Rome Is On The Verge Of Detroit-Style Bankruptcy | Zero Hedge
Rome Is On The Verge Of Detroit-Style Bankruptcy | Zero Hedge.
With European peripheral bond yields collapsing every single day to new all time lows (primarily driven by Europe’s near-certainty that a US-style QE is imminent as we first showed here in November, despite Mario Draghi’s own words from November 2011 that a QE intervention is virtually impossible), increasingly more of Europe is trading just as safe, if not more, as the United States. And in keeping with the analogies, considering a major US metropolitan center, Detroit, recently went bankrupt, it is only fair that Europe should sacrifice one of its own historic cities to the gods of negative cash flows. The city in question, Rome, which as the WSJ reports, is “teetering on the brink of a Detroit-style bankruptcy.”
Rome, the eternal city, which survived two millennia of abuse from everyone may be preparing to lay its arms at the hands of unprecedented corruption, capital mismanagement and lies
On the first day of his premiership, Matteo Renzi had to withdraw a decree, promulgated by his predecessor, that would have helped the city of Rome fill an €816 million ($1.17 billion) budget gap, after filibustering by opposition lawmakers in the Parliament on Wednesday signaled the bill had little likelihood of passing.
Devising a new decree that provides aid to Rome will now cost Mr. Renzi time and political capital he intended to deploy in promoting sweeping electoral and labor overhauls during his first weeks in office.
For Rome’s city fathers, though, the setback has more dire consequences. They must now face unpalatable choices—such as cutting public services, raising taxes or delaying payments to suppliers—to gain time as they search for ways to close a yawning budget gap. If it fails, the city could be placed under an administrator tasked with selling off city assets, such as its utilities.
“It’s time to stop the accounting tricks and declare Rome’s default,” said Guido Guidesi, a parliamentarian from the Northern League, which opposed the measure.
Alas, if one stops the accounting tricks, not only Rome, but all of Europe, as well as the US and China would all be swept under a global bankruptcy tsunami. So it is safe to assume that the tricks will continue. Especially when one considers that as Mirko Coratti, head of Rome’s city council said on Wednesday, “A default of Italy’s capital city would trigger a chain reaction that could sweep across the national economy.” Well we can’t have that, especially not with everyone in Europe living with their head stuck in the sand of universal denial, assisted by the soothing lies of Mario Draghi and all the other European spin masters.
So what is the catalyst that would push the city into default? Trash.
No really: an appeal for a €485 million transfer from the central government to compensate Rome for the extra costs it incurs in its role as a major tourist destination, the nation’s capital and the seat of the Vatican. “Rome is unique compared with other cities” and deserves state support because of huge numbers of visitors who use services but don’t contribute much to the economy, Mr. Marino said in a recent interview. But even before the government of Enrico Letta fell this month, the proposed transfer had prompted complaints that the aid was unfair, given the dire straits of other cities.Rome has long struggled to balance its books. Because of its dearth of industry, the city depends heavily on trash-collection levies and the sale of bus and subway tickets. It struggles much more than other European cities to collect either one. About one in four passengers on Rome’s public transit system doesn’t buy tickets, costing around €100 million in lost revenue annually, compared with just 2% of passengers on London’s public transit network.
Meanwhile, employee absenteeism at Rome’s public-transit and trash-collection agencies runs as high as 19%, far above the national average.
But how can Rome’s clean up costs be a surprise? Well, they aren’t. What is however, is the severity of the recession that crushed the national economy.
Just six years ago, some €12 billion in city debts was transferred to a special fund subsidized and guaranteed by the national government in a move aimed at giving Rome a fresh start. But Italy’s economy has shrunk by almost 10% since then, eroding the tax base just as national austerity programs pushed extra costs onto local governments.Even before the withdrawal of the “Save Rome” decree, Mr. Marino was facing unpalatable choices. He has already raised cremation and cemetery fees and plans to centralize city procurement, which he says will save €300 million a year.
Now, without the transfer from the central government, he may be forced to impose income and property tax surcharge—already among the highest in the country—and to cut salaries to the city’s 20,000 employees or trim city services such as child-care centers or job-training programs—also unpopular moves.
What would happen then is unknown, but hardly pleasant:
The political fallout could be severe. The mayor of Taranto, a southeast city that defaulted on €637 million in debt in 2006, has suffered some of the lowest poll ratings in the country after cutting back services.
Oh well, another government overhaul is imminent then, after all it is Italy. Just as long as it is not elected. Because then there woud be a chance that someone who actually sees behind the facade of lies, like Beppe Grillo for example, may just be elected PM, and then all bets are off.
Howeber, that will never be allowed, and instead Rome will almost surely be bailed out. That however would open a whole new can of worms as every other insolvent city demands the same treatment:
A new appeal for a special transfer to Rome could embolden demands that other cities in distress be helped, even though Italy’s public finances are already strained. Naples is close to having to declare bankruptcy. Reggio Calabria has been run by a special commissioner for the past three years, but may still default on €694 million in debt, according to Italy’s Audit Court.
And if all else fails, there is the nuclear option: “Some politicians say Rome should sell assets such as ACEA, the electric utility that is worth about €1.8 billion and is 51% owned by the city.”
True: and Goldman, or some other bank filled to the gills with the Fed’s generous excess reserves, would be happy to swoop in and scoop up hard Roman assets providing it with just the right cover for creeping global encroachment. The benefactors? A select few equity shareholders. Because for every million or so peasants who suffer, a few rich men have to get even richer in the New Feudal Normal.
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Two Russian Warships Enter Black Sea Through Bosphorus; Another Docks In Cuba | Zero Hedge
Two Russian Warships Enter Black Sea Through Bosphorus; Another Docks In Cuba | Zero Hedge.
Russia may be awaiting a diplomatic resolution of the Ukraine crisis, but we wouldn’t hold our breath especially with the deposed president Yanukovich set to conduct a press conference tomorrow from Russia’s Rostov-on-Don at 5pm local time, where we hardly anticipate a scaling back of the escalation in what is sure to not be an abdication from power. Instead, Putin continues to prepare for the worst and is openly signalling to the West that if he has to fight to regain influence in the Ukraine, he will, as a top Kremlin politician warned last week. As such it was not surprising to read that two Russian warships, the Minsk and the Kaliningrad which last week were sent out on deployment around Syria, crossed back into the Black Sea, most likely in direction Sevastopol, as the build up of Russian forces in the Crimea continues.
From Bosphorus Nabal News:
Today, two Ropucha class landing ship from Russian Navy passed through Bosphorus returning from their Syrian deployment. As the political crisis in Ukraine particular in Crimea is increasing it is possible that Russian Navy wanted these valuable assets closer to home.
And in other more perplexing news, AFP reported that a Russian warship was docked in Havana Wednesday, without explanation from Communist Cuba or its state media. “The Viktor Leonov CCB-175 boat, measuring 91.5 meters (300 feet) long and 14.5 meters wide, was docked at the port of Havana’s cruise ship area, near the Russian Orthodox Cathedral.
The Vishnya, or Meridian-class intelligence ship, which has a crew of around 200, went into service in the Black Sea in 1988 before it was transferred seven years later to the northern fleet, Russian media sources said.
Neither Cuban authorities nor state media have mentioned the ship’s visit, unlike on previous tours by Russian warships.
The former Soviet Union was Cuba’s sponsor state through three decades of Cold War. After a period of some distancing under former Russian president Boris Yeltsin, the countries renewed their political, economic and military cooperation.
The ship is reportedly armed with 30mm guns and anti-aircraft missiles.
The Mail adds that The intelligence vessel bristles with electronic eavesdropping equipment and weaponry, including AK-630 rapid-fire cannons and surface-to-air missiles.
Why is Russia planting a spy ship in the US backyard? It might have something to do with John Kerry’s earlier admonition that the US is now behaving like a “poor nation” – maybe Russia decided to test just how poor?
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The High Price of Delaying the Default – Thorsten Polleit – Mises Daily
The High Price of Delaying the Default – Thorsten Polleit – Mises Daily.
Mises Daily: Wednesday, February 26, 2014 by Thorsten Polleit
Credit is a wonderful tool that can help advance the division of labor, thereby increasing productivity and prosperity. The granting of credit enables savers to spread their income over time, as they prefer. By taking out loans, investors can implement productive spending plans that they would be unable to afford using their own resources.
The economically beneficial effects of credit can only come about, however, if the underlying credit and monetary system is solidly based on free-market principles. And here is a major problem for today’s economies: the prevailing credit and monetary regime is irreconcilable with the free market system.
At present, all major currencies in the world — be it the US dollar, the euro, the Japanese yen, or the Chinese renminbi — represent government sponsored unbacked paper, or, “fiat” monies. These monies have three characteristic features. First, central banks have a monopoly on money production. Second, money is created by bank lending — or “out of thin air” — without loans being backed by real savings. And third, money that is dematerialized, can be expanded in any quantity politically desired.
A fiat money regime suffers from a number of far-reaching economic and ethical flaws. It is inflationary, it inevitably causes waves of speculation, provokes bad investments and “boom-and-bust” cycles, and generally encourages an excessive built up of debt. And fiat money unjustifiably favors the few at the expense of the many: the early receivers of the new money benefit at the expense of those receiving the new money at a later point in time (“Cantillon Effect”).
One issue deserves particular attention: the burden of debt that accumulates over time in a fiat money regime will become unsustainable. The primary reason for this is that the act of creating credit and money out of thin air, accompanied by artificially suppressed interest rates, encourages poor investments: malinvestments that do not have the earning power to service the resulting rise in debt in full.
Governments are especially guilty of accumulating an excessive debt burden, greatly helped by central banks providing an inexhaustible supply of credit at artificially low costs. Politicians finance election promises with credit, and voters acquiesce because they expect to benefit from government’s “horn of plenty.” The ruling class and the class of the ruled are quite hopeful that they can defer repayment to future generations to sort out.
However, there comes a point in time when private investors are no longer willing to refinance maturing debt, let alone finance a further rise in indebtedness of banks, corporations, and governments. In such a situation, the paper money boom is doomed to collapse: rising concern about credit defaults is a deadly enemy to the fiat money regime. And once the flow of credit dries up, the boom turns into bust. This is exactly what was about to happen in many fiat currency areas around the world in 2008.
A fiat money bust can easily develop into a full-scale depression, meaning failing banks, corporations filing for bankruptcy, and even some governments going belly up. The economy contracts sharply, causing mass unemployment. Such a development will predictably be interpreted as an ordeal — rather than an economic adjustment made inevitable by the ravages of the preceding fiat money boom.
Everyone — those of the ruling class and those of the class of the ruled — will predictably want to escape disaster. Threatened with extreme economic hardship and political desperation, their eyes will turn to the central bank which, alas, can print all the money that is politically desired to keep overstretched borrowers liquid, first and foremost banks and governments.
Running the electronic printing press will be perceived as the policy of the least evil — a reaction that could be observed many times throughout the troubled history of unbacked paper money. Since the end of 2008, many central banks have successfully kept their commercial banks afloat by providing them with new credit at virtually zero interest rates.
This policy is actually meant to make banks churn out even more credit and fiat money. More credit and money, provided at record low interest rates, is seen as a remedy of the problems caused by an expansion of credit and money, provided at low interest rates, in the first place. This is hardly a confidence-inspiring route to take.
It was Ludwig von Mises who understood that a fiat money boom will, and actually must, ultimately end in a collapse of the economic system. The only open question would be whether such an outcome will be preceded by a debasement of the currency or not:
The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances.[1]
A monetary policy dedicated to averting credit defaults by all means would speak for a fairly tough scenario going forward: depression preceded by inflation. This is a scenario quite similar to what happened, for instance, in the fiat money inflation in eighteenth-century France.
According to Andrew Dickson White, France issued paper money
seeking a remedy for a comparatively small evil in an evil infinitely more dangerous. To cure a disease temporary in its character, a corrosive poison was administered, which ate out the vitals of French prosperity.
It progressed according to a law in social physics which we may call the “law of accelerating issue and depreciation.” It was comparatively easy to refrain from the first issue; it was exceedingly difficult to refrain from the second; to refrain from the third and with those following was practically impossible.
It brought … commerce and manufactures, the mercantile interest, the agricultural interest, to ruin. It brought on these the same destruction which would come to a Hollander opening the dykes of the sea to irrigate his garden in a dry summer.
It ended in the complete financial, moral and political prostration of France — a prostration from which only a Napoleon could raise it. [2]
Note: The views expressed in Daily Articles on Mises.org are not necessarily those of the Mises Institute.
Thorsten Polleit is chief economist of the precious-metals firm Degussa and co-founder of the investment boutiquePolleit & Riechert Investment Management LLP. He is honorary professor at the Frankfurt School of Finance & Management and associated scholar of the Mises Institute. He was awarded the 2012 O.P. Alford III Prize in Libertarian Scholarship. His website is www.Thorsten-Polleit.com. Send him a mail. See Thorsten Polleit’s article archives.
Notes
[1] Ludwig von Mises. Interventionism: An Economic Analysis. Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1998. P. 40.
[2] Andrew Dickson White. Fiat Money Inflation in France, How It Came, What It Brought, and How It Ended. D. Appleton-Century Company Inc., New York and London: D. Appleton-Century, 1933. S. 66.b
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Federal Court Finds Canada Has Failed to Uphold Endangered Species Act – Ontario Could Be Next | A\J – Canada’s Environmental Voice
FEB 20 2014 |
A woodland caribou. Photo from the U.S. Fish and Wildlife Service. Woodland caribou found in Jasper, Banff, Mount Revelstoke, and Glacier National Parks belong to the Southern Mountain population and are listed under Canada’s Species At Risk Act.
Ontario’s Environmental Commissioner Gord Miller is warning Queen’s Park could face sharp reprimands by the courts for its failure to uphold wildlife protections under the Endangered Species Act.
Perhaps unsurprisingly, a federal court confirmed last week the Government of Canada does indeed have a responsibility to follow its own species at risk legislation.
The decision, handed down by Madam Justice Anne Mactavish on Feb. 14, stated the Department of Fisheries and Oceans (DFO) and the federal Ministry of the Environment “acted unlawfully in failing to post proposed recovery strategies” for the Pacific Humpback Whale, the Nechako White Sturgeon, the Marbled Murrelet and the Southern Mountain Caribou “within the statutory timelines prescribed in the Species At Risk Act.”
“It is simply not acceptable for the responsible Ministers to continue to miss the mandatory deadlines that have been established by Parliament,” Mactavish found.
Simply listing species as endangered is not the ultimate purpose of the Endangered Species Act (ESA). While being aware of their decline is a critical first step in improving their fortunes, it’s equally critical government create timely recovery strategies to facilitate moving threatened and endangered species off the ESA list. This is where DFO, Ministry of Environment (MOE) and Ministry of Natural Resources (MNR) provincially have fallen well behind in their work.
From the ruling:
To state the obvious, the Species at Risk Act was enacted because some wildlife species in Canada are at risk. As the applicants note, many are in a race against the clock as increased pressure is put on their critical habitat, and their ultimate survival may be at stake … There is indeed urgency in these matters.
The lawsuit was brought jointly by the Western Canada Wilderness Committee, the David Suzuki Foundation, Greenpeace Canada, the Sierra Club of British Columbia Foundation and Wildsight.
For his part, Miller is concerned the same fate awaits the provincial government for its own failures to uphold the tenets of the Endangered Species Act.
“As I have reported to the Legislature, the Ontario government has committed the very same offence by ignoring the statutory deadlines for producing recovery strategies for species at risk as required by the province’s Endangered Species Act, 2007,” Miller wrote Wednesday.
In his November report, Miller said the government has “failed miserably” in its efforts to protect endangered species in the province, accusing MNR of “stalling recovery strategies, crafting meaningless government response statements, delaying habitat protection, mismanaging the permitting process and deliberately ignoring public participation.”
The Ontario Ministry of Natural Resources, like its federal counterpart, is also required to produce recovery strategies for species listed as endangered on the ESA within specific timelines. And, much like at the federal level, MNR is “similarly plagued by delays and a chronic failure to meet statutory deadlines,” Miller states.
In September, a coalition of environmental groups announced a lawsuit against MNR over their July decision to gut the ESA through exemptions for industry from many of the strictest protections for species-at-risk and their habitat.
Ontario Nature and the Wildlands League hired lawyers from Ecojustice to represent them against the government and their implementation of Ontario Regulation 176/13.
The suit is calling for a judicial review of the regulation and alleges the July 2013 regulatory changes made it easier for industry to acquire exemptions from aspects of the act which forbade the killing, harming or harassing of species-at-risk and their habitat.
The new regulation “runs contrary to the objects and purposes of the ESA, which are ‘to protect species that are at risk and their habitats, and to promote the recovery of species that are at risk,’” according to the submission.
Anastasia Lintner, staff lawyer with Ecojustice, told reporters in September that MNR Minister David Orazietti “failed to meet his own legal duties before recommending this regulation be made by cabinet.”
Further, “we allege the minister failed to first assess whether the proposed regulation would jeopardize the survival of 155 species listed as threatened or endangered,” she said. “He also failed to first assess if the regulation would have any other significant adverse effects on these listed species.”
“It’s environmental deregulation, pure and simple,” said Ontario Nature’s executive director Caroline Schultz at the time. She believes industry has been left to police itself because government oversight of potentially harmful practices has been dramatically weakened as MNR’s budget has shrunk substantially over much of the past two decades.
But Orazietti told reporters in September he is confident his legislation can withstand the judicial challenge. “We have gone to great lengths to ensure the fundamental principles of this legislation remains intact,” he said. “I’m disappointed by [the environmental group’s] approach, but I believe we have very solid evidence that ensures species-at-risk will continue to be protected.”
In response to the developments this week and Miller’s statement, Orazietti told A\J:
We take this issue extremely seriously. I certainly respect the Environmental Commissioner’s opinion on this matter. We are going to do everything we can to move forward to ensure there is compliance on these issues and that Ontario is living up to its obligations within the legislation.
Miller concludes by hoping MNR responds to the warning from the federal court and that “accountability for taking action to protect species at risk does not have to be found in the Courts of Ontario.”
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Harper‘s Support for Democracy Falls Short at Home | DeSmog Canada
Harper‘s Support for Democracy Falls Short at Home | DeSmog Canada.
Harper‘s Support for Democracy Falls Short at Home
Do democracy and freedom begin at home for Prime Minister Stephen Harper?
Recently the Prime Minister told Ukraine President Viktor Yanukovych he will be judged on his actions, not words, as violence against the country’s pro-democracy protesters steadily escalates. Harper signed a joint statement at the North American leaders summit in Toluca, Mexico, saying “[the leaders] agreed they will continue to monitor the situation closely to ensure that actions mirror words.”
The Prime Minister also called for an emergency debate in Parliament this week, saying “we understand that this violence is occurring because the majority of the population is very worried about the steps taken by their government that very much remind them of their anti-democratic and Soviet past.”
While Canadians will no doubt be relieved to see the country and its leadership take a meaningful stance against the oppression and violence of President Yanukovych’s regime, there’s sure to be some cognitive dissonance associated with Harper as a ‘democracy-for-the-people’ spokesperson here at home.
In fact, Harper has been throwing his political weight around a lot lately. Including during a trip to Israel.
In January Harper addressed the Knesset in Jerusalem during a high profile trip where he lavished praise on Israel as a bastion of democracy in a troubled region. (You can see the fully edited and polished Harper-esque version on the Prime Minister’s new newsfeed 24/7).
During his address Harper scattered the words “democracy” or “democratic” more than 10 times in the relatively short speech. The word “freedom” was also liberally applied as he lauded Israel’s leadership.
Interestingly, Harper threw in a little aside about political dissent when he said, “no state is beyond legitimate questioning or criticism. Indeed, Israel as a democratic state makes such criticism a part of your national life.”
It’s refreshing to see a Canadian leader sticking up for democratic values abroad and one can argue more leaders should do it. But wouldn’t it be nice if Harper also supported some of those high-minded values at home?
At least it would be good to know how Harper defines “legitimate questioning or criticism” here at home when it comes to, say, energy development or pipeline infrastructure in Canada. Are criticisms still legitimate if they come from environmentalists or First Nations groups?
Because when you look back over the past several years you can see all calls for democracy are equal when it comes to the Harper government; just some calls are more equal than others.
Harper has his own unique style of suppressing democratic dissent in this country, a particular flare for beefing up the executive and legislative branches of power in order to hold ‘democracy’ in check. All things in moderation, after all.
Take the scaled-up attack on charities as an example.
Federal tax authorities are aggressively auditing some of the government’s most articulate and pointed critics, including the David Suzuki Foundation, Environmental Defence, the Pembina Foundation, and the Ecology Action Centre.
We now know that Ottawa is giving the Canada Revenue Agency a cool $13.4 million to investigate charitable organizations, a probe that will now extend beyond 2017, according to documents obtained by DeSmog Canada through Access to Information legislation. The investigation spending in an otherwise parsimonious budget is a sharp boost from the $8 million publically announced in the 2012 budget.
But it could pay off. Ottawa seems to have a new victim.
Environmental Defence, which has been “working since 1984 to protect Canadians’ environment and human health,” is on the verge of losing its charitable status under the taxman’s probe. Another organization, Physicians for Global Survival, was the first organization to loose its charitable status – the one group out of over 900 investigated.
“They have told us that, yes, more or less that they consider that things that we’ve been doing for 30 years are things that they now feel are not charitable,” Tim Gray, the executive director of Environmental Defence, said in a Toronto Sun report.
This haranguing against green groups has deep roots. Harper and his ministers have long worked to link environmental organizations to terrorism or to mischaracterize groups asfronts for well-funded American interests that threaten Canadian domestic energy supplies.
“I think we’ll see significant American interests trying to line up against the Northern Gateway project, precisely because it’s not in the interests of the United States. It’s in the interests of Canada,” Harper said in 2012, as recounted in the book, The Longer I’m Prime Minister.
“They’ll funnel money through environmental groups and others in order to slow it down,” he said.
The sentiment is strange when you consider the oilsands are important for American oil interests, as is evidenced in the drawn out battle for the Keystone XL pipeline, destined tosupply U.S. refineries with Albertan oil. The resentment of foreign interests also seems misplaced when you consider growing Chinese ownership in the oilsands and significant Chinese state investment in the Northern Gateway pipeline.
One this is certain: it was after these anti-environmental group statements that the Harper government directed the Canada Revenue Agency to target the legitimate dissent of some of Canada’s most prominent and respected environmental charities.
Columnist Mitchell Anderson, writing in the Tyee, opened a recent column with a pointed question: “Is Canada getting creepy?”
Mitchell outlined the CSIS affair, including Chuck Strahl’s resignation as chair of the Security Intelligence Review Committee, watchdog for the country’s powerful spying apparatus. Strahl resigned after his role as a lobbyist for the Northern Gateway pipeline project came to light. As Mitchell wrote, this was “an obvious conflict given that CSIS was spying on anti-pipeline activists – in partnership with the RCMP and private oil companies.”
At the same time as the crackdown on the environmental NGO sector, the Harper government has also vanished some of Canada’s most crucial environmental laws, expedited approvals for major energy projects and defanged the National Energy Board, which now hasstrict limits on how the public can participate in the project review process.
Critics have accused the Harper government of engaging in undemocratic politics. This lengthy list, compiled by Lawrence Martin, outlines all the times this government was found to behave in anti-democratic ways (contempt of Parliament, prorogation of Parliament, weakened watchdogs, abuse of process, suppression of research, document tampering and more) at a time when 62 per cent of Canadians felt the country was in a state of crisis.
That was in 2011, before the Harper government won its majority. By all accounts things have only gotten worse.
So while we’re working hard to protect civil dissent and promote democracy worldwide, let’s not forget to fight for the same at home.
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Ukraine Central Bank Promises Liquidity To Local Banks, With One Condition | Zero Hedge
Ukraine Central Bank Promises Liquidity To Local Banks, With One Condition | Zero Hedge.
While the “developed” world scrambles to find a way to provide Ukraine with a bailout in such a way that Russia doesn’t turn off the gas, Ukraine is doing some scrambling of its own to assure the local banks, which have been plagued by both bank runs and a collapse in the currency to record lows over the past few days, that it will be there to provide funding on a business as usual basis. Itar-Tass reports that “Ukrainian banks will be provided with necessary liquid assets, including cash.” But there is a condition: the funding will only come “if they will remain under open control of the National Bank of Ukraine, the newly-appointed NBU Chairman Stepan Kubiv is quoted as saying on the bank’s official website.”
From Itar-Tass:
“Financial and payment systems, which are of vital importance, operate normally, as well as the open market operations do. The situation is under control. We are getting feedback from all of the country’s banks, regardless their size”, he said.Kuvib stressed that the National Bank’s gold reserve includes high-liquidity assets. He mentioned such priorities of the Ukrainian banking system as the protection of clients’ interests, as well as the resumption of negotiations with external creditors, the International Monetary Fund in the first place, right after the country’s new government is formed and elaboration of a strict new plan for economic and financial reforms.
“We are very determined regarding the measures, which will be applied to those who break the mandatory requirements and are involved currency speculations. I am certain the National Bank’s measures will calm the markets and the people and ease devaluation fears”, the bank’s chief said.
In other words, any and all banks that want to continue operating must pledge allegiance to the brand new central bank governor Kubiv, who previously did not work for Goldman Sachs, but instead was one of the commendants for the EuroMaidan demonstrations. That is not say he has no banking experience at all: previously he used to be head of Kredbank. Who is Kredbank? As it turns out, it is the bank with the largest Polish investment in banking institution in Ukraine. Kredobank national network contains central branch and 130 outlets throughout Ukraine. Today, European investment is 99.6% in the share capital of Kredobank, Ukrainian capital is 0.4%.
At least it is clear where the Ukrainian central banker’s allegiances lie, and under whose “open control” suddenly the entire Ukrainian banking sector has fallen under. And just like that, Europe knows everything these is to know about all assets held within the Ukrainian banking system by the local population.
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Meanwhile, More Russian Military Vehicles Amass In The Crimean | Zero Hedge
Meanwhile, More Russian Military Vehicles Amass In The Crimean | Zero Hedge.
While the IMF is promising a massive bailout to the Ukraine, and NATO is using the harshest language it can possibly muster to halt Russia in its tracks, Putin is doing what he does best: employing brute force (as seen below), and using even harsher language, to wit: RUSSIA: WEST MUST STOP MAKING PROVOCATIVE STATEMENTS ON UKRAINE.
In photos:
And clips:
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NATO Calls Ukraine Developments “Dangerous And Irresponsible”, Urges Russia Not To “Escalate Tension” | Zero Hedge
Russian tat. And now, NATO tit.
- NATO CHIEF SAYS ACTIONS BY ARMED GROUP IN CRIMEA “DANGEROUS AND IRRESPONSIBLE”
- NATO URGES RUSSIA NOT TO DO ANYTHING THAT WOULD “ESCALATE TENSION OR CREATE MISUNDERSTANDING”
And the lie of the day:
- U.S., NATO HAVE NOT DRAWN UP ANY CONTINGENCY PLANS FOR HOW THEY WOULD RESPOND IF RUSSIA INTERVENED IN CRIMEA-NATO’S TOP MILITARY COMMANDER
- THERE IS NO REASON FOR NATO AND RUSSIA TO COMPETE OVER THE FUTURE OF UKRAINE-NATO COMMANDER
Actually, there is, which is precisely why Putin will smile when reading the latest NATO pleadings.
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Pro-Russian Gunmen Seize Ukraine Crimean Parliament; Russia Puts Jets On High Alert; Hryvnia In Record Plunge | Zero Hedge
All those clips we showed in the past few days of Russian forces amassing in the Crimean (such as this one)? Well, turns out they were all predictive of what has just happened in the Crimean region parliament at Simferopol, where around 120 pro-Russian Gunmen occupied the parliament building and raised the Russian flag. The scene was the site of Wednesday’s scuffles between Tatar groups and pro-Russian supporters. As Euronews reports, local Tatar leader Refat Chubarov posted that the buildings have been occupied by men in uniforms bearing “no recognisable insignia.” Kyiv says it would regard any movements by Russian military in Crimea outside Moscow’s Black Sea Base in Sevastopol as an act of aggression. Following the fall of President Viktor Yanukovych divisions in Ukraine have come to the fore. All this happens as Russian troops in the area are building up and at the same time as Russia put fighter jets on combat alert,according to Interfax.
The Russian flag flies atop the parliament building:
Euronews clarifies that the 120 men that seized Crimea parliament “have enough weapons to defend [the buildings] for a month” according an MP quoted by Interfax agency. Former Crimean Prime Minister and UDAR MP Serhiy Kunitsyn said to the agency that he spent all the night in contact with the armed group, “These professionally trained people are armed. They brought weapons – automatic weapons, grenade launchers, and machine guns,” he said, while speaking from the Ukraine parliament on Thursday.
According to Bloomberg, the group is allowing deputies to enter the legislature in the city of Simferopol for a possible vote on the status of Crimea, home to Russia’s Black Sea fleet, the Center of Journalist Research said. Ukraine prosecutors began a terrorism probe. .
“Provocateurs are on the march,” Acting Interior Minister Arsen Avakov said on his Facebook Inc. page as police cordoned off the block around parliament. “It’s time for cool heads, the consolidation of healthy forces and precise actions.”
At the same time Ukraine’s Foreign Ministry summoned Russia’s acting envoy in Kiev for immediate consultations.
“I am appealing to the military leadership of the Russian Black Sea fleet,” said Olexander Turchinov, acting president since the removal of Viktor Yanukovich last week. “Any military movements, the more so if they are with weapons, beyond the boundaries of this territory (the base) will be seen by us as military aggression
Reports Reuters:
There were mixed signals from Moscow, which put fighter jets along its western borders on combat alert, but earlier said it would take part in discussions on an International Monetary Fund (IMF) financial package for Ukraine. Ukraine has said it needs $35 billion over the next two years to stave off bankruptcy. The fear of military escalation prompted expressions of concern from the West, with NATO Secretary General Anders Fogh Rasmussen urging Russia not to do anything that would “escalate tension or create misunderstanding”.
Polish foreign minister Radoslaw Sikorski called the seizure of government buildings in the Crimea a “very dangerous game”. “This is a drastic step, and I’m warning those who did this and those who allowed them to do this, because this is how regional conflicts begin,” he told a news conference.
It was not immediately known who was occupying the buildings in the regional capital Simferopol and they issued no demands, but witnesses said they spoke Russian and appeared to be ethnic Russian separatists.
Interfax news agency quoted a witness as saying there were about 60 people inside and they had many weapons. It said no one had been hurt when the buildings were seized in the early hours by Russian speakers in uniforms that did not carry identification markings.
“We were building barricades in the night to protect parliament. Then this young Russian guy came up with a pistol … we all lay down, some more ran up, there was some shooting and around 50 went in through the window,” Leonid Khazanov, an ethnic Russian, told Reuters. “They’re still there … Then the police came, they seemed scared. I asked them (the armed men) what they wanted, and they said ‘To make our own decisions, not to have Kiev telling us what to do’,” said Khazanov.
About 100 police were gathered in front of the parliament building, and a similar number of people carrying Russian flags later marched up to the building chanting “Russia, Russia” and holding a sign calling for a Crimean referendum. One of them, Alexei, 30, said: “We have our own constitution, Crimea is autonomous. The government in Kiev are fascists, and what they’re doing is illegal … We need to show our support for the guys inside (parliament). Power should be ours.”a
As a reminder, so far Putin has been silent on his views about the sovereignty of the Crimean region which is host to the critical Russian Sevastopol naval base. Russian President Vladimir Putin has ignored calls by some ethnic Russians in Crimea to reclaim the territory handed to then Soviet Ukraine by Soviet Communist leader Nikita Khrushchev in 1954. The United States says any Russian military action would be a grave mistake. But Russia’s foreign ministry said in a statement that Moscow would defend the rights of its compatriots and react without compromise to any violation of those rights.
Russian Lenta, citing the Crimean information agency, reports that the Crimean deputees have begun a referendum on the status of the Crimean autonomy, which is not quite a secession. Yet.
Elsewhere, Ukraine’s deposed president, who as we reported first some time ago had fled to Russia, reappeared, as expected in Russia, and claimed legitimacy to his post saying the Ukraine’s “mob” actions were illegal . From Reuters:
Ukraine’s Viktor Yanukovich said on Thursday he was still the legitimate president of his country and that people in its southeastern and southern regions would never accept the “lawlessness” brought by leaders chosen by a mob. Russian news agencies quoted a statement by Yanukovich as saying he had asked Moscow to guarantee his personal safety.
The statement could not be independently verified and it was not clear where Yanukovich was, although some media groups have suggested he is in Moscow after fleeing Ukraine, where he was toppled by opposition forces at the weekend.
Russian President Vladimir Putin’s spokesman said he had no information and could not comment on the statement.
“I, Viktor Fedorovich Yanukovich appeal to the people of Ukraine. As before I still consider myself to be the lawful head of the Ukrainian state, chosen freely by the will of the Ukrainian people,” he was quoted as saying.
“Now it is becoming clear that the people in southeastern Ukraine and in Crimea do not accept the power vacuum and complete lawlessness in the country, when the heads of ministries are appointed by the mob.”
“On the streets of many cities of our country there is an orgy of extremism,” he said, adding that he and his closest aides had been threatened physically.
“I have to ask the Russian authorities to provide me with personal safety from the actions of extremists.”
Russian television showed what it said was a copy of the statement.
Interfax news agency quoted a source in the authorities as saying Moscow would ensure Yanukovich’s safety on the Russian territory.
“In connection with the appeal by president Yanukovich for his personal security to be guaranteed, I report that the request has been granted on the territory of the Russian Federation,” the source was quoted as saying.
And just to make sure tensions reach a fever pitch, Interfax reported a few hours ago that Russian fighter jets along the Western Border were put on high alert:
The crews of fighter jets deployed in Russia’s Western Military Districts have been placed on high alert as part of surprise combat drills ordered by Russian President and Supreme Commander-in-Chief Vladimir Putin on Wednesday, the Defense Ministry said.
“Our fighter jets are constantly patrolling the airspace over border districts,” the ministry said in a press release, seen by Interfax-AVN on Thursday. “As soon as they were put on high alert, aviation units of the Western Military District redeployed to their operative air fields,” it said.
At the moment, “the district’s bombers are tackling combat training tasks targeting an imaginary adversary at aviation training ranges,” the ministry said.
Not surprisingly, the Ukraine economy, already in critical condition, is shutting down and the Hryvnia is imploding: Ukraine’s currency weakened 10.3 percent to 11.2 per dollar at 12:21 p.m. in Kiev, the lowest level since it was introduced in 1996, data compiled by Bloomberg show. The central bank imposed capital controls this month to stem its decline.
Finally, the story in pictures as reported by Euronews:
Russia’s deterrent? Nikolai Valuyev former boxer & now Russian MP arrives in Sevastopol to “support” Russian speakers pic.twitter.com/UR9VWUmOFy
— Tony Connelly (@tconnellyRTE) February 27, 2014
Speaker of Crimea Parliament confirms: No hostages, negotiations are under way, gunmen “are not showing any signs of aggression.” #Ukraine
— Simon Shuster (@shustry) February 27, 2014
Two deaths in clashes near Crimean parliament; gunmen seize government headquarters (PHOTOS) http://t.co/CokqJftk3q pic.twitter.com/sCzaXriuUH
— KyivPost (@KyivPost) February 27, 2014
“It’s a message to Kiev not to impose its rule in Crimea by force” says @DmitriTrenin, http://t.co/G1UdZvkJaF #Ukraine
— Carnegie Russia (@CarnegieRussia) February 27, 2014
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#??????????? pic.twitter.com/ZwGG2SL5X8
— Vagabond (@kenzolika) February 27, 2014
Downtown #Simferopol empty. Few cops guard access to #Crimea parliament, center, behind clump of trees. #Ukraine pic.twitter.com/lKhPpO63Bu
— Lucian Kim (@Lucian_Kim) February 27, 2014
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Today’s Liberals Could Ruin Canada | Jason Clemens
Today’s Liberals Could Ruin Canada | Jason Clemens.
The policy direction of the Liberal Party of Canada and its leader Justin Trudeau, as evidenced by the speeches, motions, and debate at the recent national party conventionseem to indicate that the party is rejecting the successful pragmatism of the 1990s. Instead, the federal Liberals favour a more interventionist and activist government, much like that of the current Ontario Liberal government. If such policies are enacted, the results would be ruinous for Canada.
One of the central themes repeated consistently at the convention was the need for the federal government to incur more debt in order to finance infrastructure and other long-term spending. Mr. Trudeau and his policy advisers seem to have been influenced greatly by U.S. economist Larry Summers. Mr. Summers, who served in the Clinton and Obama administrations, is a vocal advocate for more expansive government spending using debt as a method by which to stimulate the economy.
One problem of many for this approach is that it belies history, both in the U.S. and Canada. Bill Clinton and Jean Chretien enjoyed enormous economic and political successby doing the opposite. U.S. President Obama and the Ontario Liberals have struggled with a weak economy by doing exactly what Mr. Trudeau now proposes for the entire country.
Beginning in 1995, the Chretien Liberals cut program spending by almost eight per cent in just two years and continued to constrain spending even after balanced budgets were achieved for the following three years. Federal program spending as a share of the economy declined from over 17.1 per cent in 1992-93 to just under 12 per cent by the end of the decade. Federal debt was reduced from 67.1 per cent in 1995-96 to roughly 30 per cent by the time the Tories took over. And critically, the Liberals enacted a series of tax cuts and reforms aimed at making our economy more efficient and competitive.
The results, contrary to the rhetoric of Mr. Summers, were stunningly positive. Over the decade spanning 1997 when the federal budget was first balanced to roughly 2007, Canada led the G7 in both economic growth and business investment. Our record on job creation was unparalleled, more than doubling the U.S. rate and higher than any G7 country. And poverty rates fell by more than 40 per cent.
These actual results stand in stark contrast to the predictions of Mr. Summer: “To start, this means ending the disastrous trend towards less and less government spending and employment each year and taking advantage of the current period of slack to renew and build out our infrastructure.”
Of additional concern is the naiveté that Mr. Summers continues to display and has apparently now infected Mr. Trudeau with in terms of the actual ability of governments to do the things he advocates. Mr. Summers was front and centre in advocating for and shepherding through the Obama stimulus, which contained hundreds of billions of dollars for “shovel-ready” projects. Mr. Summers insisted that the mark of success of such policies were that they were timely, temporary, and targeted. The reality of what happened is that, not surprising, politics affected the program. High priority projects were shelved for more politically expedite ones. Projects were delayed and hung up in red tape and bureaucrat infighting. The assumption that government can simply flick a switch and spend efficiently is both conceptually and historically false.
Mr. Summers can be forgiven for not being aware of the actual experience in Ontario. The same cannot be said of Mr. Trudeau. The large and continuing deficits in Ontario, despite economic growth, coupled with heavy-handed interventionism in a host of sectors has placed Ontario on a path of decay, not prosperity. Economic growth in the province has remained sluggish despite large-scale deficits and debt accumulation. (As a measure of the province’s problems — Ontario is markedly worse on every measure of indebtedness compared to California.)
It’s not at all clear how the country will benefit from Ontario-style policy when such policies have been an abject failure. The country would benefit from a return to the sound policies of the Chretien era in the 1990s — balanced budgets, reducing debt, decentralization of responsibility and authority for services to the provinces, better value-for-money focused spending by the federal government, and incentive-based tax relief and reform. That’s a recipe for success for any government, or government in waiting. The Trudeau Liberals should look back to this period rather than down south for their policy ideas.
This piece was co-written by Milagros Palacios, Senior Research Economist, Fraser Institute.
Olduvaiblog: Musings on the coming collapse 