David Stockman on the Coming EuroZone Disaster

David Stockman’s Contra Corner is the place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked. He tells it like it is. Here’s his take on the Greek situation. Time is running out.


If you don’t believe financial markets are well and truly broken Monday’s tepid response to the Greferendum should be dispositive. The house of cards known as the Eurozone is about to hit the wall, unleashing financial contagion and turmoil far and wide. So any investor or trader in their right mind should have been slamming Jim Cramer’s triple sell button early and often.

For lack of doubt, consider what Merkel’s Vice-Chancellor and leader of the German socialists had to say on Monday. Recall Herr Gabriel is purportedly the voice of the enlightened left and the politician hoping to soon relieve Angela Merkel of her job:

Sigmar Gabriel, the German vice-chancellor and economy minister, said there could be no question of writing off Greek debt because other countries that have had loans such as Ireland, Portugal and Spain would demand equal treatment.

‘I really hope that the Greek government – if it wants to enter negotiations again – will accept that the other 18 member states of the euro can’t just go along with an unconditional haircut,’ he said.

‘How could we then refuse it to other member states? And what would it mean for the eurozone if we’d do it? It would blow the eurozone apart, for sure.’

Oh, yes, he used the “conditional” word, meaning that if Greece signs up for a permanent regime of reform, austerity and depression its paymasters in Brussels and Berlin might be open to an accounting double shuffle. That is, to having Greece’s crushing loans extended to 40 years from 25 years, its grace period on interest and principle repayments stretched beyond the current 2023 time frame and its interest rates pared to something less than 1.5%. On an NPV basis, this is supposed to be some big deal concession.

But who do these clowns think they are kidding? Some day all of this debt will have to be rolled over, and eventually the monetary mountebanks running the ECB and other central banks will be unable to prevent interest rates from normalizing.

So put an honest interest rate—–say 6% on a country that has been a chronic deadbeat for two centuries——-on its current $350 billion of fiscal debt and the pro forma interest computation rounds out to 10% of GDP. It is doubtful that even Art Laffer would claim Greece could grow out from under that kind of financial albatross.

So the real red line is very simple. Above all else, 61% of the Greek public voted for relief from the onerous debt that has been imposed upon them by the troika and faithless Greek politicians in Athens. If they don’t get an outright haircut in excess of $100 billion, Greek democracy will remain permanently indentured to its troika paymasters.

Yet is there an iota of chance that the other 18 Eurozone nations plus the IMF will agree to a meaningful and honest “haircut”  during the next 48 hours that Angela Merkel has allotted for reaching a new deal or a Grexit?  Well, for starters, her iron-fisted finance minister has just averred that a discount on the EFSF debt is actually “prohibited” by the EU treaties.

End of discussion.

Then in the unanimous consent parade you have the Finns, who fell in line last time only by an 11th hour side deal. Said their finance minister:

We’re not willing to reduce Greece’s debt burden,” said Mr. Stubb. “We did that already in 2011; we did that also in 2012.”

So do the boys and girls who play in the Wall Street, London and other assorted casinos really need to be struck upside the head with a 2X4?

Even Jean-Claude Juncker, President of the European Commission, heretofore a dove on finding a compromise with Greece, and a sawdust-for-brains politician willing to kick any available can, did not see fit this time to lie just because things have gotten so serious. Instead of opening the door to a debt haircut, he merely dismissed the Greek referendum as an ‘irrelevant circus’.

Nor was that the extent of the European Commission’s doves dissing of the prospects for a Greek debt haircut:

Valdis Dombrovskis, the European Commission vice president responsible for the euro, said a write-down of Greece’s £270 billion debt mountain was now‘off the table’ after the referendum.

Next, throw into the mix prime minister Tsipras once again trolling around Putin-land for an alternative source of money; a German government which cannot even discuss a third bailout deal prior to a favorable resolution from a hostile Bundestag, which also happens to be on recess; and an open breach between Angela Merkel and Francois Holland on the core matter of a debt haircut and accommodation of Greece’s demands for relief from the troika memorandum.

The latter shatters the very Franco-German alliance on which the entire rotten troika bailout regime has rested.

The Germans have an impolite term for what that adds up to—- einen shitschturm!

And it will be a doozy. What the referendum did was to force the troika con job out of the accounting shadows. The Greek people now fully understand that it was not they, but the European banks and bond funds which were bailed out by the troika.

And the taxpayers of Europe now understand that it is they who are on the hook, not the Greeks who can’t and won’t pay; and not the Brussels apparatchiks, who committed them to off-budget guarantees that they falsely assured would never come due.

For purposes of clarity, here is the updated due bill for the 18 Eurozone nations which must act with unanimous agreement in the next 48 hours. It now amounts to 341 billion euros and is reaching the comical state. These fools have simply strapped themselves to a financial time bomb.

Read More.

What Will Come of Greece? What Madness Will Follow?

JHK is in fine form today and comments on the long drawn out affair with the IMF, the ECB, and especially German negotiators.  As James Howard Kunstler puts it, the can they’re trying to kick down the road is now a 50 gallon drum of cement. The end game is near.


History in Free Verse (by JHK)

History might not rhyme, exactly, but it’s not bad for free verse. Greece is this century’s Serbia — a tiny, picturesque backwater nation blundering haplessly into the center stage of geopolitics. And the European Union is, whaddaya know, Germany in drag, on financial steroids.

Nobody knows what will happen next in the struggle to wring some kind of debt repayment promises out of poor Greece. Without “restructuring” — a virtual national bankruptcy proceeding — there can be no plausible promises of repayment. Both sides seem to have exhausted their abilities to juke their way out. The European Union and its wing-men at the European Central Bank (ECB) and the International Monetary Fund (IMF) can only pretend to kick that fabled can down the road because it has turned into a cement-filled 50-gallon drum. The Greek government can only pretend to further dismantle its civil service and pension systems lest angry citizens toss it out and replace it with a new government, perhaps an ugly and pugnacious one made up of Golden Dawn party Nazis.

In the background, Spain, Portugal, Italy, Ireland, and perhaps even France wait without peeping to see if Greece is allowed to restructure, because you can be sure they will demand the same privilege to debt relief. But that’s hardly possible because the ECB has been engineering a shift of debt-holding away from the big corporate banks  — which made all the stupid loans — to the taxpayers of their member states, especially Germany, which stands to be the biggest bag-holder when a contagion of serial default seeps across the continent.

This implies, of course, that along the way to that outcome something sickening happens to the price of all the bonds that the debt is embodied in. Namely, its value craters for the simple reason that the threat of non-payment makes interest rates shoot up to reflect the actualization of risk. That would certainly set off the booby-trap of derivative interest rate swaps and credit default swaps that have been laid into history’s greatest financial minefield. Thus, the big banks that were supposedly shielded by the ECB shell game of Hide the Debt Pea Somewhere Else, will blow up in a daisy-chain of unpayable obligations.

The net effect of all that will be the disappearance of nominal wealth — it crosses an event horizon into a black hole never to be seen again. The continent discovers it is a lot poorer than it thought. Fifty years of financial engineering comes to the grief it deserves for promoting the idea that it’s possible to get something for nothing.

Read More at James Howard Kunstler’s blog.

2015 Is Headed For The Hottest Year On Record

Think it’s been hot lately? For most of the U.S. and around the world you’d be right. The amazing thing is that there are still so many climate change deniers. Perhaps with the Pope saying we face a crisis more will listen.

Any politicians that deny climate change, or say it needs more study before they make a judgement, are  idiots.  Please don’t vote for such fools.  If you’re still a climate change denier, here’s a study you should look at.

From Bloodberg news:


We broke the record. Again.

Last month was the hottest May on record, and the past five months were the warmest start to a year on record, according to new data released by the National Oceanic and Atmospheric Administration. It’s a continuation of trends that made 2014 the most blistering year for the surface of the planet, in records going back to 1880.

The animation below shows the Earth’s warming climate, recorded in monthly measurements from land and sea over more than 135 years. Temperatures are displayed in degrees above or below the 20th-century average. Thirteen of the 14 hottest years are in the 21st century, and 2015 is on track to break the heat record again. It isn’t even close.


Check out the stunning heat map animation.  It indicates we are headed for a disaster of epic proportions.

Billionaire Untamed Obsession Series Follows Genevieve

The Billionaire Untamed Obsession Series features a 24-year-old woman, Genevieve Mercier, as she transforms from a school girl virgin into a business woman facing difficult choices. Her career takes off thanks to mentoring and special treatment given by her new billionaire boss.

Billionaire Bargain
Billionaire Bargain

After graduating from Emory with an MBA, Genevieve accepts a challenging position with Hoffman Industries as an International Business Manager. She strongly believes Hoffman’s new product, BloodSave, will have a revolutionary effect on the medical profession. She’s sure new blood testing technology will lower testing costs and save many lives. For Genevieve the job is perfect. It offers the opportunity to help people while acquiring wealth.

Only after accepting the job did she find her new boss, Doctor Novak Hoffman, was a kinky sex maniac. She finds traveling with him exciting, but comes with demands and conditions. Will she fall for the outrageously handsome and sexy Doctor? Will she  find a way to curb his advances?

After traveling to Paris, Cannes, and Monaco it’s off to Asia to structure a joint venture with Chinese billionaires. This leads to even more severe complications. One of China’s richest men wants to travel with Genevieve and show her around China. Yikes! She finds out too late she’ll be sharing the same hotel suite with this gorgeous man.

Oh my. Genevieve is on the road to personal wealth, but at what cost? At times the series is spicy, at times romantic and sweet. Start at the beginning and see for yourself. Billionaire Bargain, the start of the series,  is only 0.99 cents at Amazon.   

Red Flag. Military Romance Techno Thriller

Military Romance Techno Thriller Rings True.

Wars aren’t settled in one big battle. They have countless encounters involving military units, which in time make up a war. Many small actions make up a battle and a series of battles make up a war. Innocent civilians are greatly affected by any prolonged conflict. Many are displaced, wounded or killed. Houses, businesses, offices, and lives are destroyed. For the survivors, soldiers and civilians, life will never be the same.

What Would You Do If You Came Under Attack?

Red Flag is a military romance thriller that focuses on a young couple who find themselves in a war zone. Their relationship grows and is forged by the fires of war. They must overcome serious injuries, they become collateral damage in an air strike, and strive to stay alive in a war zone.

Red Flag is unique in that the story is told from various points of view. American, Chinese, and Taiwanese, all participants in the conflict, have a story to tell. The use of fearsome anti-ship ballistic missiles and cruise missiles has terrible consequences.Techno Thriller With Military Romance

As the war rages tales of conflict in techno thriller style, new weapons systems, political intrigue, and efforts to survive are balanced with a love story. What starts out as a causal romantic relationship deepens and becomes intense love.

Red Flag is available at Amazon. Red Flag

Contemporary Romance Thriller – Vengeance

This contemporary romance thriller is book 4 of the Jay Gunner series.

Vengeance offers twists and turns and dramatic action.
Venge copy

Jay is injured in a terrorist attack that killed his girlfriend. When he recovers Jay has only one thing on his mind – Vengeance.  He enlists the help of two mercenaries and starts the search for the killer and his gang of cutthroats. They’re aware of the risks but push on. Their chase leads him to Hong Kong, Macau, London, Istanbul, and Syria.

Jay develops a friendship with his hired guns. Their interaction and frank discussions spice up the dialogue. They become a team determined to take revenge on the killer. Jay’s attraction for beautiful women in exotic locations adds to the spice.

The thrilling action at the end of the chase is surprising and brings the series to its climax. This contemporary romance thriller  is available for pre-order now and will be released on May 5th, 2015. See more at Amazon

De-Dollarization Accelerates As America’s Influence Declines

America’s privileged position since WW II with the dollar as the world’s reserve currency is coming to an end. Thanks to the Obama administration’s hubris and incompetence the dollar’s demise is accelerating. America’s friends and allies are tired of the bullying and ham fisted mishandling of foreign policy.

De-Dollarization Accelerates As More Of Washington’s “Allies” Defect To China-Led Bank

From Zerohedge

The global de-dollarization trend continues as it appears the UK’s move to join the China-led Asian Infrastructure Development Bank has indeed shown other US “allies” that spurning Washington’s advice is actually acceptable and concerns about the institution’s “standards” may simply be a diversion aimed at undermining China’s attempt to exercise more influence in its own backyard. Here’s more from the NY Times:

Ignoring direct pleas from the Obama administration, Europe’s biggest economies have declared their desire to become founding members of a new Chinese-led Asian investment bank that the United States views as a rival to the World Bank and other institutions set up at the height of American power after World War II.

Flag of the People's Republic of China
Flag of the People’s Republic of China

The announcement on Tuesday by Germany, France and Italy that they would follow Britain and join the Chinese-led venture delivered a stinging rebuke to Washington from some of its closest allies. It also called into question whether the World Bank and the International Monetary Fund, which grew out of a multination conference in Bretton Woods, N.H., in 1944 and established an economic pecking order that lasted 70 years, will find their influence diminished.

The announcement by Germany, Europe’s largest economy, came only six days after Secretary of State John Kerry asked his German counterpart, Frank Walter-Steinmeier, to resist the Chinese overtures until the Chinese agreed to a number of conditions about transparency and governing of the new entity. But Germany came to the same conclusion that Britain did: China is such a large export and investment market for it that it cannot afford to stay on the sidelines.

South Korea, another US ally that the Obama administration has not-so-subtly lobbied to stay out of the AIIB for the time being, is reportedly reconsidering a bid to join and although reports that Seoul had already committed to the venture appear to have been a bit premature, the country will make a decision this month and is expected to discuss specifics this weekend at a meeting with Chinese and Japanese officials. Here’s FT:

The foreign ministers of China, Japan and South Korea will meet in Seoul this weekend for the first time in three years, in an effort to calm tensions in the region.

The trio have strong economic ties but frosty relations. International angst about this state of affairs among the regional superpowers has been further piqued by the Asian Infrastructure Investment Bank, a Chinese-led initiative sparking alarm in Washington and proving divisive elsewhere.
Meanwhile, even Europe’s own “magical fairyland” is taking the plunge. Via Bloomberg:

Read More: De-dollarization