Category Archives: Government

Eurozone Whistles Past its Biggest Threat, by Don Quijones

The Italian financial system is in deep trouble and will crash without a large infusion of funds, undoubtedly from Europe’s beleaguered taxpayers. From Don Quijones at wolfstreet.com:

 

Italy’s Multi-Headed Hydra Predicament.

For the last three years, the political establishment in Italy and beyond have had a field day attacking, ridiculing, and vilifying Beppe Grillo’s 5-star movement. Europe’s media have tarred him with the brush of populism. In 2013 The Economist labelled him a clown on its front cover. Yet his party still leads the polls. And that lead is growing.

A new Ipsos poll in Corriere della Sera newspaper has put Beppe Grillo’s 5-Star Movement on 32.3% – its highest ever reading. It placed 5.5 points ahead of the governing PD, on 26.8%, after the PD dropped more than three percentage points in a month, as former prime minister Matteo Renzi battles to reassert his authority following a walkout by a left-wing faction.

Internal political battles are nothing new in Italy. The country enjoys a hard-earned reputation for political instability and paralysis, having seen 63 governments come and go since 1945. The problem this time around is that internal weakness and strife in Italy’s traditional center-left and center-right parties could end up gifting the next election to a party that refuses to play by the book.

If it wins the next elections, which could be brought forward to as early as June this year, 5-Star Movement has pledged to hold a referendum of its own — albeit a non-binding one — on Italy’s membership of the euro. As polls have shown, there is much broader public apathy toward the single currency than in just about any other euro zone nation. Grillo’s plan could also receive the backing of former prime minister Silvio Berlusconi who is determined to pull off a political comeback and is talking of restoring the Italian Lira.

As Reuters reports, such a scenario could spook financial markets “wary of both the 5-Star’s euroskepticism and the threat of prolonged political instability in Italy,” which boasts a public debt burden of over €2 trillion (133% of GDP). In any normal situation that would be a problem. But Italy is not in a normal situation; it is on the cusp of a potentially very large financial crisis that, if mishandled, could bring down Europe’s entire financial system.

To continue reading: Eurozone Whistles Past its Biggest Threat

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Watch These Geopolitical Flashpoints Carefully, by Brandon Smith

Brandon Smith highlights the dangers ahead. From Smith at alt-market.com:

Anyone who has been involved in alternative geopolitical and economic analysis for a decent length of time understands that the establishment power structure thrives according to its ability to either exploit natural crises, or to engineer fabricated crises.

This is not that hard to comprehend, but for some reason there are a lot of people out there who simply assume that global sea-change events just happen “at random,” that the elites are stupid or oblivious, and that all outcomes are a matter of random chance rather than being directed or manipulated. I call these people “intellectual idiots,” because they believe they are applying logic to every scenario but they are sabotaged by an inherent bias which causes them to deny the potential for “conspiracy.”

To clarify, their logic folds in on itself and becomes faulty. They believe themselves objective, but they abandon objectivity when they staunchly refuse to consider the possibility of covert influence by organized special interests. When you internally dismiss the possibility of a thing, no amount of evidence will ever convince you of its reality. This is how the “smartest” people in the room can end up being the dumbest people in the room.

In the survivalist community there is a philosophy – there is no such thing as a crisis for those who are prepared. This is true for prepared individuals as much as it is true for prepared communities and prepared nations. The only way a society can fall is when it becomes willfully ignorant of potential outcomes and refuses to organize against them.

By extension, it would make sense that by being prepared for a particular crisis or outcome an individual or group could not only survive, but also profit. It is not crazy or outlandish to entertain the idea that there are groups in power (perhaps for many generations) that aggressively seek to predict or even force particular outcomes in geopolitics for their own profit. And, by profit, I do not necessarily mean material wealth. In many cases, the power of influence and psychological sway over the masses might be considered a far greater prize than money or property.

To continue reading: Watch These Geopolitical Flashpoints Carefully

An Obama Plot to Sabotage Trump? by Patrick J. Buchanan

After eight months not a shred of evidence supports the Russian-Trump conspiracy claims, but a real scandal is emerging: the intelligence community’s surveillance of President Trump. From Patrick J. Buchanan at buchanan.org:

Devin Nunes just set the cat down among the pigeons.

Two days after FBI Director James Comey assured us there was no truth to President Trump’s tweet about being wiretapped by Barack Obama, the chairman of the House Intelligence Committee said Trump may have had more than just a small point.

The U.S. intelligence community, says Nunes, during surveillance of legitimate targets, picked up the names of Trump transition officials during surveillance of targets, “unmasked” their identity, and spread their names around, virtually assuring they would be leaked.

If true, this has the look and smell of a conspiracy to sabotage the Trump presidency, before it began.

Comey readily confirmed there was no evidence to back up the Trump tweet. But when it came to electronic surveillance of Trump and his campaign, Comey, somehow, could not comment on that.

Which raises the question: What is the real scandal here?

Is it that Russians hacked the DNC and John Podesta’s emails and handed them off to WikiLeaks? We have heard that since June.

Is it that Trump officials may have colluded with the Russians?

But former Director of National Intelligence James Clapper and ex-CIA Director Mike Morrell have both said they saw no evidence of this.

This March, Sen. Chris Coons walked back his stunning declaration about transcripts showing a Russia-Trump collusion, confessing, “I have no hard evidence of collusion.”

But if Clapper and Morrell saw no Russia-Trump collusion, what were they looking at during all those months to make them so conclude?

Was it “FBI transcripts,” as Sen. Coons blurted out?

If so, who intercepted and transcribed the conversations? If it was intel agencies engaged in surveillance, who authorized that? How extensive was it? Against whom? Is it still going on?

And if today, after eight months, the intel agencies cannot tell us whether or not any member of the Trump team colluded with the Russians, what does that say of their competence?

To continue reading: An Obama Plot to Sabotage Trump?

This new bubble is even bigger than the subprime fiasco, by Simon Black

There are now more student loans outstanding than there were subprime loans at the height of the housing bubble. And just like those subprime loans, student loan repayment rates are faltering. From Simon Black at internationalman.com:

In 1988, a bank called Guardian Savings and Loan made financial history by issuing the first ever “subprime” mortgage bond.

The idea was revolutionary.

The bank essentially took all the mortgages they had loaned to borrowers with bad credit, and pooled everything together into a giant bond that they could then sell to other banks and investors.

The idea caught on, and pretty soon, everyone was doing it.

As Bethany McLean and Joe Nocera describe in their excellent history of the financial crisis (All the Devils are Here), the first subprime bubble hit in the 1990s.

Early subprime lenders like First Alliance Mortgage Company (FAMCO) had spent years making aggressive loans to people with bad credit, and eventually the consequences caught up with them.

FAMCO declared bankruptcy in 2000, and many of its competitors went bust as well.

Wall Street claimed that it had learned its lesson, and the government gave them all a slap on the wrist.

But it didn’t take very long for the madness to start again.

By 2002, banks were already loaning money to high-risk borrowers. And by 2005, all conservative lending standards had been abandoned.

Borrowers with pitiful credit and no job could borrow vast sums of money to buy a house without putting down a single penny.

It was madness.

By 2007, the total value of these subprime loans hit a whopping $1.3 trillion. Remember that number.

And of course, we know what happened the next year: the entire financial system came crashing down.

Duh. It turned out that making $1.3 trillion worth of idiotic loans wasn’t such a good idea.

By 2009, 50% of those subprime mortgages were “underwater”, meaning that borrowers owed more money on the mortgage than the home was worth.

To continue reading: This new bubble is even bigger than the subprime fiasco

 

The FBI’s Conspiracy Theory of a Trump/Putin Collusion Has No Clothes, Paul Craig Roberts

As they say in Texas, this dog of a Trump/Putin conspiracy just won’t hunt. From Paul Craig Roberts at paulcraigroberts.com:

Unable to provide an ounce of evidence that a Trump/Putin conspiracy stole the presidential election from Hillary Clinton, the corrupt US “intelligence” agencies are shifting their focus to social media and to Internet sites such as Alex Jones and Breitbart. Little doubt the FBI investigation will trickle down to Glenn Greenwald at The Intercept, Zero Hedge, the Ron Paul Institute, Nomi Prins, Naked Capitalism, Lew Rockwell, Global Research, antiwar.com, and to others on the PropOrNot, Harvard Library, and Le Monde lists, such as top Reagan administration officials David Stockman and myself. It is extraordinary that the FBI is so desperate to protect the budget of the military/security complex that it brings such embarrassment to itself. Who in the future will believe any FBI report or anything a FBI official says?

Those behind this “investigation” understand that it is so ridiculous that they must give it gravity and credibility. They selected two reporters, Peter Stone and Greg Gordon, in the McClatchy News Washington Bureau, who fit Udo Ulfkotte’s definition of “bought journalists.” Hiding behind anonymous sources—“two people familiar with the inquiry” and “sources who spoke on condition of anonymity”—the presstitutes fell in with the attack on independent media, reporting that one former US intelligence official said: “This may be one of the most highly impactful information operations in the history of intelligence.” http://www.mcclatchydc.com/news/politics-government/white-house/article139695453.html

Wow! A totally ridiculous “investigation” is one of the most important in history. The implication is that the Russians are operating through scores or hundreds of independent media sites to control how Americans vote.

There was once a time in America when people were skeptical of anonymous sources. It was widely understood that anyone could tell a reporter anything and that a reporter could claim an anonymous source whether or not the source existed. Perhaps it was the Watergate “investigation” by the Washington Post that gave anonymity credibility. The Post’s reports made it sound like any sources ratting on Nixon’s perfidy was at risk of their lives, and the subtle emphasis on risk gave anonymity credibility.

To continue reading: The FBI’s Conspiracy Theory of a Trump/Putin Collusion Has No Clothes

The Political Class Murders Itself, by the Zman

The Zman explicates his view on the story behind the Russian hacking and influence story. From the Zman on a guest post at theburningplatform.com:

The point at which the Roman Republic moved from republic to empire is generally placed at the point when the Senate granted Octavian almost unlimited power and he adopted the title Augustus. Some historians argue it was when Caesar crossed the Rubicon or when he defeated Anthony at Actium. The implication is that once the transition was started, there was no turning back. The more useful analysis is to think of it as a process, with roots in the Republic, that evolved to the point where dictatorship was inevitable.

The die was most likely cast when the Republic began to compromise its own rules for limiting and distributing power. The system they had created was a reflection of the tribal realities of the early republic. In order to keep any one family from gaining too much power, they systematically limited the time anyone served in office. The system also forced an apprenticeship on those who went into public life. This had the benefit of making public men buy into the system. Therefore they were willing to defend it.

That meant the system had a policing mechanism to sort out enemies before they could cause trouble. An ambitious young man could not skip any steps on his way up the ladder, so once he got up the ladder, he was not agreeing to any changes in the process. Defending the system was a way to defend one’s prerogatives, but also a way to defend the system from lunatics. Verpus Maximus may be smart and talented, but he was not only going to wait his turn, he was going to do all the jobs necessary to prove his worth.

To continue reading; The Political Class Murders Itself

Commercial and Residential Real-Estate Bubble once again a Risk to “Financial Stability,” and Fed’s Rosengren is Worried, by Wolf Richter

Another bubble that’s starting to leak. From Wolf Richter at wolfstreet.com:

The Fed caused it, but it won’t do much to contain it.

Last year, Boston Fed President Eric Rosengren — considered a “dove” on the Fed’s policy-setting committee — started warning about the commercial real-estate bubble in the US and what its demise could do to banks. But in his speech on Financial Stability on March 22 in Indonesia, he added what I’ve come to call “Housing Bubble 2” to his ever more emphatic concerns.

Like all central bankers, he can’t warn publicly about an approaching problem because it could trigger the very problem he’d be warning about. In this manner, no one at the Fed saw the last bust coming. So Rosengren started out his presentation, “Financial Stability: The Role of Real Estate Values” – by clarifying this: “First, I am not here today to predict problems, but rather to suggest we continue working to head them off.

The phrase, “continue working to head them off,” is ironic because he also pointed out what has caused these problems: “very low interest rates” that were “wholly necessary” and that he “strongly supported.”

But the risks are massive.

Rosengren finds that “the root cause of the financial crisis was a significant decline in collateral values of residential and commercial real estate” and “exposures across the banking system that are correlated and sizeable.”

Real estate becomes a trigger for a financial crisis because of its high leverage. For banks, these properties are collateral. When property values tank, the collateral is impaired. Defaults rise. Then broader problems spread into the economy. Property owners experience a reduction in income. Homeowners see their paper wealth evaporate and financial stress rises. At some point, banks begin to fail.

To continue reading: Commercial and Residential Real-Estate Bubble once again a Risk to “Financial Stability