BEHIND YOUR BACK: Greece, Italy, China and Davos

Greece’s Yanis Varoufakis has been talking about efforts while he was Finance Minister to secure funding from China, a project that did eventually produce an agreement with Beijing regarding a massive investment – mainly in Greek bonds.This would’ve had a hugely stabilising effect.

“This agreement was overturned, though, with a phone call from Berlin,” he claimed.
As one prominent Greek blogger puts it, “Which shows that the European Financial Dictatorship will do whatever it takes to keep the eurozone members under its hegemony”.

Not to mention Schauble secretly persuading Papandreou to big up the original Greek debt, or indeed Gary Cohn of Goldman Sachs who headed up the project designed to hide the Greek deficits from Brussels over several years.

Cohn was to be seen on the Davos panel this morning, seated just three away from Fifi ‘Undercloud’ Lagarde. The possibilities for mutual blackmail between these two are, I would think, infinite.

It was sad to see Tsipras at Davos last night. Not just the fact that he goes there (that’s bad enough) but to hear him mouthing banalities about the ‘great opportunities’ facing Greece in the future. Obviously Alexis was a model student during his time in Room 101.


Earlier this week, Italian regulators suspended trading in bank stocks, after they had fallen 5.5% for the day. The declines were led by two of the biggest, Monte dei Paschi di Siena (MPS) and Banca Intesa San Paolo. Later, a specific ban on shorting the stock of these two  white elephants banks was introduced.

This is the new élite soccer defence now, whereby if things get to 2-0 down in the first half, a couple of brickies rush onto the pitch and wall up the goal. Things are slightly worse in China, where the opponents are all sent off and the crowd is told to go home. Each according to his needs, and all that.

I didn’t see the Italian Job covered anywhere in the old media, but the Reuters site
noted that “Investors are growing increasingly nervous about how the [banking] sector will cope with lower interest rates and a €200 billion mountain of loans that are unlikely to be repaid.”

Later, Bloomberg did write about funds starvation in a piece headlined “Italy Banks Lose over $82 Billion from Savers”, a trend that has been well-established among bank customers for some time in Italy. It is of course the reaction to obvious moves by the EC to prepare everyone for The Big Bailin.

These opening BYB stories are reasons no 61 and 62 to Vote Leave. But as the global crisis deepens, the “safer in” line will become a dominant theme from Camerlot.


Today we are three weeks into the new year, and China has already spent 16bn Yuan on direct intervention in its equity markets. As we’re being told the Shanghai composite only covers 3% of the ‘real’ economy, that would mean spending three quarters of a trillion a year just to make one allegedly small and unrepresentative aperture look better than it really is. Either the politburo can’t count, or its fallen off a cliff of excess, or the markets are a little more important than we’re being told. My money’s on the last one.

This would be bad enough without the fact that the PBOC is also having to deal with China’s biggest post-Mao capital outflow, and an offshore Yuan where short-term profit-makers are getting in the way of export currency policy.

The straightforward extrapolation is this: China can’t ‘afford’ to keep this up and lose both volume and world share in its export markets at the same time. Already we are seeing 1-2 days in every ten where intervention appears to have been minimal. The PBOC piled in overnight, but the Shanghai still lost 3.2%.

So either the markets decide that the superoptimists are right and simply ignore China; or the global downward movement in stock and commodity prices will continue. But what we’re seeing now (which could still produce a degree of rally before long) suggests that the market mainstream no longer believes the AOK line.


And so to Davos, where – if I may use the lingua franca of the moment – things are in an unpanic, but the narrative is turning darker to the downside.

In the Davos space, those jetting in over the last 24 hours are saying “lower than we thought for longer than we thought”. This is the sort of Larry Summers heresy we heard during his interview ten days ago; and whatever you may think of our Lawrence, he has called this one right on the button right on time.

The emerging Newspeak this morning is disinflation and transition. As nobody knows what to do about the insistent deflation, and we know that they don’t know, and they know that we know that they don’t know, and nobody knows WTF is going on in China, the targets look like they’re going to change: if you can’t hit one target, put another in a different place and start hitting that. It’s an old trick, but it’s worked for George Osborne…so far.

So we’re going to be holding back disinflation rather than eradicating deflation. Bear in mind that we’re already some way down the rabbit hole here because we ‘need’ to create inflation, an outlook that would have got you certified thirty years ago. This  nonsense stems from one of the few truly profound terms of the last ten years, the financialisation of capitalism.

Which leads me directly into China, because as we now know, China is going through a transition. It’s transitioning into being a service economy apparently, although the services within which are as yet unidentified. On a rather silly Davos panel this morning, IMF boss Christine ‘can’t do Sums’ Lagarde – having already spotted that the services transition narrative was getting blown – upped the ante to “many kinds of transition”. She got a little hazy on the question of what the suddenly discovered new transitions were; which means that we’ve now gone from unclarityness about the services to disclarity about the transitions.

Having demonstrated that she didn’t know where China was going or why, Investment firm Chairman Ray Dalio leapt onto the opportunity and said “The West doesn’t understand Chinese markets” and developed a line of argument proposing that this is why we were all being too pessimistic. His one shot at explaining why we should be more optimistic was “Hey yer know, a bad year in China would be a great year anywhere else”. If Ray had to spend a year in China outside the 8% econo-political élite, I doubt if he’d come out saying it had been a great year.

Lots of conspiracists remain convinced that behind our backs in Davos, despicable things are being planned. I’ve never believed this, not least because I’ve rarely heard anything intelligent said at a corporate conference anywhere. Davos is an onanistic ritual during which the superrich and megapowerful take over half a mountain and lick each other all over. It has nothing to do with reality. Never has that been more obvious than this week: the mismatch between Davositania-sur-neige and the trading-investment-business nexus sur terre has at times been cringe-inducing.

You see, I think the problem here is reality. We don’t need any more unrealities like trickle down wealth; oh no – what we need is some disreality to more accurately understand the transition from disguised to lascivious greed taking place.

What we face is a classic case of commentators and uppity radicals not understanding the wealth market, where 65 people own 0.4% of global wealth. These uninformed Leftist unfortunates need to reset the moral compass from its default position at zero to a new one whereby the compass becomes a magnet. Then they’ll see how all the owners of the magnet (us) can attract all the subsequently magnetised wealth. And thus we shall restore the natural order of things.

Mr Fang from China has just tried to explain to the panel that the answer in China is to have an economy based more on domestic consumption and less on exports. Nobody was impolite enough to point out that their last attempt to do this was dubbed the Icarus Project, in that it fell to earth in flames.

Lots of ideology and ideal worlds, no new ideas. Oh dear.

Yesterday at The Slog: Bears shitting in the markets sets off global connectivity

27 thoughts on “BEHIND YOUR BACK: Greece, Italy, China and Davos

  1. “This agreement was overturned, though, with a phone call from Berlin,” he claimed.

    Qui bono? As Cicero said in the court case that sped him to international fame.

    Who benefits?

    Certainly not Germany, in this case; and certainly the US banks, who are bleeding German coffers dry from all possible ends, including Greece. The US banks/Agencies (you know which ones) have the technological ability to make a phonecall appear as if it’s coming from somewhere… just to keep the illusion of nasty Germans and nice European Union. It keeps the European Union on track, and eases TTIP through a little easier.

    And please, no trolls, this time!


  2. => Hieronimusb… Ohhh what larks, You brightened my day. Quite a lot of belching too, Must be something in their diet?


  3. Neither the Chinese nor the Russians or anyone whatsoever would ever hand a bunch of billions to Greece so that Alexis Tsipras can give them to the Germans the next moment. The only case in which Beijing would take Athens seriously is if the latter decided to leave the eurozone, unilaterally write-off its debt as illegal -in accordance with international and UN law- and start over building its economy. And that’s exactly why the Europeans are too afraid of letting Greece go. Lest it would simply… succeed.


  4. Anonymous, when you say “would ever hand a bunch of billions to Greece so that Alexis Tsipras can give them to the Germans the next moment” – the loans that are being repaied are being repaid to ,b>private banking institutions. Most of which will be American.

    You can bet the American authorities (or their stool-pigeon the European Union) will make it quite clear that it is German government funds that must pay for Greece. And there’s nothing the German government can do about it, save up the ante by demanding the only things they can – austerity. Last year, it nearly worked, until the Americans stepped in and called off Greece’s default, turning around a massive vote in favour. Never confuse the US with a democratic nation ;)

    John Doran thanks for the info.


  5. Who is putting the squeeze, Mafia style on Angela Merkel. We have had the VW exhaust emissions debacle. the open borders to one million refugees, 75% who are not Syrians, the Cologne and Hamburg rape and assault mobs.
    The $3billion slush money to Erdogan to contain the refugee flow.
    Is this series of crisis a coincidence.?
    Can she not understand, she is not allowed to play footsie with Russia, so says the Empire of Chaos. Make of the below attachment ,what you will.


  6. As usual the NWO agenda is oozing out of Davos and quite clearly indicates that there will be no real recovery in the world economy, what so ever!

    The elite will soon be looking to run and hide in the bunkers paid for with citizens taxes, after engineering a full economic collapse as well as starting WW3, plus they will make sure that there are enough Jihadi’s in the West to start a race war.

    That should be enough to cover up the failed fiat ponzi scheme and take care of the ‘excessive’ population……


  7. Where’s Rioch,there’s a terrorist operation in Coventry & he’s gone AWOL,him & his access to GCHQ ??????????
    Stevo upon a prayer, may the many unite in love & admiration for the extinction of evil! never under estimate the power of destiny


  8. Leggy lefe is just there as a patsie… That will teach her for playing foot loose & free with with purloined bank lists. To my eyes she is being “Hung out to dry” in the most public way possible, the assertive faux feminists nightmare. hurdy-gurdygan is most definitely, in my eyes, fawning & played by the psychotics side. Who wouldn’t desire a nice little reproduction Neo-Ottoman at the bottom of their over plumped bed? Even better if it stuffs the original enemy. The under developed teenage mentality always needs something to kick against, Usually their progenitor. Such is the birth of nations. 8 Billion to bring the Ukrainians on side? Never been sure about the need to buy friendship?

    Vlad is looking so much better in all this, a nature boy at hart, too much Bear Grills, than Ray Mearse for my liking, but at least he gets out in nature, a photo op admittedly, but closer to real than most of his ilk seem to be able to manage. Still on cordial terms with his Easter neighbours too. I really don’t like bully’s, & I can’t find it in me to dislike this odd couple too…

    Odd isn’t it that all our shared genetics are about 98% the same, & don’t get me wrong a little differentiation is a good thing, but it’s true thinking persons bed buddy, is integration & not disintegration.

    I was going to say it seems odd that the me-dja, were carping on about Seriza’s “Plan B”, well that’s odd seeing as a smug “Dr Strange Hate” had the whole Troiking Greek thing planed out from 2012. Set-up springs to mind, at least the mock negotiations have helped to expose a much deeper ills. “Zair is nothing common in our European currency” All good practice this austerity, the Greeks have returned to the land, which they still have Only a short step to the real world for most of them… Not sure how other obese couch potatoes will fare. Seems like Iran have a handle on Uncle Sam’s Drones too, that makes you wonder about sofa wars relevance?… The wonders of modern technology & the flawed ego’s that design it, still seeing the weakest link as…Us.


  9. Gemma, pedant alert:

    Cui bono – more contemporarily QE bono perhaps – was a favourite phrase of Lucius Cassius, regarded by the Roman people as a very honest and wise judge. Although Cicero used it in Pro Milone and elsewhere, he made reference to the originator by saying: “let that maxim of Cassius apply”.


  10. Question for the late 40s and older types here. Once you have survived the midlife thing (the 40s are for most awful) and regained your energy, what the hell do you do with the rest of your life? Such we ponder at this time of year, when its too cold to cut a lawn, pick a zucchini or prune a tree.


  11. Jeremy Stocks: Write books, sing songs, learn another language, prune fruit bushes? The best things are those that inspire one to do more…

    … and I survived my 40s too. 45-6 was abysmal, after that, a breeze.


  12. Learn how to stop spilling energy, cut out all the conditioned redundant “Doing” & Move to somewhere too warm & dry for a lawn, then wait for my first home grown Banana to form… Then eat it, if I’m fortunate enough.


  13. ” what the hell do you do with the rest of your life? ”

    1. iron your socks
    2. look out of the window often
    3. put the tv on but spend endless hours deciding what to watch because you cannot believe how much of it is american
    4. drink wine, fine wine because life is too short to drink cheap wine
    5. don’t listen to or watch the news

    Any crisis emanating from this latest round of robbery from the masses will be resolved by killing more of the disabled and poor – have faith all you nazis – ethnic/ social cleansing is catching on all over the planet. In the uk the cancelling of Strictly Come Dancing would create more dissent than that happening currently


  14. @Jeremy Stocks, I’ve just hit 60, you ask what do you do with your life?

    Mourn the loss of your childhood and embrace the arrival of your second childhood

    Become as big a pain in the @rse to your offspring as you can

    Shout obscenities at the TV – establish Tourette’s Time and enjoy it

    You have earned the right to live as disgracefully as you please, take up smoking again, turn to drink – everyday is a bonus from now on

    Loaf about it bed until noon and stay up all night – its great!

    Stay away from those ‘Old Farts ‘ type clubs they are deadly, after 60 years I don’t give a rats @rse for the ailments of others. Avoid coach tours like the plague and anything with SAGA written on it or of a beige colour

    Get a Blue Badge parking card from your council and become one of Satan’s Road Buggers.

    Piss off your relatives by telling them you plan to live forever and will leave all your worldlies to the somalian lesbian wimmins embroidery club or some such

    Visit your council regularly the planning department is a good start and start jamming up the works. Attend the ‘open’ meetings and offer helpful advice from the peanut gallery



  15. @Jeremy Stocks, yes I agree with Ron vis a vis le vin. But sometimes, good cheap red is wonderful. Depends on the company. Also, make love often. Even if it means going home once in a while. Try eating healthily. But don’t forget the amazing smell of street cooked onions. Call politicians out on their bullshit, you only need to go to a council meeting for this.
    Most importantly, recognise that the post WWII generations really did have it comparatively good, and wonder about the complete and utter cluster f%%k that we will be leaving behind us.


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