CRASH 2: A GLOBAL MORTGAGE CHAIN IS REVEALED….

Halo fellows not entirely well-met

…THAT WILL BREAK UP THE SALE OF OBAMA2

Those reading beyond the daily lies emanating from Athens will be aware that a screeching cat is now out of the bag and smelling of poo. Hellenic accountancy being what it is, whatever deal is ‘done’ with bondholders in the end, officials calculate that to maintain the country’s debts at a ‘sustainable’ level (allegedly 120% of GDP) the EU/IMF axis of confusion is going to need an extra €15bn. The truth is – and always has been – Greece is millstoneed with too much debt, too little growth and as of earlier this week, an even bigger budget hole.

Greece is broke. Does the EU have the stomach for this?

The OECD says no. The total bailout cost for Greece standing at €130bn, OECD boffins think the European Financial Stability Facility’s (EFSF) €440bn firepower is woefully underfunded, adding that the EU ‘has not found it easy to raise funds’. Or indeed, any funds at all. Somehow – and there’s still nobody with a sane answer to this beyond debt forgiveness – Greece, Portugal, Italy, Ireland and Spain need to repay a total of €700bn this year and €400bn next year.

The EU is broke. Does Germany have the stomach for this?

Angela Merkel’s Bundesbank has already coughed up €496bn to peripheral countries in trouble. Figures released last week show how its asset base has been depleted by the need to raise bailout monies….and as you’d expect, The Slog’s  Bankfurt Maulwurf is both angry and anxious. This morning, he told me:

“I have always maintained this would happen. Every month the cost of this disaster goes up and up. The German people are not being told the truth, and in my view the CDU is playing fast and loose with the Bundestag and the media. Attitudes in my industry are hardening against this madness. She [Merkel] has this massive patriotic wave behind her, but it will end in German insolvency. The time is now….or never. We must cut the cord. The dream is over.”

Although Angela Merkel has the stomach for it, Germany doesn’t have the money. Hence her appearance in Beijing, asking Wen Jaibao for help now. But he isn’t going to do anything unless the West piles in first. He has said this over and over again – but neither the MSM nor Merkel are listening.

Germany is broke. Does the US have the stomach for it?

No, it emphatically does not. A number of States are still in the red very badly; California, for instance, is relying on the tax revenues to be gained from its citizens benefiting from the Facebook flotation. Without those, chief accountant John Chiang admitted yesterday, the State will go bust – again – for a whopping $3.3 billion.

The emergence of the Tea Partiers (those folks who can see only the cup’s darkness plus some tealeaves) means that the GOP has had to come over all Ebeneezer Scrooge or lose millions of votes….and with the deficit hovering as ever perilously close to the ceiling, Obama has no room for maneouvre.

Above all, 2012 is an Election year: Obama needs every cent he can get his hands on to make things look good. The word has gone out from the Obamites in Washington: sure, we don’t want contagion blowback from Europe – but we don’t want to lose the White House either. For the politicians, Europe is a sideshow.

It isn’t for Geithner at the Fed or Lagarde at the IMF: they know perfectly well what will happen….because they too can see the mortgage chain. But I understand that Christine Lagarde has been told to extricate the IMF from further Greek exposure that involves American money; and Geithner turned up to the Poland debt session last year with his pockets immaculately sewn up.

America is broke. Does Wall Street have the stomach for it?

You bet. For eighteen months now, the Reptile House has been lobbying Washington and the regulators to let it bet on bond defaults. They are mad of course – but encouragingly, the Washington set has been holding back the pressure by saying they just can’t see how it could be safe….in the sense that if they let the bankers do such a thing, the American people might lynch them. Wall Street’s big bananas now admit that the ruse is going nowhere.

Wall Street is being told no. Does the Stock Market have the stomach for it?

In a real world, probably not. But we must factor in the fact that Ben Bernanke is not of this world. In Ben’s Universe, beard neatness and facial stasis are everything. They create confidence, and confidence can achieve anything when accompanied by more free money from the Government. Armed with a 50mg shot of Valium, Ben will descend unto the multitudes pretty soon, stare through those catatonic eyes, and spray everything with dollars. Then the banks and multinationals will hoover it all up, dividend results will be even better….and stock prices will rise.

America’s faux recovery will be in place, and an Obama White House thus ensured by a winning combo of feelgood bollocks and Mitt Romney. The flaw in this theory is that once contagion starts, it isn’t going to pay much heed to arbitrary stuff like elections and dud Presidents in search of second terms.

I believe now that the sale of the White House will very probably fall through, because the pressure from the mortgage chain won’t wait until next September. It’s possible that an international geopolitical event will intervene to change all this dramatically: there are plenty to choose from – Chinese Yuan jiggerpokery, Iranian lunacy, Israeli frustration-fuelled blood to the head, Russia deciding to turn the screws on an EU peripheral….and so on and on and on.

But one thing I think can no longer be put off by daily announcements that a deal is only days away is the ClubMed debt crisis. The situation is very, very clearly laid out for anyone to see, because the option mirages are fading rapidly in the cool light of dawn. There is no more money to be found without printing the stuff on a massive scale.

This doesn’t mean I can guarantee that there won’t be printing on that scale: there are plenty of folks in Brussels mad enough to do it. But there are no people like that in Frankfurt or Berlin. The Germans remain fixated with the Weimar Inflation: if the price to be paid for eurozone survival (in anything like its current form) is a repeat of it, not even Angela Merkel will be up for the mission. Eurozone defaults are now, in my view, a certainty.

Greece is going to break the mortgage chain, and other ClubMeds will then scupper the entire process. Whether Obama gets a Second Term is down to how skillfully Merkel, Draghi and Sarkozy can skate on thin ice while being pelted with stones by peripheral Sovereign bondholders. Sarkozy faces an election, and the German Chancellor is facing a serious rebellion from her own business and financial community. I don’t think even Mario Draghi can pull this one off alone.

As I keep saying, the Tulip Moment is coming.

Related: Why the Tulip Moment can no longer be postponed.

What The Slog is all about

 

EU SKETCH: From this point, anything is possible

The Slog interviews some experts on the subject of Sovereign Identity

Following the German proposal for a system of Gauleiters throughout the eurozone, merchant and investment banks have been quick to respond with ideas as to how the EU as a whole could be monetized, and thus wipe out its sovereign debt problem. Already, leading lights in the New York Stock and Chicago Mercantile Exchanges have begun to involve the Frankfurt Dax in a scheme to create the world’s first Sovereign Exchange Market (SEM), in which shares in the 27 EU States might ultimately be offered on various bourses, subject to the success or otherwise of the Initial Public Offering (IPO) planned for Greece on two new Singapore and Shanghai SEMs later this year.

“Basically, I think we have to view this new space as, you know, kind of like when VW bought Skoda,” explained Todd Runtwolski, newly appointed Head of Nation State Marketing at Metro-Goering-Norodny in New York. “So although nobody wants to buy Greece right on account of it’s just donkeys struggling under the weight of obese tax evaders, now the actual sovereignty has been the subject of a takeover by Merkel, Schauble, Draghi, then we think investors will see this as a one-off mega-mezzanine opportunity.”

Runtwolski…’mezzanine opportunity’

Critics point out that The Gauleiter Memorandum* represents a hostile takeover widely opposed by Greece’s current owners the Greeks, but Mr Runtwolski brushed this aside as “negadive thinking”.

“Look, we’re all here for the shareholders in the end, right?” he asked assertively, “It’s all a question of ‘are you in or are you out?’ There’s 11.5 million of these guys and they’re starving. They’ll take the money if we cut them in. And if they don’t, then we’ll cut them out. It’s a win-win from our perspective”.

Asked about how MGN would set about the knotty problem of valuation, Runtwolski added, “It’s all a question of directional money-flow. Traditionally, the German State has been associated – unfairly in my view – with a one-way upstream surge of stuff that cynics might call asset-stripping. But really that only happened in minority sectors like Renaissance paintings, national treasures and slave workers. This time we expect the wealth of Germany to trickle down to Athens. It’s simple tried and tested Reaganomics really.”

But Todd was more circumspect on the subject of rebranding.

“That’s an area of some sensidividy,” he conceded, “Greece is a fairly well-established brand with strong associations of holidays, and a very strong smell of kebabs. But in the sovereign investor space, it mainly has connotations of crooks, food-poisoning, and a widespread lack of paperwork. So I guess we’re gonna need a liddle consultancy input on that one”.

I spoke about this issue to leading Sovereign Image advisers Bellend & Pottingshed. High-flying account director Jeremy Gnome-Orrals ran the lucrative Gadaffi account until its unfortunate demise last year, but from his newly-created position as Rogue State Business Developer, he gave us the benefit of his experience.

Gnome-Orrals….bottom-feeder

“Rebranding would be essential,” opined Jems, “And off the top of my head I’d suggest something like New Hellenic Enterprises or whatever. But that’s just dealing off the top of my head. Dealing from the bottom of the pack – do we have a salute here? – Zorba Creative Industries.  We’d need to go back to the classic history as a feint to help the target market forget, well, pretty much everything after 1670 really.”

Further down the line, I asked him, could other rebranding be adopted as the Berlin-dominated EU gradually took over fiscal responsibility for every sovereign member?

“Absolutely,” he enthused, “I mean, gosh, the possibilities are endless. Belgium, you see, is pretty useless and largely thought of in terms of bureacrats, mayonnaise and chips. But rebranded as Lower Goldman Saxony…..well, the sky’s the limit.”

After the events of the last week, I’m not sure there are any limits now. We shall see.

* The Gauleiter Memorandum, soon to be a Hollywood blockbuster starring people who don’t look anything like Tim Geithner, Angela Merkel, Mario Draghi, Wolfgang Schauble, Nicolas Sarkozy or Lucas Papademos.

At the End of the Day

As the weather turns cold, very few of us are in the tent

Driving along gently winding country lanes on the way back from a supermarket trip today, I watched as the variously shaded yellow-to-brown leaves fell from the trees on either side. They seemed to me like confetti celebrating the marriage of autumn and winter, but the air temperature outside suggested otherwise: it was 21 degrees here this afternoon. I think that’s the highest I can remember during November in my lifetime.

By 4.30 pm, the air cools rapidly; now that the clocks have gone back to GMT, it seems very odd indeed to be walking about in shirtsleeves one minute and then darkness the next. I was beginning to get used to this towards the end of our stay in southern France, where autumn is well ahead of the UK’s annual leaf-dump. The way we run our lives at the moment, we can quite easily get two summers and nearly always two autumns, but this year has been extraordinary: I’ve been in one form of warmth or another since April. When you add the Australian trip late last year – and the brief African break at the end of Winter – I’ve only suffered two cold months since May 2010.

We’re both beginning to wonder whether this is entirely healthy – and not just in relation to the bank balance, or the potential for skin cancer. While walking the dogs just before lunch, we passed through a huge forest wherein you could taste autumn. The slight damp, the soggy ground here and there, overactive squirrels taking more risks on the ground in their search next Spring’s wake-up fuel….real seasons at the right time are very important. Or at least, they are to me. Flit too much between countries and continents, and you can quickly lose this important sense of everything being naturally normal.

This is especially true, I find, at the moment. Throughout life, I’ve been a vaguely neurotic mixture of joy at the arrival on schedule of nature stuff, and boredom at being asked to deal with the same problems over and over again. Over the last eighteen months, however, a twinge of fear has been in the background too. Being able to discern what’s coming is a curse. It is frustrating when others don’t see it, repetitive at times to write about it, and terrifying when one reaches the conclusion that the people in charge of making the future safe for liberal democracy (and my grandchildren) aren’t up to the job.

For some time, a national game has been played by bloggers and other assorted commentators as to what might be the best year from which to draw a parallel with 2011. I think there’s some of 1789, 1832, 1914, 1933 and 1940 to it myself: barricades, the mob, a grisly timetable countdown, deep economic depression on the horizon, and then backs to the wall. But there are many others from which to choose: Spain’s decline after selling silver in the 16th century, the South Sea Bubble in the 18th century, the coming of Bismarck and a united Germany in the 19th….and that’s just for starters.

However, 2011 is really the first 2011. Every year is unique, but very few over the last 3000 will be seen to have shaped the nature of radical change like this one. Something different is obviously being created, but as the events speed by, it feels somehow like the potter’s wheel is out of control. Bits of useless clay are flying off in all directions; and those who know nothing about throwing pottery are desperately trying to stick the bits back on again. The experienced potter knows the answer: repair the wheel, and start again. Wanted: lots of skilled potters.

The confluence of related change has been masked to some extent by the dizzying variety of big media stories. But put together after the event, they are linked in a manner that is far from accidental. If you like, a growing awareness (often through new media) has highlighted just how much malign behaviour is being practised by people who are anything from incurably narcissistic to completely bonkers; and alongside this, how lazy, agenda-ridden, censorious and gullible most of the mass media are in communicating important information. In short, the world has looked increasingly like a stitch-up, with almost all of us outside the tent.

The Newscorp saga is shorthand for what large commercial organisations, devoid of ethics to the point of depravity, get up to on a routine basis…and how they will routinely lie until their guilt is beyond doubt. But it has also focused many minds on the corrupt, anti-social and perniciously clubbable links between politicians, bankers, media proprietors, police and bureaucrats. Like the MPs expenses scandal, it has – at long last – demonstrated that the very powerful can be brought to their knees, and perhaps even through the tall, dark metal of prison gates. But as often, it has revealed the entire process of government as something of a sham. While in and of themselves like chalk and cheese, the Tea Partiers and the City occupiers are both signs that distrust of all things Big is growing.

The arrival of the EU’s painfully slow meltdown has in turn made pin-sharp the previously blurred line between a political class and an economic form. For myself, I sense an accelerating process by which power in all its forms has been gravitating away from socio-political leaders and towards multinational finance. In the final analysis, there is a remarkable similarity between Rupert Murdoch telling Tony Blair to bomb Iraq, and Brussels telling the Greeks to take their medicine. What starts as hidden persuasion becomes increasingly brazen and arrogant, until eventually its grubby fingerprints are left all over the place for investigators to find….and the really evil motivation behind the influence comes to light. Once again, however, there is a sense that all this is being achieved without asking us.

The two most deluded groups of the year – Superstate politicians and bankers – have come face to face in the eurozone battle as never before. Frau Merkel has, I think, grasped very well that the survival of the euro (in her eyes) is as much about poking financiers in the eye as it is about some grand project; and sovereign lenders have steadfastly refused to budge when it comes to debt forgiveness. Despite all the fun we have about how hopeless, pompous and generally patronising the europols are, the real reason the EU debt crisis has lasted so long is that it’s been, effectively, a tug-of-war between two almost equal teams. Last week, the pols were reduced to telling whoppers about the IIF’s promise to deliver 50% haircuts. Creepily, that does tend to suggest that the money-men may well triumph in the end. Perhaps – the jury is out on this one – George Papandreou decided on UDI last summer, and thus bowled today’s googly as a way of saying to the banks, “Given half a chance, I can bury you all”.

Last but in no way least, 2011 has been the year of growing concern about personal privacy – in particular, the threats to it represented by State/business surveillance on the one hand, and cyber attacks on the other. It was the year that Wikileaks discovered, some four hundred years after Machiavelli, that those running State diplomacy are not very nice…and decided to do something about it. And 2011 also taught far more people that the Newscorp scandal was just one relatively small dimension of technology prying into our secrets. The overall result has been the same: in whatever direction it might be at any time, it is now clearly open season on secrets for the foreseeable future. And in that fieldsport, the UK is still in the Stone Age.

Globalist media, business, banking and government have been held up to the light and, in every case, shown to be weak, devious and – above all – devoid of ideas about how to mend broken societies….or able even to accept that mercantile laissez-faire capitalism is not living up to expectations created for it in the 1980s – and almost certainly never could. Themselves locked in a power struggle, these tribes have neglected to learn the degree to which Asia is removing our wealth – towards a more equable share-out – and yet is, at the same time, gagging to buy things of quality and provenance we might make for them.

So 2011 has been a year in which the all-important penny dropped: that uncertainty is now the only certainty in a world where trust, solutions, bravery and radicalism are all largely absent. The world really will never be the same again: 2012 will be the year in which the Tsunami hits the shore, and those who survive wake up to discover that their homes and possessions have been washed out to sea. Once the plebeian shock dissipates, those living in the privileged uplands will face an era in which, for the first time since 1917, they will have to justify their position – or be cast out.

The average person’s terror of irreversible change leads them to denial in many areas of life – from belief in police effectiveness through to a false lifestyle based on plastic cards. Read the American financial press any day, and the tone remains one of implacable Business as Usual. Most central bankers are putting out the same tosh. For all his faults, only Mervyn King has been halfway honest about warning us of the nightmare to come. Denial and dishonesty have dominated 2011. 2012 will see both these cousins in mendacity threatened as never before.

This has to be a good thing in the longer term. But in a future where the weakness, corruption and useless process of our leaders has messed up more and more of our lives, there are always going to be bombasts keen to tell the Sun-reading couch potatoes that they could make life good again. ‘It couldn’t happen here’ has been the catchphrase of the British for as long as I can remember. It doesn’t apply any more, and the sooner we wake up to this, the better.

All at Sea

We are the foreign office, and we are all at sea

We f**K things up from Athens all the way to Tripoli

                                                                                                                   (Ethel Slog, anon)

Having exerted zero pressure upon, and made minus 5000% input into, the narcissists screwing up Greece while lining up Spain and Italy, William Hague’s foreign office continues to march stoutly backwards from its hubris in Libya. The war that was “as good as won” six weeks ago (according to the Telegraph’s Government cypher Con Coughlin) is now bogged down in stalemate – if you can be bogged down in sand. ‘The rhetoric on Libya is getting weaker every day,” wrote Ben Brogan this morning. Not only does the FO not know whether it’s coming or going, what the Coalition says depends on whether Hague is going somewhere, or just coming back. I think Bald Willy is the only Foreign Secretary I remember where nobody knows where he is at any given time, or what one earth use his being there might be.

His untrustworthy lieutenant Liam Fox, meanwhile, can’t make his mind up whether Colonel Gadaffi is staying or going. I thought this observation from yesterday by our Liam was a corker:

“”The key for the Libyan resolution will be whether or not the close circle around Colonel Gaddafi realise there’s no point in investing in him, he’s a busted flush, he will sooner or later have to leave power”.

I’ve always been firmly of the opinion that Fox is a clown, but that ‘judgement’ clinches it. Gaddafi’s circle has seen the West chuck jets, tanks and several divisions of the SBS advisory UK ground troops in there. What it hasn’t seen is any sign at all of power slipping away from their man. What the folks round Muammar can see, however, is Europe and the US going bust, losing interest, and then losing their way.

The near-universal incompetence of government now would be just about bearable if the ‘mainstream’ media didn’t keep giving them quite high marks out of ten. They clearly don’t get out enough: go forth into the streets and ask ordinary Brits about Cameron, Osborne, Hague, May or Hunt, and the air will be replete with Anglo-Saxon from 20% of those you talk to. But therein lies the rub: the other 80% will say, “Ooo?”

CRASH 2: US AND EU TRAPPED IN WEB OF GREEK DEBT

West’s governments face war of attrition in four dimensions

No doubt it is Sod’s Law, but at the very time when we are at last paying attention to the Murdoch cancer we’ve been growing for forty years, an enormous double-decker truck is rumbling towards us – and hardly anyone seems to have noticed.

Sources in Berlin are tonight confirming that Frau Merkel’s Government is retreating in the face of banking intransigence about Greek default. And in turn, US sources are talking about rising panic in Wall Street regarding an unwinnable war on two fronts: one against Washington’s inability to agree on a debt ceiling, and the other against horrendous eurobank insolvency insurance claims they’ll have to pay out on, as and when Greece defaults.

I agree, it doesn’t make sense: but bankers are bankers, and they want cream on the jam on their bread buttered on both sides: they have put Brussels on alert with a clear demand that taxpayers should cough up for 60 cents on every dollar of Greek debt…..while they pick up at most 10 cents of the hit; and they’ve told Wall Street that should this bargaining ploy fail, they want every cent to which the US insurance entitles them.

This has (as you’d expect) had the phone satellites between Washington and Berlin jumping out of orbit on the subject of who is or isn’t going to pay for what and by when. And the equally predictable result is that it is going to be taxpayers or bust. Otherwise, the US is screwed royally either way.

This is the scenario: Germany’s Wolfgang Schäuble is admitting, I understand, that the most the banks are prepared to wear as a hit is €2.5 -3 billion. The EU needs, over the next few months, to plough in around €120billion. The IMF appears to have told Brussels that without that commitment, they won’t put any more monies in – indeed, the IMF’s articles won’t let them. But if they don’t, then of course the win-win banks will call in their Wall Street insurance.

Meanwhile, the US debt ceiling that was a done deal ten days ago is now completely undone.

Push is coming to shove. And nobody knows what to do.

If only ecoli could kill the EU.

Ecoli bacteria living inside something, the nature of which is unclear

Last time on ecolimania….

It was a cucumber from Spain, then it was a bean sprout from Germany, then it perhaps wasn’t a bean sprout from Germany, then it almost certainly was, and now…yes, it’s a bean sprout and a cucumber, but we don’t know where from.

What a wonder to behold is the EU. What a haven it is for slapdash, half-baked scientists who variously predict volcanic clouds that wreck airline industries, tell us all how great biofuel is for the environment when it isn’t – thus pushing up the price of food, say parabens cause breast cancer when they don’t – very nearly bankrupting the cosmetics business, and can’t tell a Spanish cucumber from a German beansprout…thus costing all of us a fortune in reparations for the farmers.

And what a wonderful life it is to be a farmer in the EU. Not only do you get to ignore all the safety and hygiene rules if you’re Portuguese, and get endless CAP subsidies if you’re French; you can also block autoroutes and demand higher reparations when things don’t go your entirely unelected way.

How marvellous to be a bankercrat in the EU, where you gaily dispense cheap money and encourage unwise lending, and then become satisfyingly sanctimonious when a combination of corrupt greedy Government and corrupt greedy Goldman Sachs sends every mammory in the Union pointing skywards. Yes, a banker’s paradise where whole countries must starve to stop you going under because you hard-sold them credit they didn’t need anyway; and a bureaucrat’s wet dream where life consists of going to endless meetings where everyone disagrees about what to do….beyond kicking the can down the road apiece.

But what a foul-smelling, invasive crock of merde it is to be a law-abiding citizen of the EU. Where every vote you cast is ignored. Where every border that was to be no more is full of cameras recording your eyes. Where it costs your country £118 billion for the privilege of membership – and at the first sign of advantage, they ban imports of your produce. Where all the poor folks flood to your shores, because unlike most other members, you obey the rules. Where a very few rich folks pauperise the ordinary folks, but the beatific faces in Brussels smile upon this, and see that it is good. Where, at the end of all the bollocks, you default and so they take your sovereignty away. And where finally, after extra time, it’s a game of meaningless football between 27 players, and then the Germans win.

This morning, Germany’s Wolfgang Schauble said the EU, the ECB, and the IMF got it wrong in Greece. Greece, he opined wisely, now needs to default. But his Chancellor disagrees. His central banker disagrees even more. And the ratings agencies say any debt forgiveness or rescheduling will constitute a default. And the IMF says it can’t lend to a country that is going to fail anyway, because that’s against the rules. But the central banker and the IMF say oh alright then if you insist, but only this once.

This is a loop. Go back to the beginning and start reading again.