Who Makes The Most Money? And How They Do It | Zero Hedge
Who Makes The Most Money? And How They Do It | Zero Hedge.
Of the 25 companies with the largest corporate profits in the world; banking, energy and technology firms are absolutely raking it in. Despite stagnating incomes, these companies made $567,856,000,000 in 2012 alone… here’s the subsidies, tax breaks, and offshoring that helped them do it…
Source: AccountingSchoolGuide.com
The Black Death Is Back…?! | Zero Hedge
The Black Death Is Back…?! | Zero Hedge.
Not since the Middle Ages has the bubonic plagues taken so many lives in a year. Having wiped out 25 million people in Europe, appearances of the Black Death since have been rare but the Red Cross is reporting a new outbreak has killed more than 20 people on the island of Madagascar. Living standards in the nation have collapsed since 2009 (what else happened in 2009?) and the prevalence of rats has helped spread the disease easily. While China claims to have the bird flu under control (despite some rumors out of Hong Kong), the Red Cross warns there is a risk of a Black Death epidemic.
A village in Madagascar has been hit by a deadly outbreak of the bubonic plague, medical experts on the island have confirmed.
Test were carried out after at least 20 people in the village, near the north-western town of Mandritsara, were reported to have died last week.
The International Committee of the Red Cross warned in October that Madagascar was at risk of a plague epidemic.
The disease is transmitted to humans via fleas, usually from rats.
…
Bubonic plague, known as the Black Death when it killed an estimated 25 million people in Europe during the Middle Ages, is now rare.
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The prevalence of rats in Madagascar’s prisons means the plague can spread easily.
The Pasteur Institute said there were concerns that the disease could spread to towns and cities where living standards have declined since a coup in 2009 and the ensuing political crisis.
Are The Markets Rigged? | Zero Hedge
Are The Markets Rigged? | Zero Hedge.
Despite being found guilty of and fined for manipulations of every other market in the world (from FX to rates to energy), investors small and large continue to play the markets on the basis that they are fair and balanced. Aside from high-profile insider trades; day after day, the oddly high correlations, the obvious spikes, blips, and front-running are ignored… until now. In this brief documentary,CBC asks the critical question “are the world’s stock markets rigged?” Amanda Lang concludes “there’s a sense among the general public that nobody seems to be maintaining the integrity of the system.” as she highlights case after case “as though everything is rigged!” Conspiracy theory evolves once again into conspiracy fact as the system that’s supposed to benefit many, but actually enriches a few.
“Historically, the system works because people have confidence in the rules and believe they are treated the same as anybody else.
But it’s getting harder and harder to ignore the stories of powerful people cheating the system for their own gain. As the bad apples add up, it gets harder and harder to ignore a troubling realization — “everything is rigged.””
Courtesy of the revelations over the past year, one thing has been settled: the statement “Wall Street Manipulated Everything” is no longer in the conspiracy theorist’s arsenal: it is now part of the factually accepted vernacular. And to summarize just how, who and where this manipulation takes places is the following series of charts from Bloomberg demonstrating Wall Street at its best – breaking the rules and making a killing.
Foreign Exchanges
Regulators are looking into whether currency traders have conspired through instant messages to manipulate foreign exchange rates. The currency rates are used to calculate the value of stock and bond indexes.
Energy Trading
Banks have been accused of manipulating energy markets in California and other states.
Libor
Since early 2008 banks have been caught up in investigations and litigation over alleged manipulations of Libor.
Mortgages
Banks have been accused of improper foreclosure practices, selling bonds backed by shoddy mortgages, and misleading investors about the quality of the loans.
Is War With China Inevitable?
Is War With China Inevitable?.
As a general rule, extreme economic decline is almost always followed by extreme international conflict. Sometimes, these disasters can be attributed to the human survival imperative and the desire to accumulate resources during crisis. But most often, war amid fiscal distress is usually a means for the political and financial elite to distract the masses away from their empty wallets and empty stomachs.
War galvanizes societies, usually under false pretenses. I’m not talking about superficial “police actions” or absurd crusades to “spread democracy” to Third World enclaves that don’t want it. No, I’m talking about REAL war: war that threatens the fabric of a culture, war that tumbles violently across people’s doorsteps. The reality of near-total annihilation is what oligarchs use to avoid blame for economic distress while molding nations and populations.
Because of the very predictable correlation between financial catastrophe and military conflagration, it makes quite a bit of sense for Americans today to be concerned. Never before in history has our country been so close to full-spectrum economic collapse, the kind that kills currencies and simultaneously plunges hundreds of millions of people into poverty. It is a collapse that has progressed thanks to the deliberate efforts of international financiers and central banks. It only follows that the mind-boggling scale of the situation would “require” a grand distraction to match.
It is difficult to predict what form this distraction will take and where it will begin, primarily because the elites have so many options. The Mideast is certainly an ever-looming possibility. Iran is a viable catalyst. Syria is not entirely off the table. Saudi Arabia and Israel are now essentially working together, forming a strange alliance that could promise considerable turmoil — even without the aid of the United States. Plenty of Americans still fear the Al Qaeda bogeyman, and a terrorist attack is not hard to fabricate. However, when I look at the shift of economic power and military deployment, the potential danger areas appear to be growing not only in the dry deserts of Syria and Iran, but also in the politically volatile waters of the East China Sea.
China is THE key to any outright implosion of the U.S. monetary system. Other countries, like Saudi Arabia, may play a part; but ultimately it will be China that deals the decisive blow against the dollar’s world reserve status. China’s dollar and Treasury bond holdings could be used as a weapon to trigger a global sell-off of dollar-denominated assets. China has stopped future increases of dollar forex holdings, and has cut the use of the dollar in bilateral trade agreements with multiple countries. Oil-producing nations are shifting alliances to China because it is now the world’s largest consumer of petroleum. And, China has clearly been preparing for this eventuality for years. So, given these circumstances, how can the U.S. government conceive of confrontation with the East? Challenging one’s creditors to a duel does not usually end well. At the very least, it would be economic suicide. But perhaps that is the point. Perhaps America is meant to make this seemingly idiotic leap.
Here are just some of the signs of a buildup to conflict…
Currency Wars And Shooting Wars
In March 2009, U.S. military and intelligence officials gathered to participate in a simulated war game, a hypothetical economic struggle between the United States and China.
The conclusions of the war game were ominous. The participants determined that there was no way for the United States to win in an economic battle with China. The Chinese had a counterstrategy to every U.S. effort and an ace up their sleeve – namely, their U.S. dollar reserves, which they could use as a monetary neutron bomb, a chain reaction that would result in the abandonment of the dollar by exporters around the world . They also found that China has been quietly accumulating hard assets (including land and gold) across globe, using sovereign wealth funds, government-controlled front companies, and private equity funds to make the purchases. China could use these tangible assets as a hedge to protect against the eventual devaluation of its U.S. dollar and Treasury holdings, meaning the losses on its remaining U.S. financial investments was acceptable should it decide to crush the dollar.
The natural response of those skeptical of the war game and its findings is to claim that the American military would be the ultimate trump card and probable response to a Chinese economic threat. Of course, China’s relationship with Russia suggests a possible alliance against such an action and would definitely negate the use of nuclear weapons (unless the elites plan nuclear Armageddon). That said, it is highly likely that the U.S. government would respond with military action to a Chinese dollar dump, not unlike Germany’s rise to militarization and totalitarianism after the hyperinflationary implosion of the mark. The idea that anyone except the internationalists could “win” such a venture, though, is foolish.
I would suggest that this may actually be the plan of globalists in the United States and their counterparts in Asia and Europe. China’s rise to financial prominence is not due to its economic prowess. In fact, China is ripe with poor fiscal judgment calls and infrastructure projects that have gone nowhere. But what China does have on its side are massive capital inflows from global banks and corporations, mainly based in the United States and the European Union. And, it has help in the spread of its currency (the Yuan) from entities like JPMorgan Chase and Co. The International Monetary Fund is seeking to include China in its global basket currency, the SDR, which would give China even more leverage to use in breaking the dollar’s reserve status. Corporate financiers and central bankers have made it more than possible for China to kill the dollar, which they openly suggest is a “good thing.”
Is it possible that the war game scenarios carried out by the Pentagon and elitist think-tanks like the RAND Corporation were not meant to prevent a war with China, but to ensure one takes place?
The Senkaku Islands
Every terrible war has a trigger point, an event that history books later claim “started it all.” For the Spanish-American War, it was the bombing of the USS Maine. For World War I it was the assassination of Archduke Franz Ferdinand of Austria. For U.S. involvement in World War I, it was the sinking of the Lusitania by a German U-Boat. For U.S. involvement in World War II, it was the attack on Pearl Harbor. For Vietnam, it was the Gulf of Tonkin Incident (I recommend readers look into the hidden history behind all of these events). While the initial outbreak of war always appears to be spontaneous, the reality is that most wars are planned far in advance.
As evidence indicates, China has been deliberately positioned to levy an economic blow against the United States. Our government is fully aware what the results of that attack will be, considering they have gamed the scenario multiple times. And, by RAND Corporation’s own admission, China and the United States have been preparing for physical confrontation for some time, centered on the concept of pre-emptive strikes. Meaning, the response both sides have exclusively trained for in the event of confrontation is to attack the other first!
The seemingly simple and petty dispute over the Senkaku Islands in the East China Sea actually provides a perfect environment for the pre-emptive powder keg to explode.
China has recently declared an “air defense zone” that extends over the islands, which Japan has already claimed as its own. China, South Korea and the United States have all moved to defy this defense zone. South Korea has even extended its own air defense zone to overlap China’s.
China has responded with warnings that its military aircraft will now monitor the region and demands that other nations provide it with civilian airline flight paths. China has also stated that it plans to create MORE arbitrary defense zones in the near future.
The U.S. government under Barack Obama has long planned a military shift into the Pacific, which is meant specifically to counter China’s increased presence. It’s almost as if the White House knew a confrontation was coming.
The shift is now accelerating due to the Senkaku situation, as the U.S. transfers submarine-hunting jets to Japan while pledging full support for Japan should war ignite.
And most recently, the Japanese press has suggested that war between the two countries could erupt as early as January.
China, with its limited navy, has focused more of its energy and funding into advanced missile technologies — including “ship killers,” which fly too low and fast to be detected with current radar. This is the same strategy of cheap compact precision warfare being adopted by countries like Syria and Iran, and it is designed specifically to disrupt tradition American military tactics.
Currently, very little diplomatic headway has been made or attempted in regards to the Senkaku Islands. The culmination of various ingredients so far makes for a sour stew.
All that is required now is that one trigger event — that one ironic “twist of fate” that mainstream historians love so much, the spark that lights the fuse. China could suddenly sell a mass quantity of U.S. Treasuries, perhaps in response to the renewed debt debate next spring. The United States could use pre-emption to take down a Chinese military plane or submarine. A random missile could destroy a passenger airliner traveling through the defense zone, and both sides could blame each other. The point is nothing good could come from the escalation over Senkaku.
Why Is War Useful?
What could possibly be gained by fomenting a war between the United States and China? What could possibly be gained by throwing America’s economy, the supposed “goose that lays the golden eggs”, to the fiscal wolves? As stated earlier, distraction is paramount, and fear is valuable political and social capital.
Global financiers created the circumstances that have led to America’s probable economic demise, but they don’t want to be blamed for it. War provides the perfect cover for monetary collapse, and a war with China might become the cover to end all covers. The resulting fiscal damage and the terror Americans would face could be overwhelming. Activists who question the legitimacy of the U.S. government and its actions, once considered champions of free speech, could easily be labeled “treasonous” during wartime by authorities and the frightened masses. (If the government is willing to use the Internal Revenue Service against us today, just think about who it will send after us during the chaos of a losing war tomorrow.) A lockdown of civil liberties could be instituted behind the fog of this national panic.
Primarily, war tends to influence the masses to agree to more centralization, to relinquish their rights in the name of the “greater good”, and to accept less transparency in government and more power in the hands of fewer people. Most important, though, is war’s usefulness as a philosophical manipulation after the dust has settled.
After nearly every war of the 20th and 21st century, the subsequent propaganda implies one message in particular: National sovereignty, or nationalism, is the cause of all our problems. The establishment then claims that there is only one solution that will solve these problems: globalization. This article by Andrew Hunter, the chairman of the Australian Fabian Society, is exactly the kind of narrative I expect to hear if conflict arises between the United States and China.
National identity and sovereignty are the scapegoats, and the Fabians (globalist propagandists) are quick to point a finger. Their assertion is that nation states should no longer exist, borders should be erased and a one-world economic system and government should be founded. Only then will war and financial strife end. Who will be in charge of this interdependent one world utopia? I’ll give you three guesses…
The Fabians, of course, make no mention of global bankers and their instigation of nearly every war and depression for the past 100 years; and these are invariably the same people that will end up in positions of authority if globalization comes to fruition. What the majority of people do not yet understand is that globalists have no loyalties to any particular country, and they are perfectly willing to sacrifice governments, economies, even entire cultures, in the pursuit of their “ideal society”. “Order out of chaos” is their motto, after all. The bottom line is that a war between China and the United States will not be caused by national sovereignty. Rather, it will be caused by elitists looking for a way to END national sovereignty. That’s why such a hypothetical conflict, a conflict that has been gamed by think tanks for years, is likely to be forced into reality.
General Electric Knew Its Reactor Design Was Unsafe … So Why Isn’t GE Getting Any Heat for Fukushima? Washington’s Blog
GE Engineers and American Government Officials Warned of Dangerous Nuclear Design
5 of the 6 nuclear reactors at Fukushima are General Electric Mark 1 reactors.
GE knew decades ago that the design was faulty.
ABC News reported in 2011:
Thirty-five years ago, Dale G. Bridenbaugh and two of his colleagues at General Electric resigned from their jobs after becoming increasingly convinced that the nuclear reactor design they were reviewing — the Mark 1 — was so flawed it could lead to a devastating accident.
Questions persisted for decades about the ability of the Mark 1 to handle the immense pressures that would result if the reactor lost cooling power, and today that design is being put to the ultimate test in Japan. Five of the six reactors at the Fukushima Daiichi plant, which has been wracked since Friday’s earthquake with explosions and radiation leaks, are Mark 1s.
“The problems we identified in 1975 were that, in doing the design of the containment, they did not take into account the dynamic loads that could be experienced with a loss of coolant,” Bridenbaugh told ABC News in an interview. “The impact loads the containment would receive by this very rapid release of energy could tear the containment apart and create an uncontrolled release.”
***
Still, concerns about the Mark 1 design have resurfaced occasionally in the years since Bridenbaugh came forward. In 1986, for instance, Harold Denton, then the director of NRC’s Office of Nuclear Reactor Regulation, spoke critically about the design during an industry conference.
“I don’t have the same warm feeling about GE containment that I do about the larger dry containments,” he said, according to a report at the time that was referenced Tuesday in The Washington Post.
“There is a wide spectrum of ability to cope with severe accidents at GE plants,” Denton said. “And I urge you to think seriously about the ability to cope with such an event if it occurred at your plant.”
***
When asked if [the remedial measures performed on the Fukushima reactors by GE before 2011] was sufficient, he paused. “What I would say is, the Mark 1 is still a littlemore susceptible to an accident that would result in a loss of containment.”
The New York Times reported that other government officials warned about the dangers inherent in GE’s Mark 1 design:
In 1972, Stephen H. Hanauer, then a safety official with the Atomic Energy Commission, recommended that the Mark 1 system be discontinued because it presented unacceptable safety risks. Among the concerns cited was the smaller containment design, which was more susceptible to explosion and rupture from a buildup in hydrogen — a situation that may have unfolded at the Fukushima Daiichi plant. Later that same year, Joseph Hendrie, who would later become chairman of the Nuclear Regulatory Commission, a successor agency to the atomic commission, said the idea of a ban on such systems was attractive. But the technology had been so widely accepted by the industry and regulatory officials, he said, that “reversal of this hallowed policy, particularly at this time, could well be the end of nuclear power.”
This faulty design has made the Fukushima disaster much worse.
Specifically, the several reactors exploded … scattering clumps of radioactive fuel far and wide.
In addition, the Mark 1 included an absolutely insane design element: storing huge quantities of radioactive fuel rods 100 feet up in the air.
The Christian Science Monitor noted:
A particular feature of the 40-year old General Electric Mark 1 Boiling Water Reactor model – such as the six reactors at the Fukushima site – is that each reactor has a separate spent-fuel pool. These sit near the top of each reactor and adjacent to it ….
Indeed, the fuel pools have caught fires several times, and now constitute an enormous danger.
As we noted last year, the spent fuel pool at Fukushima reactor number 3 is in a heap of rubble (spent fuel pool designated as “SFP” in the lower left):
Nuclear fuel rod expert Gundersen says the pool at unit 3 is in much worse shape than at 4:
Unit 3 is worse [than No. 4]. Mechanically its rubble, the pool is rubble. It’s got less fuel in it [than unit 4, but] structurally the pool has been dramatically weakened. And, god nobody has even gotten near it yet.
He’s right. It’s too radioactive for Tepco to even get a look at what’s going on in the reactor pools at units 1 through 3, and they have no idea how to do it. Indeed, the technology does not even exist to approach those reactors, as the high radiation levels quickly destroy even robots.
Heck of a job, GE …
Postscript: Unfortunately, there are 23 virtually-identical GE Mark 1 reactors in the U.S.
This is not to say that Tepco and the Japanese government are not to blame also. They are.
But GE and the American government are largely responsible as well.
Canadian Job Growth In 2013 Worst In A Decade, Outside Recession
Canadian Job Growth In 2013 Worst In A Decade, Outside Recession.
Job creation in Canada this year has been the weakest in a non-recession year in more than a decade, and the low quality of the jobs being created is causing some economists to raise concerns about the country’s economy.
Looking at StatsCan’s latest job numbers, released last week, BMO economist Benjamin Reitzes notes that Canada created fewer than 175,000 net jobs in the year to date (meaning all of 2013 except December).
“Compared to November 2012, employment is up a meagre one per cent, with both the goods and services sectors clocking in at that pace,” Reitzes wrote, adding that “this is hardly the stuff of a firm underlying economy.”
Job gains this year have averaged 13,400 a month, the Globe and Mail reports, slightly more than half the rate in 2012 (25,400 jobs per month), and below theestimated 17,000 jobs per month needed to keep up with population growth.
Even the latest numbers for November look negative when digging into the details. While the jobless rate held steady at 6.9 per cent and Canada registered 22,000 new jobs during the month, 20,000 of those were part-time, notes Erin Weir, an economist for the United Steelworkers.
“Broken down another way, 19,000 of the employment increase were people reporting themselves as self-employed,” Weir writes. “Canadian employers actually hired fewer than 3,000 [net] additional employees last month.”
In an analysis put out last week, before the latest StatsCan data, the Canadian Centre for Policy Alternatives argued Canada’s job market hasn’t actually recovered from the last recession.
Although the total number of jobs returned to pre-recession levels in 2011, the rate of growth hasn’t been keeping up with population growth, the CCPA said.
Canada’s economy created slightly more than one million jobs since the recession ended in 2009 (very few of them this year), but in order to keep up with population growth it would have had to create about 1.3 million of them. The CCPA calculates that another 280,000 jobs would be needed to really recover from the recession.
The think tank also notes that what jobs do exist are more precarious than they used to be. It says the proportion of people working in temporary jobs has increased, though only slightly, since the recession. Canada already had a high rate of temp work when compared to other countries, the CCPA noted.
With 13.7 per cent of Canadians in temp jobs, Canada ranks 17th out of 28 OECD countries when it comes to the proportion of people in precarious jobs, the CCPA said.
BMO’s Reitzes notes that governments have been a drag on employment growth. With the federal government and some provincial governments in the midst of budget-fighting austerity measures, Canada has lost 5.3 per cent of all its government jobs since the start of the year, about 51,600 jobs.
“With the federal government and most provinces still looking to balance the books, don’t expect a comeback anytime soon,” Reitzes writes.
He estimates that job growth in Canada would have amounted to 1.4 per cent this year, instead of one per cent, had governments not cut back on employment.
Is Your Job About To Be Outsourced By A Computer (The Probability Is 47%) | Zero Hedge
Is Your Job About To Be Outsourced By A Computer (The Probability Is 47%) | Zero Hedge.
Productivity. Every employer loves it, and every employee is fascinated by it, especially if it comes in cute colors, a retina screen, and weighs under a pound… at least until such time as “productivity” results in the loss of the employee’s job, which in turn makes the employer love it even more as it results in even higher profits, even if it means one more pink slip and a 91 million people outside the labor force.
With a labor force already in turmoil as millions drop out every year never to be heard from again, made obscolete by the latest technological and computerized innovation, and students stuck in college where they pile up record amounts of student loans (at last check well over $1 trillion) hoping form some job, any job, upon graduation, unfortunately the future is not bright at all.
In a recently published paper, “The Future of Employment: How Susceptible are Jobs to Computerisation,” Oxford researchers Frey and Osborne, look at the probability of computerization by occuption. What they find is shocking for nearly half of the US labor force, and especially those in the transportation, production, office support, sales, service and extraction professions.
JPM’s Michael Cembalest summarizes it as follows:
Life after college: be prepared for technology to continue changing the job landscape
There’s plenty of data on unemployment rates and salaries by undergraduate major (the majors with the lowest unemployment rates and highest salaries: computer, chemical, electrical, civil and mechanical engineering; math/physics; and economics. Drama and film majors are a recipe for living at home). A more important long-run issue to think about may be how technology affects your career. Researchers at Oxford just published an analysis assessing what jobs might be computerized in the future. Their conclusion: a staggering 47% of the US workforce, spanning a range of career types. There are vigorous debates about outsourcing, but increasingly, computerization may grow as a factor affecting employment conditions.
In The Man in the White Suit, Alec Guinness invents a suit that never has to be cleaned or replaced. London’s tailors and dry cleaners angrily chase him down in the street to destroy his invention. They are relieved when the suit finally starts to unravel, since the fiber’s design is flawed. Productivity improvements are great things, but there might be a point at which too much power shifts to capital over labor. Anyway, when you think about a career, remember that in some professions, eventually a computer might be able to do it too, or reduce the economic value of you doing it (e.g., the impact of the internet on print journalism).
The good news: those iPad apps are cheap, and most unemployed workers – who were put out of a job thanks to one – can afford them. The bad news: anyone lamenting the return of America’s employment golden age, is kindly encouraged to exhale.
ECB Admits Sovereign Bonds Are Not Riskless | Zero Hedge
ECB Admits Sovereign Bonds Are Not Riskless | Zero Hedge.
For the last year or two, European banks have engaged in the ultimate of self-referential M.A.D. trades – buying the sovereign debt of their own nation in inordinate size to maintain the ECB’s illusion of control (even as their economies collapse and stagnate) while referentially obtaining the funding for said purchase from the ECB by repoing the purchase back to the central bank, usually with no haircut to mention. Today though, as The FT reports, a top official at the European Central Bank has signalled it will try to force eurozone banks to hold capital against sovereign bonds, in an attempt to stop weak lenders using its cash to hoover up the debts of crisis-hit countries.
This is a problem as banks assume zero risk-weights (under BIS III) to these “assets” as they swap them for cash with the ECB and, as Praet notes, if sovereign bonds were treated “according to the risk that they pose to banks’ capital” during the health check, then lenders would be less likely to use central bank liquidity to buy yet more government debt.
A top official at the European Central Bank has signalled it will try to force eurozone banks to hold capital against sovereign bonds, in an attempt to stop weak lenders using its cash to hoover up the debts of crisis-hit countries.
…
the central bank could combine its new powers as chief banking regulator with its existing role as currency issuer to toughen up the requirements on sovereign bonds, which have been traditionally classed as risk-free.
…
Mr Praet said if sovereign bonds were treated “according to the risk that they pose to banks’ capital” during the health check, then lenders would be less likely to use central bank liquidity to buy yet more government debt.
The vicious cycle that has seen banks use central bank cash to buy government bonds has been partly blamed for prolonging the eurozone financial crisis.
But do not worry – should this decision to force banks to hold more capital against their massive sovereign bond books backfire (though credit creation is already dismal), the ECB will save the day…
If the health check were to choke off lending to eurozone households and businesses then the ECB would provide another round of cheap loans, Mr Praet said.
He said monetary policy would be used “without hesitation” if the ECB’s data on money and credit showed banks were continuing to shrink their loan books. The ECB would ensure any liquidity was used to spur lending to the real economy by attaching tougher requirements to banks’ holdings of sovereign debt.
And ever the optimist,
“Perhaps paradoxically, a rigorous AQR and stress test helps monetary policy [function],” Mr Praet said.
but the kicker is…
“Should the procyclical impact of the AQR be significant, then monetary policy would be able to act – without hesitation and being reassured that the side effects of a liquidity injection that we have seen for the 2011-2012 [three-year long term refinancing operations] would be minimised.”
Though it appears to us that the “side effects” of massive liquidity-driven demand for the bonds of the distressed nations smashing their risk to record lows while the economies of those nations languishes – is exactly what they wanted…
So again – it comes back to their reliance on the ECB’s “we’ll collateralize any-old-shit at Par” programs, its unintended consequence of driving the banks and the sovereigns even more symbiotically intertwined, and its inept belief that the stress tests to be undertaken next year will solve all the problems…
Wondering why the Italian bond market has been stable and “improving” in recent months, with yields relentlessly dropping as a mysterious bidder keeps waving it all in despite the complete political void in the government and what may be months of uncertainty for the country, and despite both PIMCO and BlackRock recently announcing they are taking a pass on the blue light special offered by BTPs? Simple. As the Bank of Italy reported earlier today, total holdings of Italian bonds by Italian banks hit an all time record of €351.6 billion in February.
Why are local banks loaded to the gills in the very security that may and will blow up their balance sheets when the ECB loses control of the European sovereign risk scene as it tends to do every year? Because courtesy of ECB generosity, Italian debt continues to be “cash good collateral” with the ECB, and as a result Italian banks can’t wait to pledge and repo it with Mario Draghi in exchange for virtually full cash allottment.
In other words, the more debt the Italian Tesoro issues, the more fungible cash the Italian banks have to spend on such things as padding up their cap ratios and making their balance sheets appear like medieval (any refernce to Feudal Europe is purely accidental) fortresses.
Until – the ECB changes the rules…
Meanwhile, Russia Casually Announces It Will Use Nukes If Attacked | Zero Hedge
Meanwhile, Russia Casually Announces It Will Use Nukes If Attacked | Zero Hedge.
With the Ukraine situation increasingly precarious, and now even the US state department getting involved with the occasional unexpected harsh warning…
- U.S. MAY CONSIDER SANCTIONS ON UKRAINE: STATE DEPT
… into what Putin has made very clear is his brand new sphere of influence (it is unclear just why the US is responding in such a way: did the pro-Europe protesters not use Made in the US tear gas or chemical weapons?), Russia casually threw it out there earlier today that it would use nuclear weapons if it comes under an attack. As vice prime minister and defense industry chief made clear, “One can experiment as long as one wishes by deploying non-nuclear warheads on strategic missile carriers. But one should keep in mind that if there is an attack against us, we will certainly resort to using nuclear weapons in certain situations to defend our territory and state interests.” Just in case it wasn’t quite clear…
Rogozin pointed out that this principle is enshrined in Russia’s military doctrine. Any aggressor or group of aggressors should be aware of that, he said. “We have never diminished the importance of nuclear weapons – the weapon of requital – as the great balancer of chances,” Rogozin said.
More from RT:
Russia’s Fund of Perspective Researches (FPI) will develop a military response to the American Conventional Prompt Global Strike (PGS) strategy, Dmitry Rogozin told the State Duma.
So far, the FPI has already looked at over a thousand proposed ideas and plans to work on 60 projects, eight of which are top priority, the politician said. He refused to disclose any details, but said that one of those projects is focused on preparing a response to the PGS, which is the “main strategy” that the Pentagon is nurturing.
PGS would allow the United States to strike targets anywhere on the planet, with conventional weapons in as little as an hour.
As Rogozin explained earlier, the strategy would give America an advantage over a nuclear state, thanks to their better technical capabilities with weaponry, including the speed, RIA Novosti cited.
So if nothing else, at least the primary deterrence strategy of the cold war has just made a roaring comeback. We can only hope that with such skilled heads of the State Department as John Kerry, that the nuclear exchange that was avoided for the duration of the first cold war doesn’t somehow become a GDP-boosting reality.