I have been asked many times why I have intervened in the federal prosecution of Dzhokhar Tsarnaev, the young man who was convicted and sentenced to death in the Boston Marathon bombing case where two brothers, on April 15, 2013, allegedly detonated pressure cooker bombs on Boylston Street in front of the Forum Restaurant that killed or maimed many people. As I wrap up my career of fifty years as a member of the bar, including service as a public defender in state and federal courts, co-founder of an accredited law school, and chief public prosecutor in Minnesota state courts, I am apprehensive that my country might be entering into an era of judicial murder. Judicial murder is the practice of designing a trial to get a guilty verdict, regardless of the facts, and a death sentence carried out. It has happened in many countries in all ages. It has been recognized as a threat of public justice by the United States Supreme Court in Powell v. Alabama, 287 U. S. 45 at 72-72 (1932). Judicial murder is followed by corruption and destruction of society. The judicial murder of Socrates was followed by loss of the classical civilization of ancient Greece. The judicial murder of Jesus of Nazareth, whether son of God or venerable philosopher, was followed by the destruction of Jerusalem and the second temple. The judicial murder of Joan of Arc was followed by loss of most English lands in France. The judicial murder of Charles the First was followed by loss of the free constitution of England. The judicial murder of Louis XVI was followed by 150 years of defeat, ruin, suffering, and chaos in France. Judicial murder in the Third Reich was followed by humiliating defeat of Germany. Judicial murder in the Soviet Union was followed by collapse of the Soviet empire. If the justice system cannot be trusted, evil consequences follow.
In Germany, Martin Schultz wants to give refugees the right to vote. So if he cannot win with Germans, he wants to give the right to vote to refugees to win by bribing them. The German politicians are now giving them apartments they are constructing that cost about 3 million each. The construction costs actually come out to about 1600 per square meter and since each apartment is about 470 square meters, the cost to build one apartment is more than 3 million. It is stunning that Merkel was so fearful of inflation that she would not yield to Greece and saw fit to impoverish the people to pay for the political corruption of their politicians. Yet building dwellings for refugees without language and job skills that cost 3 million each is some how not inflationary.
Dijsselbloem’s comments regarding the Southern Europe reflect the political bias – not the general public at large within Europe. There are different cultures throughout Europe. In some places people will not cross the street until a light changes even if there are no cars. Other parts are like New York, lights are optional. There are many cultural differences in general between north and south, but even more between members. Even in Germany there is a divide between north and south. The blame does NOT lie in cultural differences, corruption, or even easier spending in the south and excessive pensions as in Greece. The problem that has pushed Europe to the brink is: (1) this failed idea that ending European War can be achieved by federalizing Europe. That will not change the cultural differences. Even in the United States, there are cultural differences between the Bible Belt (anti-Abortion & anti-Gay Marriage) compared to California or New York. It is the Federalization of the United States and the attempt to impose one culture upon the whole every since the Great Depression that is causing tensions within the United States. The same is TRUE within Europe.
Ever since governments began banning and licensing different parts of the economy, the black market has made sure people still have access to the things they need. Unstable governments always turn on their own citizens by using price controls, heavy taxes, and even the threat of imprisonment to prop up their failing systems. As conditions inevitably deteriorate, as they have in Venezuela and Greece, the underground economy becomes invaluable to those living through the crisis. The shadow economy refers to more than just the trade of illegal goods. A grey market, for example, provides legal products that have become difficult to find. Since basic things like toilet paper, medicine, and even food have disappeared from store shelves in Venezuela, the peer-to-peer network has become the only reliable way to secure life’s necessities. In desperate situations like this, the existence of independent merchants can mean the difference between life and death. Even the value of Venezuela’s currency has started to move away from the government’s control. At one point, the official exchange rate was fraudulently set at 10 bolivars per U. S. dollar, while on the black market it was trading at 1,000 to one. This action hurt millions by suppressing wages across the country and eroding any remaining trust. Inflation has quickly become the most imminent threat to the Venezuelan people, stealing the value of their labor and savings. For years, the bolivar has experienced hyperinflation, increasing the cost of living almost exponentially. The State’s desperate response was to institute price controls, but that has only led to shortages across the board. Luckily, the unregulated markets have been able to determine the true value of goods and provide vital support for the struggling communities. Many people think that so-called price gouging is unethical, but isn’t it better to buy what you need at twice the price than to not be able to get it at all?
This post was published at Zero Hedge on Mar 10, 2017.
It didn’t take much for the Greek bank run jog to return: with Greece once again stuck between an IMF rock and a Schauble hard case, and whispers that another bailout may be on the horizon, the local population took advantage of whatever capital controls loopholes they could find, and withdrew money from the local banking sector, which to this day remains on ECB life support, almost two years after the 3rd Greek bailout in the summer of 2015. According to Greece central bank data, Greek private sector bank deposits declined in January for the second month in a row, driven by renewed concerns over the country’s neverending bailout. Business and household deposits fell by 1.63 billion, or 1.34% month-on-month to 119.75 billion ($126.8 billion), the lowest level since November 2001. The January outflow follows a “jog” of 3.4 billion in December, making the two-month drop the worst since the latest Greek bailout panic in July of 2015.
This post was published at Zero Hedge on Feb 28, 2017.
Neocolonial “capitalist paradise” or crony “socialist paradise”: the net result is the same: expropriation and impoverishment. Yesterday I noted that not all assets will make it through the inevitable financial re-set. ( Which Assets Are Most Likely to Survive the Inevitable “System Re-Set”?) Those that are easy to expropriate will be expropriated, and those assets vulnerable to soaring taxes, inflation and currency devaluation will also be hollowed out. There are two real-time examples of these dynamics we can profitably study: “capitalist” Greece and “socialist” Venezuela. Both nations have impoverished their citizenry to preserve an oligarchy and its cronies. I hope it won’t be too great a shock that crony-capitalism and crony-socialism function in much the same fashion and generate the same result: the wealth of the nation is funneled (or expropriated) into the ruling Elites, impoverishing the non-elites.
Editor’s Comment: Is it really any wonder that the most dangerous leaders in society, and their cadre of supporters, are always urging everyone to vote? Democracy has been sanctified because of its symbolic indication that the will and the voice of the people is being considered. Grand sweeping sentiments, ‘democracy,’ the ‘American way’ and so forth. But perhaps it is a model that never could live up to the needs of society… if voting just means picking the personality of your dictator, then there is noting to vote for. Not sure all the things asserted in this article should be implemented either, but it is worth keeping mind that the population and size of the societies that first instituted democracy in Ancient Greece, etc. have little in common with the easily divided, multi-dimensional population base in the United States – with a whopping 315,000,000 people being represented by 1-of-2 presidential candidates, and 535 people in Congress. The most populous state in the U. S., California, is represented by 2 Senators – at a ratio of about 1 to 19 million, and each of its 53 representatives in Congress theoretically represent the views of more than 700,000 people. In Wyoming, the least populous U. S. state, 1 House member represents about a half million people, and each of their 2 senators represent about 232,00o people. Anyway you slice it, no matter what system or values you believe in, that’s a lot of people being represented by a very few… and almost none of those representatives are able to resist corruption, avoid tainted lobbyist money or uphold their promises to voters. So you tell me what the solution is? Mathematicians Prove Society is Way Too Complex to Have A President Mathematics, a report published by Vice’s Motherboard prior to Election Day suggests, proves society is so complex that democracies have been rendered irrelevant. According to a study carried out by mathematicians at the New England Complex Systems Institute (NECSI), it is difficult for government entities or single individuals to debate what these mathematicians call ‘social policy’ if the goal is to find something that works for everyone. Once we consider that members of any society are simply too complex, the study suggests, we are able to understand that the systems of government currently available fail to meet our expectations.
This post was published at shtfplan on November 18th, 2016.
The simple fact of the matter is that 2012 wasn’t supposed to happen. By every orthodox prediction and theory about the set of tools deployed after the Great Recession (after it, the first clue) there was no reason to suspect anything but the usual cyclical occurrences. Sure, the recovery would be weak because the recession large, but retrenchment was never even considered. The recovery might be somewhat shallow, but there was no way it could be bent or durably altered. The first rebuke to the mainstream came from Europe. Though the European economy would fall right back into recession so soon after the ‘Great’ one, it was easily dismissed as a product of Greece, debt, and the demographics of Greek debt. So tantalizing was its allure, the European debt crisis of 2012 even made its appearance within excuses for China. China’s fixed-asset investment has already started to pick up and a jump in spending on railway construction would echo the expenditure on rail lines and bridges that was part of stimulus during the global financial crisis. A decline in foreign direct investment reported by the government today underscored the toll that Europe’s debt woes and austerity measures are taking on Asia’s largest economy. I honestly have no idea how Bloomberg News got from European ‘austerity measures’ to the vast Chinese slowdown other than to skim the surface of stories that just happened to be occurring at the same time. In other words, it is the same logical fallacy that pervades mainstream ‘understanding’ of how the world supposedly works; correlation doesn’t suggest causation.
The Greek government is calling for full disclosure of ALL household wealth. The Greeks are to disclose everything they own – cash worldwide, jewelry, real estate, paintings, and furniture. The Greek government is totally insane and intends to exploit its population simply to remain in the euro without the simplest shred of evidence that such a measure would even benefit the country. They are preparing to impose a compulsory levy to reduce debt owed to Brussels and Germany. This will send the Greek economy into a Fourth World order and destroy one of the most beautiful countries in Europe. There is zero chance of altering the future since the corruption of the Greek government – not the people – created this nightmare to begin with. Now the Greek population will have to pay for the fraud their government carried out with the aid of Goldman Sachs.
The Brexit vote was never just about whether the Brits would reject rule from Brussels. The real issues were much broader and felt across the whole EU – an arrogant and undemocratic elite, its disastrous economic policies and an increasing gap between haves and have-nots, the first being the cause of the second and the second the cause of the third. To paraphrase what one disillusioned British voter told The Guardian: if you’ve got money, you vote in; if you ain’t got no money, you vote out. In this context, I would like to quote two poignant open letters from European friends that were sent out just before the UK referendum. The first is from a group of prominent Greek opinion leaders. Their letter started with the basic idea, as it was explained to the people in Europe, [which] was [that the EU] was a community of European nations in friendship, solidarity, mutual benefit and democracy: Basic European Values. It continued: Unfortunately, these inviting promises proved to be false or failed. There is nothing about freedom, solidarity or friendship in the European Union. The European Union has proven to act on behalf of the interest of banks, multi-national enterprises and groups in the shadow, as advised by professional think-tanks and lobbyists, not in favor of its people. . . . The European Union is designed as a cartel and typically, there is a lack of democratic structures and processes: democracy becomes a disturbing factor.
Hedge fund manager Marc Mezvinsky had friends in high places when he bet big on a Greek economic recovery, but even the keen interest of his mother-in-law, then-Secretary of State Hillary Clinton, wasn’t enough to spare him and his investors from financial tragedy. In 2012, Mezvinski, the husband of Chelsea Clinton, created a $325 million basket of offshore funds under the Eaglevale Partners banner through a special arrangement with investment bank Goldman Sachs. The funds have lost tens of millions of dollars predicting that bailouts of the Greek banking system would pump up the value of the country’s distressed bonds. One fund, exclusively dedicated to Greek debt, suffered near-total losses. Clinton stepped down as secretary of state in 2013 to run for president. But newly released emails from 2012 show that she and Clinton Foundation consultant, Sidney Blumenthal, shared classified information about how German leadership viewed the prospects for a Greek bailout. Clinton also shared ‘protected’ State Department information about Greek bonds with her husband at the same time that her son-in-law aimed his hedge fund at Greece. That America’s top diplomat kept a sharp eye on intelligence assessing the chances of a bailout of the Greek central bank is not a problem. However, sharing such sensitive information with friends and family would have been highly improper. Federal regulations prohibit the use of nonpublic information to further private interests or the interests of others. The mere perception of a conflict of interest is unacceptable. Through its press representative, Eaglevale declined to comment for this story. Clinton’s campaign press office did not respond to a request for comment.
The title of this episode is the ‘Return of Stalinism’ but in actual fact the discussion is more about the rise of nationalism that is occurring both in the West and in Russia. Cohen notes that in the United States it is an integral part of the election process (and perhaps less significantly about Washington’s foreign adventures); in the EU it is about the failures of the EU, especially the refugee crisis, and in Russia it is tied to the increasing threat of NATO on its borders. The latter now includes the so called ‘missile shield’ that has, with ribbon cutting fanfare, just seen Rumania added as the newest such missile site and newest threat to Russia. Putin, during his recent visit to Greece, has finally spoken out against these missile sites saying that as a threat to Russia they become targets of attack for Russia. That message is now clearly Russian policy should hostilities commence with NATO. Expect the obvious to be ignored. But as a symbol of foreign policy success, for Russians Stalin has some credibility and now that Russians feel threatened the Russian Communist Party is planning to use his image during the coming election for the Dumas. He was a terrible despot, who killed millions, but as a military leader he had great success and Russians still debate his status. Cohen discusses how post Stalin Kremlin leaders dealt with the question until Gorbachev virtually defined himself as an anti-Stalinist. But now Russians are threatened again and Stalin is seen in a more positive way – ‘as an attitude of the people’, not as a regressive trend. Cohen reminisces about how Russians would use Stalin’s image under post Stalin Soviet leaders as a quiet protest about failures of domestic government policies. And one can see the same today in Russia although ‘it is now commercialized and politicised’. This makes it a problem for Putin because the comparison is there to live up to when things go wrong and to defend against when the ‘Stalin label’ is compared to the present Putin regime. But Putin’s regime in today’s Russia, Cohen argues, does not in any way resemble Stalin’s state – nor a Soviet one -but, as Cohen points out, Russians know that the West did not put missiles on the borders of Stalin’s Russia. In the last segment Cohen discusses the level of corruption in all areas of Russian society and how the perception of Stalinism has created myths about that leader. It is Putin’s domestic headache to address the corruption, but Stalin is seen, incorrectly, as a corruption fighter. Similarly Stalin’s collectivization efforts can be compared to the transformations under Putin, and while pro Stalin elements in the population proclaim Stalin’s efforts successful, the reality was very much more debatable. Putin’s successes, however, are far less debatable; they are very real. Putin has chosen the role of an anti-Stalinist leader. However, he is not seen as a leader who has taken a very hard line against provocative western interests (NGOs and media) within Russia and to an enemy NATO outside – as Stalin surely would have. This reality may have changed this past week with Putin’s warning to NATO that missile sites along Russian borders are now targets, and now the New Cold War is one more step closer to the military response.
FRANKFURT – China is cutting back on mining machinery as its economy slips. The United Arab Emirates and other Middle Eastern countries are no longer awash in oil money, putting luxury car brands at risk. Russia, still facing Western sanctions, cannot buy as much high-tech energy equipment. The downshift in the emerging markets is leaving Germany vulnerable – and, by extension, Europe. As many businesses in the region struggled just to tread water in recent years, German companies prospered by selling the goods and technology that emerging countries needed to become more modern economies. As they did, Germany’s strength served as a counterweight to the economic malaise, financial turmoil and Greek debt drama that dragged down many European countries. Now, Germany, which accounts for the largest share of the European economy, is looking like the laggard. Compared with the economies of other countries in the region, Germany’s has been more deeply tethered to emerging markets. And the political climate is only adding to the uncertainty, as Germany deals with a wave of migrants and a potential exit of Britain from the European Union. Against that backdrop, the country’s export engine is sputtering, while business confidence is eroding.
Russia’s decision to greatly reduce its military presence in Syria, coming as it did with little warning, has left the world struggling for explanations. Russia is to maintain a military presence at its naval base in Tartous and at the Khmeymim airbase. In fact Russia is ‘withdrawing without withdrawing’. The partial withdrawal is seen by many as a message to the Assad government to not take Russia’s military aid for granted, and to be more flexible in the upcoming peace negotiations. As Robert F. Kennedy Jr., attorney and nephew of US President John Fitzgerald Kennedy explains, the major reason for the west’s attempt to overthrow the Assad government was to build a natural gas pipeline from Qatar that traversed Syria, capturing its newly discovered offshore reserves, and continued on through Turkey to the EU, as a major competitor to Russia’s Gazprom. By re-establishing the Assad government in Syria, and permanently placing its forces at Syrian bases, the Russian’s have placed an impenetrable obstacle to the development of the Qatar gas pipeline. Russia has also placed itself at the nexus point of other new offshore gas discoveries in the Eastern Mediterranean, including Israel, Cyprus, and Greece. It’s not hard to imagine a new Russian pipeline to Europe serving these new partners. Could easing of sanctions also lead to the implementation of the long-stalled plans of Gazprom for a second pipeline under the Baltic Sea to Germany for Russia and its partners, Royal Dutch Shell, Germany’s E. ON, and Austria’s OMV?
When she isn’t shipping in more Syrian refugees, or trying to find new ways to destroy the Greek economy, the German Chancellor Angela Merkel is fond of quoting an alarming statistic: Europe accounts for just 7pc of the world’s population, and 25pc of its GDP, and yet it also accounts for a massive 50pc of its welfare spending. The point is an important one. Europe’s welfare spending is out of control, and is on a scale that is both lavish and unaffordable compared with the rest of the world. There is a problem, however. Neither she, nor any other political leader in Europe, has the will to do anything about it. Eurostat, the statistical agency of the European Union, has this week published updated figures on the total welfare bill across Europe. It is rising, and in some countries is getting up to a quarter of national output. Meanwhile, the percentage of spending on stuff like infrastructure or education, which increase an economy’s potential output, is falling. So long as that is true, it is very hard to see anything other than a bleak future for any of Europe’s economies.
Among the many issues not being debated in the presidential nomination races in both political parties is the matter of the debt ceiling, which both political parties continue to raise each time it is reached. Given that the debt ceiling is an acknowledgment that too much debt is a very bad and very dangerous thing for a government and a nation (See Greece and Puerto Rico), wouldn’t you think that this would be something that would be discussed and debated in the course of a presidential race? Well, apparently not in this one. Check out this website, which is called the US Debt Clock.org. It shows that the national debt currently stands at $19 trillion. The amount of that debt allocated to each citizen is $59,150. Advocates of ever-growing federal spending have long maintained that the national debt doesn’t really matter because ‘we owe it to ourselves.’ It would be difficult to find a more inane statement than that in the annals of history. The fact is that the government owes all that money to people who own U. S. government bonds and other U. S. debt instruments, including foreign regimes like communist China, which loaned the George W. Bush regime the money he needed to invade and occupy Iraq.
It is those who love Europe, its diversity, its history and its humanity who should be the most enthusiastic about Brexit. A paradox? Not at all. TheEuropean Union, as currently constituted, has run out of road. It is doomed to fail, sooner or later, with catastrophic consequences for our part of the world, and the only way forward is for one major country to break ranks and show that there can be a better alternative consistent with Europe’s core enlightenment values. It would be far better if we, rather than a more socialist or nationalistic country, were the first to break the mould: Britain would have the opportunity to show that free trade, an open, self-governing society and a liberal approach could ensure the peace and prosperity at the heart of the European dream. Others would soon join us. If we vote to stay, we will lose the moral authority to speak out, and other, less benign, inward-looking, illiberal approaches may triumph instead. The eurozone is broken, and another, far greater economic crisis inevitable. The next trigger could be a fiscal meltdown in Italy, or another banking collapse, or a political implosion in Spain or France, or another global recession. Nobody can be sure what the proximate cause will be – but there will be one, and the fallout will be turmoil of a far greater magnitude than anything we saw in Greece. At the same time, the tensions fuelled by the migration crisis will grow relentlessly, especially if hundreds of thousands or even millions of people are settled across the continent over the next few years.
Renowned fund managers who invested hundreds of millions of dollars in the troubled Greek banks are trapped in uncertainty caused by the political developments in Greece and global financial turmoil. John Paulson, Prem Watsa, Wilbur L. Ross and other funds, such as Brookfield Capital Partners, Capital Research & Management, Mackenzie Cundill, Schroder Investment Management and Wellington Management are among those who invested more than 10 billion euros ($11.3 billion) of capital in the Greek banking system over the past couple of years. Many of them saw the $6.7 billion worth of investments in Greek banks that they made in February 2014 evaporate just a year later, under the risk of a Grexit. Although they lost their initial bet on Greek banks, last November they dared to put an additional 4 billion euros ($4.45 billion) worth of funds into the Greek banking system. Until recently, these foreign investors argued their investments in Greek banks were promising, as their stocks traded at a third or less of their tangible book value. They were confident that as the Greek economy would start to grow, bank reserves and earnings would improve – pushing up Greek bank stock valuations. The same investors saw great value in the portfolios of nonperforming loans of Greek banks and believed that 20 percent of these bad loans could be recovered.
The stock markets of the so-called PIIGS are breaking down on an absolute and relative basis – not a positive development for global markets. The PIIGS are starting to squeal again in Europe. No, not the kind that produces pancetta or linquica or bangers. We are talking about the continent’s debt-laden, economically-challenged countries known by the acronym PIIGS, namely, Portugal, Ireland, Italy, Greece and Spain. These nations are essentially economic dead weight for Europe considering their plight. That said, all financial markets are cyclical – nothing straight-lines. And indeed, despite the apparent inevitable downfall that awaits the Eurozone as a result of the PIIGS, the associated equity markets have actually been quite buoyant for the better part of the last 4 years. Not so anymore. We have posted before a composite that we constructed consisting of equally-weighted portions of each of the PIIGS’ stock markets. We call it…the PIIGS Composite. The composite starts in 2006 and hit an all-time low in June 2012, amid the Europe/PIIGS near-meltdown. Following Mr. Draghi’s ‘whatever it takes’ moment, the PIIGS Composite shot up off the mat, rallying nearly 75% in 3 years before peaking in May of last year. Since then, the composite has gradually leaked lower. Around the start of the year, the leak turned into a gusher. As of this week, the PIIGS Composite is at near 3-year lows, approaching levels last seen in 2012.
This post was published at Zero Hedge on 02/11/2016.
The simple fact of the matter is that gold is no longer money and hasn’t been treated that way in decades. It is a frustrating and often woeful outcome, but deference isn’t a reason to color judgement. As an investment, which is more like what gold has become, it isn’t all that straight, either. Gold behaves in many circumstances erratically; often violently so. In 2008, gold crashed three times; but it also came back (and then some) three times. The metal remains stuck in some orthodox limbo of duality, sometimes acting an investment while at others, more rarely, as almost reclaiming its former status. The junction of that dyad format is wholesale collateral. It is a difficult and dense topic because it plumbs the very depths of the wholesale arrangement – factors like leasing, swaps and collateralized lending through binary bespoke arrangements. It is there that I think it helps to form the narrative, however, starting by reviewing what the BIS was up to in late 2009 and early 2010. I am going to borrow heavily from an article I wrote in April 2013 that describes the events in question but this is one of those times when you should read the whole thing. Back in July 2010, the Wall Street Journal caused some commotion when it happened to notice in the annual report for the Bank for International Settlements the sudden appearance of gold swap operations to the tune of 346 tons. Subsequent investigation by media outlets, including the Financial Times, reported that the BIS had indeed swapped in 346 tons of gold holdings from ten European commercial banks. That was highly unusual in that gold swaps are typically conducted between and among central banks. Included in that list of commercial banks were, according to the Financial Times, HSBC, BNP Paribas and Socit Gnrale. The timing of the swaps was pinned down to sometime between December 2009 and January 2010 – just as the world was getting reacquainted with the Greek Republic.