CYPRUS: Why we should be putting Mario Draghi and the EC in the dock

Treason in Frankfurt & Brussels

At the risky of becoming corny about the Cyprus situation in particular, and the Berlin-am-Brussels eurozone obscenity as a whole, I thought it might be helpful to point out some damning evidence of how we are witnessing dereliction of duty on a grand scale, and a wholesale rejection of the principles upon which the original EEC was founded.

From yesterday’s Financial Times:

‘The independent and unelected ECB has been a key player in all four sovereign bailouts in the eurozone, through its non-voting seat at the “eurogroup” meeting of eurozone finance ministers that hammers out such rescues; and through its role in the “troika” with the European Commission and International Monetary Fund in subsequently monitoring bailout reform commitments.’

The ECB’s answerable-to-nobody-elected-or-otherwise Mario Draghi has been completely absent from public life, and media utterances, for a disturbingly long time….during which illegal confiscation of bank deposit funds, skimpily clothed in the euphemism of tax/levy’, is about to be enacted against anyone on Cyprus who has more than €20,000 in a bank account there.

On March 6th 2013, an Italian University posted this at its site: ‘Due to unforeseen work obligations, the ceremony conferring an honorary degree to the President of the European Central Bank, Mario Draghi, has been postponed. The new date will be published as soon as possible.’

Draghi’s last appearance was at a press conference twelve days ago. Because of work obligations he has been obliged to disappear, but Cypriots are far from obliged to him for the haircut that is being reconfigured by the hour. I think he has an obligation to EU citizens to come out on the balcony and say something. But last Thursday – in a meeting billed as obligatory – Draghi gave EU leaders a crash course in macroeconomics, expressing his deep concerns about “low productivity and high labour costs hurting the eurozone’s prospects.”

The meeting started at 11 pm at night.
Draghi said to his audience that there were two ways to close this gap: either reduce labor costs or raise productivity’. I understand that not once during the presentation did he mention Commission actions, Berlin jiggery-pokery, f**kwitted austerity policies, or banking insanity as in any way “hurting the eurozone’s prospects”. It would be hard to pillory Draghi’s ‘analysis’ more succinctly than Ben Davis of Hinde Capital, who notes:

‘In fact taxpayers have consistently bailed-out the private sector in full. The Cypriot bank rescue is no exception, except this time there is a bail-in – and ironically again not of bondholders but of the depositors first. This is a direct contravention to the usual legal claims on the capital structure.’

I hereby accuse Mario Draghi of illegally subordinating Greek bondholders, neglecting his duties as the custodian of taxpayers’ money, approving illegal deposit confiscation, and hiding from the consequences.

At the same time, it’s hard to marry up Draghi’s midnight pitch with the principles upon which the EU was founded.

From The Treaty of Rome, 1957:

‘AFFIRMING as the essential objective of their efforts the constant improvement of the living and working conditions of their peoples, INTENDING to confirm the solidarity which binds Europe and the overseas countries and desiring to ensure the development of their prosperity, in accordance with the principles of the Charter of the United Nations, to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living, and closer relations between the States belonging to it.’

I’m bound to say, it seems to me there are a few omissions in this mission statement. Irish, Portuguese, Spanish, Italian and Greek citizens have all had their standards of living crushed to pay for mad ECB lending policies, mad banker betting, crooked MEP expenses, and the incompetent largesse of the Commission.

There also appears to be nothing in there about the whole thing being a Franco-German club, and screw the hindmost.

Nothing about backstairs deals to get Italy and Greece into the eurozone in return for favourable export deals for German arms.

And, of course, there is nothing in there about everyone joining a Fiskal und Politische Union run from Berlin, crap Japanese doggerel poetry being emitted by Belgian arses, and a Common Agricultural Policy that is indestructible.

Were we to bring 1957 up to date with the EU’s current aspirations, in fact, the principles would read like this:

‘HIDING as the essential objective of their efforts the inevitable reduction in the living and working conditions of their peoples, while INTENDING to confirm the solidarity which binds politicians and bankers and global multinationals to ensure the development of their profits and dividends, in accordance with the principles of the White House, Chancellery and ECB, and thus  to produce throughout the Union a disharmonious destruction of economic activities, a continuous and balanced contraction, a dangerous acceleration of instability, a plummeting standard of living, and the ultimate souring of relations between the States belonging to it.’

I hereby accuse the élite politicians, fascist administrators, protectionist Unions, greedy bankers and media moguls in the European Union and elsewhere of twisting the original ideas of peace, liberty and equality that behind the Treaty of Rome into a gross monster of control freakery hated from Dublin to Drama.

There is something about every organisation built on (or perverted by) hubris and hypocrisy that requires it to have words in the State’s title that are the opposite of reality on the ground. The Chinese People’s Republic is not run by the people, the Soviet Union was held together by brute force and eventually disintegrated, the Deutsche Demokratische Republik wasn’t democratic at all, and even the Irish Free State spawned a fiercely anti-libertarian military wing over time.

The European Union, however, is unique in that its features bear no relation at all to the astonishing and wonderful variety of European cultures, political ideas and agro-industrial economies across its 27 members, and (not mutually exclusive of that fact) it is about as united as Sunni and Shia Muslims. It is thus a misnomer in every respect.

It should have tried instead to be what its citizens wanted it to be: a community in which all could share, grow and learn – from the best of (for example) French administration and cheese, German workforce relations and beer, Italian cooking and opera, Irish marketing and blarney, British advertising and banking, Portuguese hospitality and fishing, Spanish Rioja and football, Dutch reclamation and linguistic skills – and of course, Greek architecture and seafaring.

What we have instead is a rigid cacophony of anally inhuman rules – courtesy of Belgian chocolate soldiers and wannabe German generals – aided and abetted by crooked élites from London to Athens.

Such a shame. Che peccato. Quelle dommage. Wie Schade. τι κρίμα.

Earlier at The Slog: Denials and delays in Cyprus

Forging the truth: the internet was meant to set us free…

…..but now it’s able to counterfeit reality

What is real? Who is real? The Invasion of the ID Snatchers at The Slog has achieved, in some ways, exactly what the perpetrator(s) hoped to stop: raising awareness among all Web users that ‘Trolls’ can no longer be dismissed as only Lee Harvey Oswald style nutters. Those like our schizoid friend here with 17 IP addresses (and as many identitities as his usefully empty brain can come up with) can’t be quite so easily explained away.

At the moment on this site, visitors are confused as to whether MaxC, Liz O’Donnell, me or a hundred other contributors are who they say they are.

There is one short term solution which doesn’t involve me pre-comment approving (see earlier post today) but will at a str0ke nip this outbreak in the bud. So I’ll be using that when I once again have 24/7 access to the site.

Medium to longer term, let’s just say I’m talking to one or two people who this Invasion Fleet would have you believe are figments of my  imagination.

I am, by the way, truly reassured that after nearly 72 hours of limited access, there seems to me a predictable (and predicted) march towards Berlin playing the ‘ordinary German voters’ card to put Greece under yet more pressure.

It’s too close to call at the moment. I will post about it as and when I have solid information of some interest to genuine Sloggers.

Is Microsoft even madder and more autocratic than the EU?

So there I was, posting away merrily, when my sentence disappeared, Word disappeared and on came Windows to tell me it was reconfiguring stuff to download stuff, none of which I wanted.

“This could take several minutes,” it announced. It took twenty. Then my netbook wouldn’t start.  So I chose Repair startup. It told me that some f**king clown had loaded some software inappropriate for my netbook, and this had now damaged the startup settings. It said they would now atempt to repair their own torpedo hole.
“This could take over an hour,” another panel said. But instead, it took five minutes to say it couldn’t repair the problem and I should get in touch with my hardware manufacturer.

So that’s it. Until I get back to my laptop, the Slog will be dormant. But Microsoft, maker of universlly sh*t software, can pull this kind of stunt because it is beyond the reach of the law or the will of politicians to stop them. This post comes courtesy of a chum’s laptop; and so while I’m here analysing the nature of f**kwits, we might as well talk about the EU.

Manuelo Barroso, I’m told, is gaining power in Brussels. The reason? “He rarely makes mistakes and never says anything radical”. So there you have it: how to become Holy Brussels Emperor without really trying.

In Greece meanwhile, the property tax is about to be doubled, and the can of worms Coalition at the top is doing the Troika’s bidding without courage or fairness, this being the opposite of without fear or favour. But Evangelo Venizelos says the horizontal cutting is now over, and that the economic programme of 2012 will proceed as planned, “with the highest degree of social sensibility, and special payrolls [judges, state hospital doctors, military personnel and others] won’t be affected.” But in 2013, the Fat One promises, “there will be no horizontal cuts.”

I’m thrilled about this in a baffled sort of way, but confused about the social sensibility bollocks. The addition of the emergency property tax to electricity bills in 2011 and the inability of many people to pay either the Greek Public Power Company (DEH) bills or the emergency tax. Greek  citizen debt has skyrocketed to 1.1 billion euro in unpaid bills.

However, the management of DEH granted themselves a family allowance of 3,500 euro per month. That should allow their families to avoid penury while evading tax.

In Spain, full bailout is about to happen (if Berlin is still up for it) and Sicily looks as if it might up anchor and declare independence from Italy, possibly to form the People’s Congress of Cosa Nostras. The worse the ClubMed economic data gets, and the more surging export figures emerge from Merkelania, the more money flows to the safe North and makes a ClubMed collapse inevitable.

Christine Lagarde’s reaction (under orders from the White House) is to stop lending at all to the eurozone. David Cameron’s is to demand some sock pulling and sleeve up-rolling. But Mario Draghi has come out fighting, saying that the euro is “irreversible”. If he means by this that it has no reverse gear, and thus cannot be stopped from ploughing into an ocean of smelly-doo-doo big jobbies, he is correct.

More on Olympic disorganisation later if I can get access.

 

EUROBLOWN: As the lights go out all over Greece, now at last Berlin moves towards Eurobonds

“Oh very well then….if I must“

Frankfurt, Obama pressure tells at last

As the union representing drivers of touring buses starts a four-day strike at the height of the season,  public hospitals begin running out of medicine  after pharmcos demanded cash to deal with the Greek State, and power for lighting and cooking stands under threat because Athens hasn’t paid the bills, Angela Merkel has (at three minutes past metaphorical midnight) began to budge on the issue of common responsibility eurobonds.

It bears repeating before we go any further on this piece that these shortages are the direct responsibility of the Troika, not Greek civil servants or politicians. The Troika now takes the overwhelming majority of all decisions on who gets paid with bailout money; and in every case, bankers come before cancer patients and old people in need of food and warmth.

The Slog’s favourite source in the Frankfurt banking sector suggested to me late last night that much of the pressure came from Mario Draghi (whose European Central Bank is based there) and some pretty serious jumping up and down by private Bankfurters. But the Bundesbank is – not surprisingly – solidly against the idea until all 16 eurozoners have signed in blood to a deal that severely limits Germany’s responsibility – see the German Finance Ministry leak published in a Slogpost of last week.

But contacts in both Paris and Washington disagree on whose was the most telling influence, saying that – at Geithner’s near-desperate behest – Barack Obama threatened Berlin with dropping Germany’s share of US trade far down the list of Favoured Nation States. That’s a fascinating development, because Forbes only last week wrote this in relation to what Obama should do about Spain:

“An American President would know how to say to Angela Merkel – if you do not compromise, if you do not  resolve this, then we will begin sidelining your companies from our high speed rail projects; we will make it tough for you to sell luxury cars; we will review procurement procedures to eliminate your companies from our public tenders. We will not relent until you do.”

There is no way the electioneering Obama could be seen to be weak on euro-contagion, and so he has acted. Good for his campaign, bad for the Pentagon and the oil business who had other plans for Greece…and if the truth be known, still do.

As always with Berlin, however, there’s a catch: the Chancellery signalled that it may be open to euro-zone bonds or further support for the region’s banking sector, but that would depend on other countries agreeing to transfer more power to Brussels.

A late adman friend of mine, when asked what the ultimate advertising claim was, told the questioner, “Buy this thing or you’ll die”. This is indeed the deal that’s on the table here. But my God, how much time and taxpayer money all this hubris-fuelled denailism has cost. It would be nice to think that some day those responsible will be brought to book for it. But inhaling without further action is not recommended.

So: Obama blackmails Berlin, and Berlin blackmails its eurozone partners. They used to call this diplomacy.

The Slog wishes to recognise the enormous value added to this piece by Sloggers in four different countries.

Related: How a currency zone we’re not in wiped out 80% of Osborne’s austerity drive

At the End of the Day

Practically every Western State of any eminence is currently suffering from politics that are divisive – rather than just showing where the division lines are. All of them are run by a political Establishment that hasn’t renewed itself for decades. And most of them are being run by Coalitions.

While this is an obvious thing to remark, we still need a convincing explanation for it. I think I have one – I think most sites like this one share it to one extent or another – but so far the ‘conclusion’ about how we are ruled in the 21st century (and why it doesn’t work) has failed to break out into the depoliticised mass market.

The following are ‘democratic’ States I would describe as capable of having a massive influence on the economy and money-transmission systems of planet Earth: the Unites States (sheer size), the United Kingdom (banking centre), France (bulwark against Merkelism), Australia (raw materials), and Greece (raw materials and financial contagion).

They are all divided right down the middle between the hypocritical and meaningless divisions of Left and Right. And they all have small oligarchies running that show who – because they protect their positions – utterly fail to represent their constituencies at large. Republican, Democrat, Labour Party, Conservatives, UMP, Socialists, Labor, Liberals, and PASOK, New Democracy. The people they represent – all of them – are the people with the kind of money, organisation, and communicatory power to make a difference to opinion generally, and elections in particular: globalist multinationals, banks, media conglomerates, Internet Service Providers, and bureaucrats.

What have we discoverdd since 2008 about the way these people are treated by government? Well, large global concerns pay on average a third of the tax rate enjoyed by the rest of us; banks that lost money through their own reckless stupidity have been bailed out by the rest of us, and starved the businesses of the rest of us; media conglomerate crime has been protected by both legislators and policemen in their pay; ISPs provide risible service, and carte blanche to close down, ban, ignore and even demonise users; and in the UK especially, bureaucrats have enriched themselves at the expense of the public purse to the tune of £1.3 trillion in pension obligations.

This is the human ‘tribal power’ model of social anthropology: four or five key families with the alpha genes tolerate the Chief and constantly compete to replace him, while the rest of the tribe or ‘pack’ are kept reasonably well fed and distracted….and thus happy with their lot.

The also-rans of higher animal species beyond Homo sapiens do introspect: but rarely to the point of influencing very much in terms of the pecking order. Humanity is different because it has language, printing, and sophisticated media for communication. Thus, to go all Geithner for a second, ideas can be leveraged. If one columnist invents a phrase or word – like Sloane Rangers or Yuppies – 300 million people will know about it within a short time. What the internet has done is reduce that time from years to hours.

This gives ISPs enormous power to select and censor information, and that in turn attracts the envy of the security services – organisations set up to ‘defend the State’ – by which they mean ‘protect the oligarchy’. Once the oligarchy is so unassailable as to keep any intruders out, it becomes stale, smug, mediocre…and incompetent. The vicious circle now comes into play, for the more process-driven, fruitless and incompetently administered Establishment policies are, the more ordinary voters and taxpayers become angry. They therefore have to be watched via surveillance cameras and £13bn GCHQ digital monitoring programmes 24/7.

Thus one tiny group gets infallible protection, and the 93% get the crumbs. To rationalise that reality, wombats like Milt Friedman come along and explain how this is the only way to create wealth. But no matter what degree of bollocks is applied to the attempt to make red green and up down, the practice of The Law is the obvious giveaway.

So it is that after getting on for 500 days of Hackgate, not a single Newscorp, police or government apparatchik has been so much as placed in an official dock…let alone tried. But when those at the bottom – badly parented thanks to mad social engineers, and rejected by the accountancy model of capitalist social responsibility – decide to torch neighbourhoods and steal things they’ve been told they should aspire to, 3,420 miscreants get caught, tried and imprisoned within weeks. (And of course, the media point out how far-Left elements were working these poor stupid people from behind. Which they are…but why does that excuse exclusion? It’s a result of exclusion isn’t it?)

Why does any of this matter? For one thing, in Greece it has started to break down. Over the last ten days, young voters there have have realised that they can defy the self-interested 3%. The Greek and Brussels oligarchies have in turn seen this happening – indeed, spied upon its occurrence – and, I remain convinced, will do whatever they can to derail its progress.

It matters in America, where the self-appointed elite let a tame black man into the White House. Their antidote for this empty suit is Mitt Romney. It matters in the UK, where a Prime Minister who has lied to Parliament on several occasions now tries to defend a slimey careerist on grounds so illogically ridiculous, the media barely know where to start in deconstructing it. It matters in France, where (having torpedoed one opponent) the Sarkozyistes are now busily engaging the services of bankers and Germans to demonise the new challenger. (They needn’t worry: Hollande is not exactly a game-changer in my book). And it matters in Australia, where the truly appalling Labour Stateist Julia Gillard came to power and stays there on the basis of a grubby agreement with mining conglomerates.

But above all, it matters because these clowns are in power to do as they’re told, not to address the profound problems facing their respective nations.

America’s debt, and sociopathic banker elite, are driving the country towards inevitable ruin. The weakness of its banks and dependence upon an imploding EU make the UK a hugely vulnerable nation in turn saddled with gigantic debt. France is a nation suffering a crisis of identity, an increasingly bellicose neighbour, wasteful bureauracy and perhaps Europe’s biggest exposure to Greek default. Greece finds itself surrounded by malign forces ranging from the Troikanauts to Recep Erdogan. And Australia has an overdependence on mining exports to China – coupled with a frigthening property bubble – that will give it, in time, the sort of economic and fiscal descent to make Greece’s demise look like a gradual incline.

My soundbite tonight is this: the faster the descent, the greater the dissent. As the Greek tragedy also befalls first Spain, then France and finally us here in the UK, then – when they are hit with a vicious right-hook in the pocket – the sofa dwellers will finally rise up and o something.

But my recurring fear is that they will go for somebody horrible with a nice line in “Let me take you away from all this”.

EUROBLOWN: The grisly necrophilia of the mad elites is merely the overture.

‘Lagarde praised reform efforts by Italy’s government and said market confidence had improved since Rome agreed to enhanced surveillance by the IMF. She also saw progress in Spain.’ (Reuters website this morning)

Veteran Sloggers will know that I had Mme Lagarde taped as a prime example of divine idiocy in human form way back during the days when she oversaw France’s descent into unrepayable debt. Somehow – and I’d imagine DSK would very much like to know how – she clawed her way up to the IMF job. And there she sits today, a person still incapable of exponential extrapolation, saying that Italy is improving and there’s progress in Spain.

Buoyed up by Chris’s remarks, investors pulled 100bn euros from european bonds. European sales by Fiat, Italy’s largest vehicle manufacturer, tumbled 26% to 81,469 cars – the highest drop in Europe. And Spain faces an important test today with its planned auction of 12-month and 18-month treasury bills….after yields topped the 6% marker again yesterday. Entirely understandable market concerns about Spain’s position mean that the nation’s borrowing costs are now higher than they’ve been all year.

What we have here is three dead bodies, my friends, called Greece, Spain and Italy. And how are the euro-elites dealing with their disposal? Well call me unpleasant, but it looks for all the world like necrophilic anal intercourse from where I’m sitting.

My lead piece yesterday concerned the pretty unsubtle Troika attempt to ignore the citizens again in Greece after the elections.

Angela Merkel opened her campaign to win back Germany’s most populous state in May 13 elections by appealing to voters to endorse her message of austerity. She offered ‘no respite to Spain in its debt reduction schedule’.

European officials travel to Washington this week seeking a bigger global war chest to combat the debt crisis as Spain’s government battles to quell renewed market turmoil over its finances.

And she who sees only improvement and progress will meet with frantic EU officials in three days time, where it is guaranteed that crisis-fighting resources will dominate talks at the IMF’s spring jolly in Washington from April 20-22. Because everything is going so well, Lagarde has dropped her bazooka requirement from 600 to 400 bn euros (might as well be realistic). Only faraway Japan is going to bazooka her firewall-war chest….with $60bn. Washington, however, insists that Europe has all the resources it needs to do the job itself.

Some of this may look to the lay-reader like help, but in reality it is necrophilia – a last ditch attempt to ‘show’ the markets that the Troika will triumph in the end. This triumph will involve stopping debt contagion hitting US banks on Wall Street, US banks in the EU, and US banks in Asia. It will involve keeping $300 trillion of self-created debt out of the real world, in order to save the perverts who created it in the virtual world of obligations and derivatives cut every which way and then some. And it will do this by engaging in sexual congress with dead people. Not until every last ‘consumer’ has been rendered unable to consume will the next stage begin.

Do the elites around the Globe know this is unlikely to succeed as a defence strategy? I’d say Draper Osborne probably doesn’t – he pledged £10bn of our money to Frufru Lagarde yesterday – but aside from him, pretty much everyone else does. That’s why lots and lots of preparations are under way. Once again, I urge you all to simply record the facts, not dismiss this as conspiracy theory. Having shagged all the corpses but still not achieved a satisfactory level of satiation, the Masters now plan to ensure that any gobby serfs are kept well in their place.

The German Government has a ready stock of plain banknote paper it bought ahead during 2010. It has also passed EU-illegal laws keeping all ClubMed paupers from getting their hands on German welfare money.

 Madrid has threatened to seize budgetary control of wayward Spanish regions as early as May if they flout deficit limits, officials said yesterday. And new laws there have been introduced to criminalise online/texting incitement to disorder.

In the UK ten days ago, Home Secretary Theresa May tried to sneak through Parliament a draconian GCHQ package allowing for blanket suveillance of all online activity. Caught at it, the Government back-tracked hastily. But they’ll be back soon enough.

And level-headed Ed in Houston, in response to The Slog’s Sunday Essay last weekend, offers this as a response:

‘ The US seems to be preparing now for anarchy. Homeland security has purchased hundreds of millions of rounds of hollow point bullets, to be used domestically. Bullet proof check point stations are being purchased to control the flow of the populations, the
UL 752 BR. And you probably heard already that the government is implementing a system to that will allow any mobile phone to be remotely disabled, necessary for the control of the citizen’s communication during the anarchy.’

Hatches are also being battened down in all the key transactional areas. Gold, as we have seen, is being capped to block off any escape route once the US stock market collapses.

 

 

As the FT reported yesterday, clearing houses and other central counterparties that handle complex securities transactions will be required to maintain enough capital and liquidity to withstand the simultaneous collapse of their two largest users under new global rules announced by securities and payments regulators.

But meanwhile, undeterred by this plunge into a potential abyss of mediaeval poverty and martial law, the drongos who caused this mess are still at it. Yesterday, Italy’s stock market regulator fined André Santos Esteves for alleged insider trading, just days before the Brazilian billionaire is to launch a high-profile initial public offering of his investment bank, Banco BTG Pactual.

I’m afraid there will always be some people in the world who simply are too feral to deregulate. In dealing with them, I suspect a better approach would be to strangulate. But no doubt wiser voices than mine will prevail.

 

EXCLUSIVE: OIL – THE REAL MOTIVES BEHIND THE PRICE INCREASES

In this Slog special:

How the numbers on oil supply disruption don’t add up

Why the IEA doesn’t believe them

Why and how oilcos are profiting from the spin

What links Iran, Nigeria, Israel, and Greece in US foreign policy

Why Obama wants to open up the reserves, even though they aren’t needed

The carrot he’d like to offer the oil business to ensure his re-election

An in-depth investigation by The Slog reveals that disruptions in oil supply have been massively hyped – and used as the cover for naked oil company profiteering, US Presidential politics, market speculation, and broader geopolitical aims.

The reason I’ve waited until now before posting anything about the oil ‘shortages’ – and subsequent price hikes -  is that I truly could not get my head round them. It appears as of yesterday that the US, UK, France and Japan are thinking about starting talks to release some of their strategic reserves. Yesterday morning, the FT reported, ‘Industry officials said the four countries were quietly drawing up contingency plans for the release, which could surpass the size of last year’s use of the strategic stocks to offset the shortage triggered by the war in Libya.’ As the FT is wrong about almost everything these days, I decided to dig a little deeper. Having already invested a couple of weeks in the energy subject, it seemed the right time to do it.

Throughout the ‘liberation’ of Gadaffiland, I kept on seeing this statistic telling me that Libya produces just 2% of the world’s oil. So even if Libyan production had stopped dead – which it hasn’t – I figured that, in a global economy not exactly bounding along at the moment, there wasn’t a lot to worry about. To offer a comparison, oil production dropped by about 1 million barrels a day in 2005 when Hurricanes Katrina and Rita forced companies in the Gulf of Mexico to shut down many of their wells. It was a disruption, but not an economic catastrophe. The total output from Libya is roughly 1.6 million a day. At midpoint last year, it was estimated that the world had a surplus of some 4 – 5 million barrels a day.

Hmm. Maria van der Hoeven, the International Energy Association’s (IEA) executive director, claimed only last week, “As no specific supply disruption is currently under way, we are not planning any co-ordinated actions at the present time”.  And earlier this week, Business Week talked about ‘resurgent Libyan oil exports’.

The very latest ‘reason’ being offered for all this panic floating around the MSM is the gas leak in the North Sea’s Elgin platform. But all the price rise malarkey was taking place long before that happened. Late last week, Reuters suggested that, ‘Civil unrest, adverse weather and technical glitches disrupted 1.2 million barrels per day of global oil output in March’. But it added that such a combo was ‘rare if not unique’…and it didn’t, as such, give us a clue about where all this bad weather and glitching had happened.

However, the investment site thisismoney.co.uk recently instanced one example: ‘Disruption of supplies from unstable oil producer Nigeria’. Now this is more like it: 10% of US oil is imported from Nigeria, which is capable of producing over twice as many barrels per day as Libya. But other sources are quick to point out that Nigerian production is set to increase later this year with the sale of new drilling rights.

Another obvious ‘culprit’ is Iran. At 4 million barrels a day capacity, the Tehran regime could produce twice as much again as Nigeria, and has the third biggest reserves in the world. But because of its obsession with developing nuclear power for peaceful purposes (the way you do when you’re sitting on more oil than anyone could ever use) investment in oil machinery updates has lagged behind the search for atom-splitting street lights. Thus, since roughly early 2010, it’s been producing about 2.2 million bbds. And in recent months, that’s dropped a further 300,000 barrels.

Once again, it doesn’t add up, does it? The world has lost 2 million barrels from its fourth biggest oil producer – and nary a peep of pain from the West. Now it loses 300,000 barrels, and immediately the price sky-rockets.

Yet again, the IEA said that it “does not see any significant disruption”. I italicise the word ‘see’ there because I think it is quite significant. It’s in the present tense, and there’s no ‘think’ or ‘maybe’ about it. The IEA is politely saying it doesn’t know WTF the four countries planning to release reserves are on about.

You can sort of see why. Qatar, the world’s biggest producer of liquefied natural gas, increased its capacity to make natural gas to an annual 77 million tons last year with the start of its 14th liquefaction plant. It also opened the world’s largest plant that converts gas into liquid fuels such as diesel and jet fuel. Clearly, all this is unlikely to lead to gas rationing any time soon.

Nor is all this anything to do with fears about reserves. Huge new finds have emerged under the seas that lie between Greece and Israel, and around the coasts of Cyprus. Nigeria alone is known to have 53 billion barrels of reserves, and Chinese engineers talk of a potential 300 billion in total there. Every month now – as world demand makes exploration sensible once more – new fields are being found from the Maltese waters to the Mississippi delta.

Then there is the shale issue. Industry websites estimate that this method of gas production will rise to around 7000 billion cubic feet by 2021, or roughly 12% of the globe’s energy needs. Finally, thisismoney quotes warm weather across Europe, and the EU debt crisis, as further factors already depressing demand. As most Western leaders must have grasped in private by now, demand is not going anywhere northwards over the next two years. Yet some folks are predicting $140 a barrel by mid 2013.

The real motives behind the spin

So what gives? Why all the pressure to release reserves from the major industrialised nations? [Surprise, surprise, excluding Germany - which has massive reserves, and is doing its 'serves you right' display on this issue too]

Speculation is clearly a factor to some degree. Over-zealous trading makes the market more volatile than it would otherwise be. And speculation is definitely on the increase. The simple truth is that, according to the IEA, world oil demand is expected to increase by a mere 1.5% to around 90 million barrels a day in 2012. In reality, the market is already behaving far too capriciously to be based solely on supply and demand: look across the major traders and analysts in the sector, and you will note that almost ubiquitous is the frantic attempt at self-fulfilling prophecy. It’s a bit like looking at the UK’s real estate sites in 2011: total, nonstop bollocks from end to end.

But there are much bigger factors in play behind the scenes. They concern geopolitics, profiteering, and re-election politics.

Geopolitics

The geopolitics of all this is pretty obvious, and not news to anyone who’s awake: we saw late last year how America’s control of the global Dollar transmission system brought Iran close to its knees, and we also saw how peace-loving Islamists in Nigeria blew up a church full of Christians on Christmas Day in Nigeria – as the formal kick-off for a murderous campaign of gentle killing. Some 3,200 Nigerian citizens have since perished – although the newish Government there denies this.

So, one reason why the price of oil is rising concerns the War on Terror, and the closely associated worry about Islamic fundamentalists controlling African oil production. What Nigeria and Iran have in common is Islamist nutters, and unstable government of a population in pretty bad shape. What they also have in common is Chinese technicians just gagging to lend a hand.

I wrote in the summer of 2010 about the inevitable flashpoint we will reach as a species when Beijing meets Allah in Africa. The Chinese already have a serious foothold in southern Africa (spend any time there, and one of the most common sights is Chinese blokes with surveying equipment) and they will soon effectively control South Africa. That the place needs propping up cannot be denied: I learned from S&P yesterday that they’ve downgraded SA debt again, citing  how (my italics) ‘…fundamental structural economic and social problems continue, such as very high unemployment, and a structural current account deficit that makes the economy dependent on external financing….’

The dominant Left Wing of the ANC now more or less accepts that it’s in hock to Beijing. The boss of one of its biggest banks and the biggest gold mining company has long been an enthusiastic traveller to and from China, initiating a two-way technical flow that benefited both countries. The Beijing politburo (itself in some disarray at the minute) sees precisely the same set of bankrupt, unstable politics in Iran and Nigeria. Iran in particular has kicked the West out…and is already heavily dependent on China for foreign currency.

This Friday, President Obama will without doubt sign off a Bill designed to turn the screw more tightly on Iran. He has also, off-stage, been fully briefed about Nigeria’s social problems. Nigerian President Goodluck Jonathan (that is his real name) was elected in 2010 on an anodyne reform programme, since when there has been little or no reform as such. Almost none of Nigeria’s oil wealth is trickling down to the poor folks, and Goodluck made a bad decision earlier this month when he decided to remove the petrol subsidy. Faced down by thousands of demonstrators, demands for his removal and a weeklong general strike paralysed the country. Mr Jonathan quickly gave in, partly restoring the fuel subsidy that — more than an Islamic insurgency in the north or a long-running conflict in the south — seemed to draw citizens onto the streets in rage.

In short, there really is going to be a potential oil shortage later this year or by early 2013. And a White House desire to increase its access to oil, while halting the marches of China and Islam, could very easily exacerbate the supply problems that already exist. All that’s happened thus far is the analysts, markets, hedge funds and sector experts have factored in what will probably happen….and got it kick-started in order to maximise the potential profit stream.  The suckered investors will eventually realise that a Global economy on its arse is not going to need anything like the oil it has already: at which point, the price will plummet.

The Electioneering politics

Barack Obama obviously doesn’t need a US in panic about gas-pump prices. So why is he hyping the whole business by talking about releasing oil reserves? Well, at this point we need to return to November’s Presidential Election.

There are powerful elements in the oil industry who do not like Barack Obama one bit. Again this Friday, Barry hopes to finalise and pass a Bill to remove the oilco tax breaks and subsidies. Even I as a lifelong capitalist would tend to view these subsidies as an outrage when most people under 21 can’t even find a job. But as with things here in Merrie Olde England, Americans are not really “all in this thing together”.  And to be fair – knowing the Obama Administration’s track record on, say, housing market intervention – they’d probably waste all the new money on hare-brained schemes that failed to address the real econo-fiscal problems faced by the US.

The sum of money involved – some $4bn net to the Treasury per annum – is a gnat bite on the bum to the oil business – it makes $200m each and every day. But with prices rising at the pumps, Barry desperately needs to show he is taking action against profiteering: for nothing riles an American voter more than some jumped-up Arab or fat oilco suit denying his eternal right to cheap motoring. What Obama won’t do (because he lacks the necessary cojones) is put forward a game-changing oil-tax bill – because the guys in the big hats would pass it on to John Doe, who in turn would stick it to the Black Dude in the privacy of the ballot booth.

Now the truth is, there is no financial point or logic to the removal of these subsidies: the Obamites are positioning it as the President getting tough with big oil, and the more downmarket Democrat voter base is too insular or thick to question that. The issue has no bearing at all on the pump-price of petrol – but it sounds good. (And, to my mind, it represents good governance over an industry that has been taking the piss for decades).

However, at the same time it enhances a threat to Obama’s re-election.

Oil company profiteering

Estimates suggest that 93% of oilco political contributions go to Republican candidates – added up, it comes to roughly $54m a year: but that doesn’t include the vastly greater amount spent lobbying Congress about tax; and in an election year like this, it doesn’t include the monies invested in getting rid of a bloke you don’t much care for. Just to get him this far in the Primaries, the oil business has contributed in excess of £2m to the Mitt Romney campaign alone.

But these guys are much smarter than that. They have much more subtle ways to help turf out the Black Dude from the White House: and they can make yet more money while doing it.

Read this startling admission from the California Energy Commission:

‘The Energy Commission cannot estimate profit margins based on average retail prices and observed wholesale market prices. This is because detailed data on refining and distribution costs, costs paid by approximately 10,000 retail locations, hundreds of wholesale marketers, jobbers, and distributors is not available.’

Nice work if you can get it, eh? Basically, the oil barons can hide, fiddle, manipulate and exaggerate the accountancy of all this any which way to suit their needs.

However, the Commission provides handy tables of the bare facts. Drilling down into these, we find out how all that money spent lobbying Congress about tax has kept all taxes on the oil business at 64 cents per retail gallon for some time. Since the end of January, however, the price of crude has risen 25 cents. What the oilcos need to explain to us is why, over the same period, the retail price has increased by 64 cents. What an ironic coincidence that the industry is raking off, in unjustified margin increases, exactly what the IRS takes per gallon….but only 25 cents of that reflect crude increases.

And there’s yet more. A funny little column three in on the best table there shows that, since the start of the year, ‘refining costs and profits’ have leapt from 19 to 54 cents a gallon. Now, fans of GAAP will know that that is just accountancy bollocks: something is either a cost or a contributor…it can’t be both. What we can say is that the oil business has trebled its take on refinery (which it does itself, of course) in 2012 alone…..the re-election year for a man whose fan club they have chosen not to join.

The White House is well aware of what’s going on. Just as Slick Willy once said ‘it’s the economy, stoopid’, it is also a truism that the US doesn’t re-elect Presidents who preside over petrol price hikes.

And this is the real reason why Barry and Dave were so cuddly-snuggly last time they met: because they both have an interest in keeping pump prices down. Cameron has his own additional strike problems, but right now they are friends in need. So too does Sarkozy want to be seen to be tough on petrol prices….he too is in the middle of an election. And with their own special ‘lost decade’ problems, the Japanese need rising oil prices like another Nagasaki.

Angela Merkel has flatly (and smugly) refused to join the Gang of Four. Not only does she have lots of reserves (and some intriguing influence with the Eastern bloc as was) she would also much prefer to deal with Mitt Romney than Barack Obama. Berlin has, as a whole, had more than enough of Obama plots and Geithner demands. She favours a more isolationist America: all the more room for her to be the undisputed Queen of Europe.

Stick and Carrot from Obama

Look at the US/UK MSM spin in recent weeks about unrest, glitches, supply problems and the Iranian threat: then look at the numbers (as I have done in this piece) and you see an immediate mismatch.

Barack Obama and others have hyped a supply disruption in order to be able to solve a problem that doesn’t exist.

On Obama’s home patch, that ‘solution’ will involve unleashing massive barrelage into the US domestic refining process, telling the American people that this must inevitably bring down retail petrol prices….and then daring the oil barons not to fall into line. That barrelage should last just beyond November: it which point, the re-elected President Obama won’t give a tinker’s cuss about oilco profiteering.

Do you think Obama has the power to make this stick? If the bankers screw up again – and more banks start falling over – then a lurch to the Left – by damning Big Business generally – would play very well among the American middle and lower class voter. But me – I doubt it: for a calculating man like the President, that’s far too big a risk.

But supposing alongside the Rooseveltian Big Stick, he dangles a 24-carat carrot right in front of the oil industry’s dollar-dazed eyeballs? You may not realise it yet, but we are right back in Iran….and Israel…and Greece.

The win-double of compliant oilcos and good geopolitics

Israeli Prime Minister Benjamin Netanyahu left Washington earlier this month well satisified with Barack Obama’s attitude and assurances. Since that time, several senior members of the US Administration have hinted that an American-led ‘solution’ to the Iranian problem would be vastly preferable to an Israeli one. There has also been much gobblydegook on both sides of the Atlantic about how the Tehran regime “represents a threat to global recovery by restricting oil output”. Again, the recent history and the facts associated with it simply do not bear that assertion out.

But Netanyahu and Israel also discussed the enormous mineral and energy wealth the Israelis have found in their own waters, stretching across to Greece and further still to Cyprus. Greece, Israel and Cyprus have already issued an accord about joint prospecting – albeit it vague and not as yet formally signed. And as we saw with the ‘amputate Greece’ plan, Obama wants friendly folks owning the Med’s undersea oil: folks he can influence by bankrolling the exploration. Further, the Americans have eyed Greece as a perfect military base from which to face off China, Russia and Islamism at the eastern end of southern Europe. Hence the desire to befriend a Greece which finds itself somewhat isolated.

However, the final ace up the White House sleeve is this: ensuring profitable oil concessions for the oilcos in a defeated/neutralised Iran and/or Nigeria – and with new best friends (like a eurozone-ejected Greece) in the Mediterranean.

As so often, it takes a long time to get to what’s really at stake in today’s 24/7 news events mania. But the bottom line on rising petrol prices is, I would suggest, very roughly 50% oilco profiteering from a groundless scare, 20% market speculation, and 30% politics. Plus ca change.

This essay was put together with the help of industry sources, Slog readers, media folk and political insiders in the US, UK, eurozone and Africa. My sincere appreciation of their efforts goes to all those concerned.

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.

SKETCH: Ultimately, the markets must decide

The Slog ponders about what happens if the markets don’t know.

So anyway, Fred came in, looked at his Reuters screen, and saw that the metal commodities sector was bearish on the news from Athens. He sold some General Mining and went off for a coffee. Bert passed his desk, saw the same screen, and went to his own pod. Bloomberg told him that the markets had now steadied on the news from Athens airport, as Papandreou left for Cannes, talking about a more solid EU. He went to his commodities folder, bought General Mining, and then popped downstairs to pick up a croissant.

In the lift, he met Sarah from sovereigns, and she asked if he’d seen the transcript of Sarkozy’s statement as he left Paris. No, he replied. OhmyGawwd, you must she said, exiting the lift. In the breakfast shop across the road, Demetriou the Cypriot owner had BBCNews on, and Bert heard a snatch from Sarkozy’s soundbite, in which the French President said “….should now definitely get out of the European Union…or be forced out”. Blimey: Sarko was talking about using force against Greece. He forgot about his breakfast, and legged it back into the Omnivore headquarters.

Fred was at this moment on his way back from the coffee machine, where he’d met his Section Head Phil. Phil was glum at the news about all the Greek military being fired. ‘All’ was a lot, right – what might it mean? Phil thought it might mean the Greek armed forces being cut. That meant fewers tanks and guns and stuff. Back at his desk space, Fred went back to General Mining’s page, and sold some more. After clicking on ‘finish’, he nodded as a distracted Bert walked briskly past. Safely back in his pod, Bert went into General Mining, and trebled his purchase of five minutes previously. There was going to be a war, and he was ahead of the curve. Result!

In his bigger-than-anyone-else’s glass space with the corner window overlooking Threadbare Street, section head Phil continued to look into this Greek army shit. It looked like he might have it wrong: the colonels had been purged, not fired. They’d been replaced with guys loyal to Papandreou. Did this mean the Greek leader was getting ready to put down a revolution? That would mean more weapons and more tanks.

Looking to advertise just how far ahead of the curve he was, Bert tapped at Phil’s open glass door, and said how the Greek situation was looking good for metals. You bet said Phil, we should get into bull mode about it. Bert added that he was on the case, then returned to his pod and doubled the General Mining Fund purchase.

By the time Bert had increased his General Mining position, Phil had taken the lift to the Director’s floor, and – having loitered for five minutes – tried to look casual as he at last saw Equities Director Marcus heading towards him. Marcus asked him how it was going with the air of a man who couldn’t care less and, encouraged by this, Phil said he was instructing his key traders to take solid positions in metals shares and futures.

Had he seen the Sarkozy remarks at De Gaulle airport, Marcus asked. Not as yet, Phil replied, but he was in the loop about the Greek army gearing up for revolution. Revolution in Greece? said Marcus, wow, no, I was talking about Sarko saying the UK should f**k off out of the EU for good. He said that? asked Phil….it could mean war and shit, wow…then all the more reason to be in General Mining and metals right? Right said Marcus, especially as there’s gonna be a revolution in Greece, Jeeesuzz. Phil took the stairs two at a time back to his floor and, passing Bert’s space, asked him what positions he had with General Mining, Krupp and British Aerospace.

I’m good on those Bert replied, and then doubled all his holdings in them the second Phil left. Four floors further up, Marcus was  in the Chairman’s office suggesting a major redirectionalisation in the iron ore mining sector, and arms manufacturer stocks. We’re ahead of the wave on this one Jasper, he assured the Omnivore boss.

Back at his desk, Fred was Googling ‘Athens crisis latest’ and clicking into a Daily Telegraph piece explaining how Papandreou had both the Greek armed forces and the EU surrounded. Just as I thought, Fred thought: his original thought had been right, as he’d thought it would be. It was only a thought, but surely a lack of military action plus an EU debt meltdown meant the last place to be was in mining and arms. He went back to the relevant pages, and sold his entire holdings in every relevant position. He’d ducked, evaded the curved ball, and was now free to reinvest in bear funds. Bert ambled up to Fred’s pod.

Looks like the EU’s turning nasty, he said. You bet, replied Fred. The meltdown looks pretty bad. Bert nodded, adding that – if nothing else – it was now pretty clear what positions to take. Absolutely, agreed Fred. Both men left the brief chat more confident than ever that they were on the right track.

————————————

Over at Consolidated Miners in Johannesburg, Corporate Finance Director Hal Owen at last got in to see Ty Phoo, the Chinese CEO imposed on the Board in a Beijing coup the previous year. Hal said he had grave news. Glave news? asked Ty. No grave news, Hal corrected: I think Omnivore knows that Amalgamated Diggers are working to undermine our position. Ty was unhappy at the thought of his mines being undermined, especially by his Austlarian enemies, but before he could think further about it, Hal Owen explained that Omnivore were taking two entirely opposing positions in Consolidated’s shares. This was obviously being done as a hedge against whichever way the takeover might go. Mr Ty thanked his finance guru, and nodded to signal that Owen should now exit meekly from the room.

Alone again, Phoo rang Bo Sun, the metals & mining commissar in Beijing. Amalgamated are planning a takeover, he told Bo: get Wen on the case fast. Tell him to remind the roundeyes who pays their export wages. Sun sucked his teeth and said Wen was tied up with all this Greek shit, but he’d do what he could.

Wen Jaibao had suffered an appalling night into the small hours in Beijing listening to this Regling idiot from the EFSF explaining how the Greeks would be crushed into submission, so when Bo Sun told him what the Aussies were up to, he got on the phone to Austlarian foreign secretary Wayne Belcher at the double. It being already 10.00 am in Canberra, Wayne was a few tinnies to the good, and didn’t take kindly to Mr Wen’s interpreter yelling insults at him. At the Cabinet meeting half an hour later, Belcher gave an exaggerated and jingoistic account of the Chinese position, at which point Prime Minister Julia Gillard, whose poll figures were in need of a boost, fired off a stiff note back to Beijing. Wikileaks picked up the missive, splashing it across the Western media within minutes. The Russians also blagged into the diplomatic exchange, and fed the story to bewildered eurocrats as the death-knell for any EFSF deal….given that Beijing would now be fully engaged in knocking seven bells of shit out of the Aussies, as opposed to dealing with all this Greek shit.

——————————————

By 6 pm in London, Fred found himself completely distracted by the news that China and Australia has broken off diplomatic relations and were rattling sabres at each other. This was big, he figured: mega big. No longer able to get Aussie metals for the war effort, China would pile more investment into African mining. Whereas Amalgamated Diggers would go through the roof supplying metals for all those guns and tanks and stuff the Aussies would need for their war effort. Cuts in Europe were chickenfeed compared to this. Working frantically across five files and nine windows, Fred sold all his bear funds and poured his entire annual investment budget into metal mining and futures. His bull position was way ahead of the game. He’d be a hero on this floor by tomorrow lunchtime.

Bert yawned and was about to quit his pod for a large Jamesons in the Default & Liquidity Pool, when his Associated Press window flashed that the Greek deal had collapsed following firm signs from Beijing that they wouldn’t be helping with EU bazookas, on account of needing seven new aircraft carriers. This changes everything, he mused: the EU economy will dive, the euro will collapse, and the French banks will fall over after the now inevitable Greek default. He dashed into Phil’s glass case and broke the news. Don’t worry, he told the section head: it’s hot off the wires…we’re way ahead of the curve here.

So it was that all three traders, the equities director, and the Omnivore Chairman Jasper Trillion worked through the night, such that by 6 am everyone had reversed their positions…..and thus, the firm’s net exposure to bull and bear scenarios was precisely what it had been fifteen hours earlier. The only things that had changed were first, the debt crisis was now global, and Australia had declared war on China. But in the cab home at first light, Marcus figured what the hell: a bloody great war had gotten us out of the mire last time after ’33, and it probably would this time. The markets always balanced things out. The markets must always decide.

In Johannesburg, an exhausted Hal Owen watched as both his share price and that of Amalgamated Diggers zoomed up and down until the printout graph looked like the weft on a spinning machine. In the seat opposite, Ty Phoo was draining some fine Japanese brandy, still clueless as to why somebody (even him maybe?) appeared to have caused a full-on Asian war. He was also struggling to understand why, since 4 am that morning, he had been able to buy Amalgamated or be bought by them on seventeen different occasions over five hours.

Maybe Wen had gone mad. Maybe that Juria Girrard was mad. For sure, Papandreou was mad: the BBC said so, so it must be true. And even more for double-dog sure, these f**king fang woi stock markets were mad. He poured himself another large one, and began to doze off, reminiscing as he did so how much easier things had been under Mao: peasants doing brain operations, and neurosurgeons getting trench foot in the paddy fields. You always knew where you were with Mao: tits up and snafu, 24/7. He drifted into dreams of tanks running over dissidents. Life had been so much easier then. If only we could all go back to that nice, cosy Cold War.

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.

An end to the Greek crisis now looks definitely uncertain.

Fee-diddle-fy-do-bum-bum-bum

The French have a plan. What’s more, even Trichet has approved the plan. It is called, “Nous kickons la boite down le road”. But it is still a plan that will ‘change the game’, and that much is true: it will change the date of Greece’s default, but not its inevitability. It’s also illegal under EU Law…but Blind Eyes are the order of the day, it seems.

An hour ago, the New York Times said world stocks were already rising ‘on hopes of a resolution of the Greek debt problem’. Sloppy reporting is so common these days, you wonder about the average hack’s ability to think. My New Year’s resolution was never to believe politicians who have resolutions to problems: so lacking are they in resolve, they never resolve anything.

As if to prove the point, within 30 minutes another NYT lady said no, hang on a minute, it’s now looking bad again…the vote may not pass, as some of Papandreou’s socialist comrades fear being ripped to shreds by the mob. This reporter’s mind-boggling assertion two paragraphs further down was ‘failure to pass the new law will engulf the world banking system in a spiralling crisis’. Yes, hmm. Well if you believe what the banks say about the danger, it will. And if you believe what the French banks say about their ability to withstand Greek default, it won’t. And if it won’t do the French can-kickers any harm, why the plan to (effectively) write off half the debt and delay Domesday?

This remains the fundamental problem at the core of so much media coverage these days: lazy, naive, ill-informed, and lacking in any attempt to read past, through or around the numbers in the press pack. The FT’s oped today, for example, is headed ‘Give Greece time to prove it can do the job’. But nothing below the headline suggested how it could do that job – or indeed, what the exact job might be. At the BBCNews website, Bobby Peston’s piece – ‘Is the French plan flawed?’ - showed no awareness of Der Spiegel’s piece from the day before saying the flaw was its illegality. (One of his comment threaders was left to point this out.)

The Wall Street Journal writes about how ‘the European Union warns that failure by the Greek government to pass into law and implement its newest austerity package would disqualify it from another bailout’. It still beats me exactly why the Greeks see this as a threat, but then I’m not there and staring oblivion in the face. However, I don’t make the point lightly: the EU’s diktat lacks any real ability to back it up. As so often in international affairs, the leader who just ignores the threats gets away with it. Hitler built a career and a Reich doing it. Not that I’m suggesting Greece should demand an Anschluss with Troy (although that would certainly be more entertaining) but rather that Papandreou could say “Stick your rotten, hypocritical rules up your Rompuy” or something similar.

The whole charade – the bailout, the deals, the threats and the dire predictions – is bollocks. Wholesale debt forgiveness or disaster: the choice really is that simple. For myself, I’m hoping there will be what the Fascists in Bankfurt quaintly call ‘an accident’. That is, the People or their representatives saying ‘No’. Usually, that sort of thing makes no difference to the EU at all. This time it would. If the Greek Deputies vote down the deal today, they will be doing all of us a favour in the long term.

If you liked this, you should have a look at Crash 2: Situation Normal, all….