathered in Cannes, or more appropriately “Cannot”, should be holding their heads in abject shame.

The only one that has stood out from the crowd has been Georges Papadopoulos. Having negotiated the economic equivalent of a pact with the devil, he had the outrageous temerity to propose, that the sale of Greek nation into decades of bondage, be authorized by the Greek people via a referendum.

Whether he did this out of a belated sense of nationalist pride and loyalty, as a brilliant or misguided internal political maneuver, or whether he finally snapped under the pressure of being serially Bunga Bunga’d by Merkozy and the IMF apparatchiks, perhaps we will never know.

However what has been far more revealing than his actions has been the extraordinary reactions of all other parties.

The Dutch Prime Minister said that they were seeking legal advice as to how to stop the referendum. Does this not seem rather undemocratic and smell like interfering in a sovereign countries internal politics, rather like Iran with Syria for example?

Sarkozy said that if Greece decided to leave the Euro, then they would have to leave the Euro zone. Would he wish that the UK which is not in the Euro leave the Euro zone and leave poor little France with its bankrupt banking system to deal with Mrs. Merkell and Mr Schauble all alone. It is rather doubtful that the “Force de Frappe” would be enough to save them.

Mr Sarkozy who also said all those who do not follow the rules should leave the Euro zone, has still not filed a request for France to withdraw, after multiple years of exceeding the authorized deficit limits.

The Greek finance minister, a real “heavy weight”, sided immediately with the international financial elite. As Papandreou’s right hand man in this game, one would have to say the half life on loyalty in Greece is extremely short. It does not even allow the person falling on his sword, knowingly or unknowingly, to hit the ground.

 So now we have seen the same Papandreou, decide to abandon the referendum and the G 20 would have us believe now everything is fine.

However the realities laid out in my Blog about the EFSF are beginning to come true.

Mrs. Merkell is saying that there is very little appetite in the G 20 for these bonds. Who could possibly blame an incoming investor for feeling a little squeamish, given the spectacle of the last few days, weeks, months?

They even pulled the offering for the EFSF’s initial funding EUR 3 Billion, (0.3%) of the EUR 1000 Billion total, due to poor market conditions. Imagine all those up front banking fees going to waste?

So now we come to the moment of truth, if the G20 does not want to fund the EFSF who will. At this stage if the Martians threatened to invade and promised to come with EUR 1000 Billion of new bank notes, you can be sure the G 20 would be welcome them with open arms.

So what is the nearest earthly equivalent to Martians, it is of course the IMF.

The IMF however has only a limited amount of money and a few years ago was on the edge if insolvency itself. It makes its money “altruistically” of course, by bailing out insolvent states such as Jamaica, Hungary and potentially Greece and Italy if it is not careful.

It gets its money, called SDR’s from the Governments which support the IMF, the main economies, firstly the USA, Japan, Germany etc. It leverages this by borrowing from major banks at favorable terms, and then on lends, at what all debtor nations would call usurious terms to the recipient countries.

In the case of the EFSF, the IMF would be obliged to come up with EUR 440 Billion in hard cash. This is from the same G 20 donor nations who already do not want to contribute directly to the EFSF, except of course for those, that would be back at the trough claiming more back than they put in as they needed a bail out. You really could not make this up if you tried!!!

So here we have the stand off because why should the US wish to contribute to the rescue of the EUR which, but for the utter incompetence of our leaders, would have been the greatest currency threat to the USD.

Similarly, in the UK there is very little appetite to support the EUR, where the EU member states actively promote legislation, designed to weaken London as the leading European financial center.

Why should Germany pay once as EU state member and be obliged to contribute a second time via the IMF.

It is increasingly apparent that the irreconcilable differences that divide the Euro zone are far more powerful that the forces holding it together. We can look forward to a great display of “shock & awe” very soon.

A BLOGGERS LIFE FOR ME

A BLOGGERS LIFE FOR ME

It is now just over a month since starting the GenevaBusinessInsider Blog and time to take stock of the results.

Personally I have found it immensely rewarding because putting on paper ones views is very liberating. It not only relieves a certain level of frustration but gives a real sense of purpose to writing. Although I do not see the audience; it is fascinating to realize that my Blog is literally read all over the world, thanks to the power of the internet.

I just checked my statistics on my latest post, and in Russia where I know virtually nobody, I appear to have a significant following. Admittedly, I still get fewer hits than Google and the Michael Jackson trial, but the evolution from a zero start, has nonetheless been very gratifying and motivating.

The Blog has already allowed me to re-establish contact with friends in Canada, Australia, France, Holland, Qatar, Bahamas and the USA, to name just a few countries.

I have also made new friends and valuable contacts in spheres that concern me, and enjoy the exchange of views. It is interesting that most people make direct contact by e mail rather than posting a comment on the Blog, which is a pity as it would enable more people to participate and exchange views.

Over time I have learned a great deal, both from experience and extensive reading, about the world of finance, economics, politics, and history etc. As of today I derive most of my knowledge from other well informed Blog sites.

You have no doubt observed that the mass media has metamorphosed to become the propaganda arm of anyone who pays the advertising revenues, (Governments, Financial Institutions and Global Corporations). Investigative journalism has been replaced by superficial sensationalism.

My objective is to continue to furnish high quality interesting relevant and well researched views, with a bit of British humor thrown in for good measure.

I would like to thank you all very sincerely for following the Blog. I hope I can live up to your expectations and that you will spread the word.

EFSF LESSONS LEARNED AND WHAT THE FUTURE HOLDS

EFSF LESSONS LEARNED AND WHAT THE FUTURE HOLDS

Perhaps the EFSF has been the much needed 11^th hour electroshock required to wake people up to what the European project really means.  There is a whole wave of Euro skepticism sweeping the UK and having spent last week on holiday in Germany’s southern capital Antalya, there are immense misgivings being freely expressed by our Teutonic cousins. One could hardly say the PIIGS in general and the Greeks in particular are exuberant about the situation either.

The politicians and bankers know the realities perfectly well, only they dare not tell the public. They know that the European bail out, to be effective should be for EUR 2,500 Billion, not the paltry EUR 1,000 Billion currently mentioned. So they play a game of “Extend and Pretend” and give the bad news out in salami sized doses, never ever telling the truth. The name of the game is getting through the next bail out and election cycle. This requires keeping the gravy train running, by robbing the efficient, prudent saver economies and bailing out the inefficient spendthrift ones. The communists call this “To each according to his needs, from each according to his abilities”.

The politicians mantra is never do anything for your country, when doing so would be detrimental to yourself.

Mr Sarkozy for example said at a press conference, that neither he nor Mrs. Merkell was in office when the Greek problems were created. He has perhaps forgotten that neither Winston Churchill nor General De Gaulle was in office, when appeasing Hitler led to WW2.

They faced the problem with great courage, and brutal honesty. Few can forget Churchill’s “I have nothing to offer but blood sweat toil and tears” speech. They were leaders and did not play blame games, more appropriate to a school playground than the highest sphere of Euro politics.

Even the power hungry central bankers, politicians and bureaucrats in Brussels know full well the end game is in sight. This is why they are making such desperate efforts to push their views in the media, suppress democratic voices, consolidate power, and seek even more centralized financial and fiscal control.

If they win Sovereign Governments in Europe will become entirely subservient to Brussels. They will fix the laws, the budgets, the taxes, the wealth redistribution, control money supply, interest rates etc.

The last person with similar ambitions was called Adolf Hitler. He failed because he tried to achieve this by military means. With Hitler the enemy was clearly identifiable and the public could be rallied to the very personalized cry of defeating Hitler and the Nazi’s.

How much more difficult to personalize and counter an insidious attack that has been ongoing over many years, by an almost invisible enemy, whose rhetoric is that everything is done for your good, because they know better. Through legislation, regulation, debt creation and many other devices, they have brought Europe to its knees, without a shot being fired?

We are now finally seeing Europeans standing up, and in Greece the fact that Mr. Papandreou, an ultra elitist, has in extremis called a referendum, means even he has realized he cannot rule forever against the will of the people. A similar watershed event is coming in most European countries.

Nothing is more abhorrent to the Brussels elite than the voices of freedom and democracy, and yesterday must have been a day of deep despair for them, as they watch their carefully erected house of cards wobble and start to fall.

Perhaps the final trigger for collapse will be Greece defaulting and leaving the EUR, the PIIGS further crashing their economies to get better haircut  terms, Italy or Spain defaulting for an amount well beyond the capability of an underfunded EFSF, or Germany or equally possible the UK, withdrawing from the Euro zone.

We should thank our politicians for their immensely inept and profoundly dishonest handling of the EFSF.

It has put into stark relief the true motivations of the power elite, their breathtaking self interested arrogance, and awakened in the minds of ordinary citizens the need to stand up and defend their rights, before they are swept away.

Although short term, the impending disintegration in the Euro zone will have a cataclysmic effect on the world as we know it, longer term we will survive and thrive.

We are after all Europeans, even if we are not the version that Brussels would like.

THE EFSF EXPLAINED IN SIMPLE TERMS

THE EFSF EXPLAINED IN SIMPLE TERMS

Last week saw the much vaunted “solving” of the European Financial Crisis, by the raising of EUR 1 Trillion, for the EFSF, by far the biggest single debt fund, in the history of the planet. First country to be rescued is Greece.

Those who believe in knowing the truth would seek answers to a few niggling little details:

Will the voluntary 50% Greek haircut be enough?

The latest projections suggest that with a 50% haircut, the Greek debt levels will over time reduce to 120% of GDP. Curiously enough, this was the level which triggered panic in the first place as being “unsustainable”

Can we trust the Greek Projections?

To date they have been wildly underestimated. Austerity creates a vicious downward spiral of reduced tax revenues and increased social costs, and runaway deficits.

Why has a 50% haircut been called “voluntary?”

If it were compulsory, the regulator ISDA would be obliged to declare a default event, which would trigger default insurances, and greatly heighten contamination risks elsewhere. Even worse insolvent banks would be forced to book their losses. As the main objective is to protect the banks from facing accounting reality, the regulator has essentially been complicit in calling it a voluntary haircut.

Will shareholders of solvent banks hold the Boards of Directors accountable for giving in to blackmail?

The word is really extortion and it will be interesting to see the class actions against institutions. Look at the fallout from the Lloyds /HBOS shotgun marriage.

Why is the ECB exempted from taking a 50% write off?

Well “some are more equal than others”. The ECB which is the largest single holder of Greek Debt, face value EUR 55 Billion, would face losses of Billions. The ECB has a Capital of EUR 5 Billion, so such a write down would bankrupt the ECB overnight. By the way the ECB has “invested” a further EUR110 Billion, in other Government bonds, all in much the same condition as the Greek debt. The only solution is simply to misstate the true value of ECB assets, hold investments at cost, and get compliant auditors to sign off.

If the ECB goes BUST who pays the bill?

The other Central Banks are the first port of call. As they are all strapped for cash, a move to double the capital last year from approximately EUR 5 Billon to EUR 10 Billion, has only resulted in EUR 1 Billion being funded.

How can the ECB with a Capital of EUR 6 Billion buy EUR Billions of debt?

Despite being called a Central Bank, the reality is that if it marked its debt holdings to their market value, it would be more appropriate to call it a bankrupt overleveraged hedge fund, which under Swiss Law would be considered to be trading fraudulently.

How can a broke ECB continue buying Sovereign Debt of insolvent countries?

The ECB buys from the holders of the Sovereign debt, namely the banks and financial institutions, which would otherwise be bankrupted by the losses. All this money is to save the Banks, none to help the real economy.

In summary the bankrupt ECB buys from the bankrupt banks the un-payable debt of bankrupt countries?

You have understood the situation PERFECTLY.

So how does the EFSF (European Financial Stability Fund) solve the problem?

It does not, although it allows politicians and Central Bankers to pretend that it does. The EFSF would be far more appropriately named the Extended Fraudulent Salami Fund, as it much more clearly describes its function.

With EUR 1,000 Billion in the Bank, surely the problem is solved?

Firstly the fund is EUR 440 Billion, and it has not yet been funded. The countries that should fund it include the insolvent PIIGS, who pay in on one hand and take out with the other. It is basically a shell game; now you see it now you don’t.

This leaves Germany who has capped their contribution, exactly for the above reason, and of course the UK theoretically a contributor to support a currency that is not even theirs. You really could not make this up if you tried!!!

Secondly there are no confirmed sources of the other trifling amount of EUR 560 Billion. The Germans are out of the game, and the Chinese, the other potential source of cash, are being feverishly courted at present. What exceedingly high price will be exacted for their contribution, (human rights, exchange rates; technology exchange, trade mark violations, military accommodations, etc.) remains to be seen.

Perhaps all the above would be tolerable, if the EUR 1.000 Billion would fully solve the problem. However all the evidence suggests it definitely will not?

The realistic amount of un-payable sovereign debt in the Euro Zone is believed to be of the order of EUR 2,500 Billion.

What is meant by leveraging the fund or making it an insurance company?

This means that the basic EUR 440 Billion is paid in as capital and the remaining EUR 560 Billion is borrowed. The next question is from whom, and the answer of course is from the same bankrupt banks who are requesting a bail out. Having received a bail out and getting cash for severely impaired assets, they would then loan back the money and charge the EFSF interest.  

The insurance company solution, as yet an undefined pipe dream, would be a repeat of the AIG disaster in the USA, where an insurance company that was totally under-capitalized insured enormous financial risks. When its clients filed the claims, AIG went bankrupt and needed a government bail out, officially of some USD 60 Billion, but the truth?

Mr Sarkozy wanted to make the EFSF a bank, and leverage the fund further, a solution that Mrs. Merkell violently opposed. The first question is, why if the EUR 1 Trillion fund was enough would further leverage be necessary? Is there perhaps something we are not being told? The other issue is that by being a bank it would have the right to access liquidity through the ECB.

In summary an illiquid EFSF could borrow money from the bankrupt ECB

You have understood the situation PERFECTLY.

It is my sincere hope that this Blog post analysis, imperfect and simplified though it may be, will assist in making the reader fully aware of what is really going on.

I also challenge anyone reading in Brussels, or elsewhere, where this Blog will be an anathema, to demolish the facts or the arguments and post their comments. As they say in French, “qui ne dit rien a consenti”. He who says nothing has agreed.