Category Archives: Finance

Chart of the day: Greek working class miseries


From the Hellenic Statistical Authority, the grim nrews about paychecks yunder the reign of the Austerians:

Kathermini adds some detail:

More than half of private sector employees in Greece are paid less than 800 euros per month, compared with just 11 percent in the public sector, while the real unemployment rate is more than 30 percent, the country’s biggest union claimed in its annual report published on Monday.

The Labor Institute of the General Confederation of Greek Labor (INE-GSEE) noted in its 2016 report on the Greek economy that crisis-induced inequalities among different groups of workers and the decimation of the labor market have had a negative impact on productivity. The increase in labor market flexibility last year translated into 51.6 percent of private sector salary workers receiving less than 800 euros per month at the same time as half of all civil servants were being paid more than 1,000 euros per month.

After processing the salary data in the private sector, INE-GSEE found that net pay was up to 499 euros per months for 15.2 percent of workers, between 500 and 699 euros for 23.6 percent, and 700 and 799 euros per month for 12.8 percent. Just over one in six (17.3 percent) received between 800 and 999 euros. Meanwhile, 38.5 percent of civil servants had net earnings of between 1,000 and 1,299 euros and 15.7 percent collected more than 1,300 euros per month.

The large decline in private sector salaries and the fact that the institute’s economists estimate that the unemployment rate is much higher than the official 23.1 percent are particularly ominous developments which could erode social cohesion and lead large parts of the population into poverty.

The report highlights the increase in the rate of households unable to cover some of their basic needs from 28.2 percent in 2010 to 53.4 percent in 2015. This is due to the major decline in disposable income and the drop in savings. A rise was also noted in the rate of households delaying loan and rent payments (from 10.2 percent in 2010 to 14.3 percent in 2015). Worse, households’ inability (or unwillingness) to pay utility bills soared from 18.8 percent in 2010 to 42 percent five years later.

Life is bitter under the dominion of the Troikarchs

The Wall Street Crash that triggered the Great Recession was followed immediately by the decisions of governments, central banksters, and the money lords of the International Monetary Fund to bail out the banks, and not the lenders.

Those decisions weighed hardest on indebted nations, and proved especially onerous in Southern Europe, where reckless lending by German and other banks had undergirded economic expansion during the boom.

To ensure repayment, the European Central Bank, European Commission, and the International Monetary Fund mandated ongoing wage cuts, pension and healthcare benefit reductions, new taxes, and sellff of large sectors of public infrastructure and resources, most notably in Greece.

The measures have brought no real relief, and Greeks are continuing to pay a high price.

Woman workers hit especially hard

From Kathimerini again:

Women, especially young women, have been hit particularly hard by Greece’s economic crisis, Labor and Social Insurance Minister Effie Achtsioglou told the Parliament in Athens on Wednesday on the occasion of International Women’s Day.

Of all the registered unemployed in Greece, 61 percent are women, Achtsioglou said, noting that although joblessness has dropped 3 percentage points over the past two years of the SYRIZA-Independent Greeks coalition, more needs to be done to curb unemployment generally, and in particular among women.

Cuts in social welfare spending over the years have fallen most heavily on the shoulders of women, Achtsioglou said, adding that the current government remains determined to ease austerity as soon as possible.

And a foreclosure epidemic rocks the nation

Because of lost jobs and smaller paychecks, many Greeks are faced with a hard choice.

From Kathimerini again:

The austerity measures introduced by the government are forcing thousands of taxpayers to hand over inherited property to the state as they are unable to cover the taxation it would entail. The number of state properties grew further last year due to thousands of confiscations that reached a new high.

According to data presented recently by Alpha Astika Akinita, real estate confiscations increased by 73 percent last year from 2015, reaching up to 10,500 properties.

The fate of those properties remains unknown as the state’s auction programs are fairly limited. For instance, one auction program for 24 properties is currently ongoing. The precise number of properties that the state has amassed is unknown, though it is certain they are depreciating by the day, which will make finding buyers more difficult.

Financial hardship has forced many Greeks to concede their real estate assets to the state in order to pay taxes or other obligations. Thousands of taxpayers are unable to pay the inheritance tax, while others who cannot enter the 12-tranche payment program are forced to concede their properties to the state. Worse, the law dictates that any difference between the obligations due and the value of the asset conceded should not be returned to the taxpayer. The government had announced it would change that law, but nothing has happened to date.

Charts of the day: A look at the Greek debt burden


We have two charts from the just-published edition of The Greek Economy, a monthly update from the Hellenic Statistical Authority.

Of the many charts in the document, we picked these two because they depict to loss of national financial sovereignty in a dramatic way.

Our first chart is straightforward, showing the dramatic rise in the ratio of Greek debt to the national GDP:

The second graph charts the radical change in the nature of Greece’s debt, a changed mandated by the financial overlords of the International Monetary Fund, the European Central Bank, and the European Central Bank — the Troika — as a condition of financial aid.

In the chart, debt in the form of securities such as government bonds is represented by the broken blue line, while second broken line represents debt in the form of outright loans. The radical shift was the result of the Troika’s demands on becoming the nation’s financial overlords.

The third and constant line in the graph represents debt in the form of cash and cash deposits:

When lawmakers buy stock, the price rises


It really is the best Congress money can buy, one might reasonably conclude from the findings of a new academic study.

Yep, it seems to be one of those mysterious laws of the universe that when a member of Congress buys stock in a company, the value of that stock soon rises.

Oh, and when a member of Congress buys into a company, the business cuts back on lobbying because, presumably, their interests are financially merged.

More from the University of Arkansas [emphasis added]:

From 2005 to 2010, the average S&P 500 firm had seven members of Congress who owned stock in the firm, and some companies had closer to 100 members owning stock, according to a new study co-authored by a management professor at the University of Arkansas.

The study also found that firms in which a greater percentage of lawmakers invest in a given year performed significantly better the subsequent year.

“Each percentage of congressional membership owning stock was worth about a 1 percent improvement in return on assets,” said Jason Ridge, assistant professor of management in Sam M. Walton College of Business. “We think this suggests that it’s possible that members of Congress use their influence to benefit firms in which they invest.”

Ridge and co-authors Aaron Hill, associate professor at Oklahoma State University, and Amy Ingram, assistant professor at Clemson University, discussed these findings in a Harvard Business Review article [$36 for non-subscribers] published last week. The article was based on “The Signaling Role of Politician Stock Ownership: Effects of Lobbying Intensity,” their study that was published in the Journal of Management.

Ridge, Hill and Ingram confirmed previous research that members of Congress, on both sides of the political aisle, have substantial stock holdings in firms that are affected by their legislative actions. Ridge, Hill and Ingram wanted to understand how this works at the company level. To do this, they compared a sample of S&P 500 performance data from 2005 to 2010 with public disclosure information about Congress members’ stock holdings as compiled by the Center for Responsive Politics.

Firms are possibly using required public disclosure laws as a new way to influence lawmakers, Ridge said. For example, he and his co-authors found that firms, armed with knowledge of which members of Congress hold stock in their companies, scale back the intensity of their lobbying efforts with lawmakers, presumably because the companies assume that owning stock aligns the interests of firms with those of stock-holding lawmakers.

Ridge’s research focuses on executive leadership, compensation and political strategy.

Yet another update on the ongoing Greek Crisis


Greece, the European nation hardest hit by the Great Recession, continues to struggle, weighed down by massive loan debt, accumulated during the pre-crash boom and amplified by bailouts in the years since.

Much of the Greek debt is held by vulture funds, specializing in swooping in toe feed off the cheaply priced debt of stricken economies, then demand payment in full as the national economy struggles to recover.

Much of the Greek debt is held any Germans backs which financed Greek military purchases from German munitions companies — many of them induced by bribes from the German corporateers.

The Troika — the coalition of the European Central Bank, the European Commission, and the International Monetary Fund have insisted on full repayment, with the price of rebellion being the education of Greece from the common currency, a move that would force Greece to drop the Euro and go back to the drachma.

And while Germany booms, Greeks are subjected to pay and pension cuts healthcare reductions, and sell off of national power and transportation grids, as well as the sale of ports and islands.

The resulting deprivation has distorted the Greek economy, evident in these two charts from the Hellenic Statistical Authority.

First, a chart of the ten top-selling industrial products manufactured in Greece [click on the images to enlarge]:

blog-greeceNext, the top-sellers for the European Union as a whole:

blog-greece-2But more misery lies ahead, , ,

We begin with this from China Daily:

Greece will likely need a fourth bailout program, according to Cypriot economist and 2010 Nobel laureate Christoforos Pissarides.

“I am afraid there will be a fourth memorandum,” 69-year-old Pissarides said in an interview with local SKAI television’s program “Weekend with Action”.

“The crisis and austerity will end when Greece will be able to return to international financial markets,” Pissarides said, adding that in his view it was rather unlikely to happen before the end of the current bailout in August 2018.

The expert called for more reforms with no delays to attract investment in order to exit the seven-year debt crisis.

And Germany won’t stand for debt relief

There’s no relief in sight for the Greeks, as Germany, the dominant economic power in the European Union and chief player in the central bank, insists that all loans be paid in full.

From Kathimerini:

Greece must not be granted a “bail-in” that would involve creditors taking a loss on their loans, Germany’s deputy finance minister said in an interview broadcast on Sunday, reiterating the German government’s opposition to debt relief for Athens.

“There must not be a bail-in,” Jens Spahn told German broadcaster Deutschlandfunk, according to a written transcript of the interview.

“We think it is very, very likely that we will come to an agreement with the International Monetary Fund that does not require a haircut,” he said, referring to losses that Greece’s creditors would have to take if debt was written off.

The IMF has called for Greece to be granted substantial debt relief, but this is opposed by Germany, which makes the largest contribution to the budget of the European Stability Mechanism (ESM), the eurozone’s bailout fund.

Greece and its creditors agreed on February 20 to further reforms by Athens to ease a logjam in talks with creditors that has held up additional funding for the troubled eurozone country.

Continue reading

Border wall moves ahead; Mexican resistance stirs


Yep, the border wall is moving ahead.

From the Chicago Tribune:

U.S. Customs and Border Protection said Friday that it plans to start awarding contracts by mid-April for President Donald Trump’s proposed border wall with Mexico, signaling that he is aggressively pursuing plans to erect “a great wall” along the 2,000-mile border.

The agency said it will request bids on or around March 6 and that companies would have to submit “concept papers” to design and build prototypes by March 10, according to FedBizOpps.gov, a website for federal contractors. The field of candidates will be narrowed by March 20, and finalists must submit offers with their proposed costs by March 24.

The president told the Conservative Political Action Conference on Friday that construction will start “very soon” and is “way, way, way ahead of schedule.”

The agency’s notice gave no details on where the wall would be built first and how many miles would be covered initially. Homeland Security Secretary John Kelly has sought employees’ opinions during border tours of California, Arizona and Texas.

Announcement comes a day after cross-border meeting

The wall wasn’t even mentioned when two cabinet members traveled south of the border the day before the announcement.

From NBC News:

There were promises of cooperation, of closer economic ties, and frequent odes to the enduring partnership between the U.S. and its southern neighbor. But there were no public mentions of that massive border wall or President Donald Trump’s plan to deport non-Mexicans to Mexico as top U.S. officials visited the Mexican capital.

Instead, U.S. Homeland Security Secretary John Kelly and Secretary of State Rex Tillerson played it safe, acknowledging generally that the U.S. and Mexico are in a period of disagreement without putting any specific dispute under the microscope. It fell to their hosts, and especially Mexican Foreign Secretary Luis Videgaray, to thrust those issues into the spotlight.

“It is an evident fact that Mexicans feel concern and irritation over what are perceived as policies that may hurt Mexicans and the national interest of Mexicans here and abroad,” Videgaray said Thursday after meeting with Kelly and Tillerson.

The Americans focused instead on putting to rest some of the fears reverberating across Latin America – such as the notion that the U.S. military might be enlisted to deport immigrants in the U.S. illegally en masse. Not so, said Kelly. He said there would be “no mass deportations” and no U.S. military role.

Sure, Mexico can trust anything that comes out of an administration headed by a man who can’t even keep his own lies straight, then flies into a rage any time anyone dares point that out.

Trump may do the impossible for Peña

Mexican President Enrique Peña Nieto has been polling at all-time lows, earning an abysmal 12 percent approval rate in one recent survey., making Trump’s current 42 percent approval rating look like a rave review.

But Trump may prove a boost for the beleaguered Mexican President is Agent Orange continues with his self-serving racist rants, especially now that Peña’s administration is showing a little resistance.

From teleSUR English:

The U.S. wants to pressure Mexico into keeping migrants and refugees as they await trial, forcing Mexico to deport them instead. Mexico isn’t falling for it.

Mexico will reject the remaining funds of the Merida Plan if they’re used by the U.S. to coerce the country on immigration policy, said Interior Minister Miguel Angel Osorio Chong on Friday.

The US$2.6 billion security assistance package on the drug war has been almost been entirely distributed since 2008, mostly on military equipment like helicopters and training for its security forces.

The plan has been widely criticized for worsening, rather than improving, violence and disappearances in the country and being partly responsible for the disappearance of the 43 student-teachers in Ayotzinapa. It already contains a proviso to withhold funds if Mexico doesn’t improve its rule of law or human rights abuses, though the U.S. has never enacted this demand.

Besides now taking into account U.S. President Donald Trump’s plan to build a border wall, the aid may be dependent on Mexico hosting undocumented immigrants from third countries as they are awaiting processing of their deportation trials in the U.S.

“They can’t leave them here on the border because we have to reject them. There is no chance they would be received by Mexico,” said Osorio Chong on Friday, speaking with Radio Formula after a cool reception of U.S. Secretary of State Rex Tillerson and Homeland Security Secretary John Kelly, who visited on Thursday.

Mexico already deports hundreds of thousands of Central Americans apprehended at its southern border, but cities like Mexico City are among the largest receptors of refugees deported from the U.S.

Mexico hints at a trade war

A not-so-veiled threat was issued Thursday at the same time Trump administration officials were meeting with their Mexican counterparts.

From Reuters:

Mexico’s economy minister said on Thursday that applying tariffs on U.S. goods is “plan B” for Mexico in trade talks with the United States if negotiations aimed at achieving a new mutually beneficial agreement fail.

Economy Minister Ildefonso Guajardo told local broadcaster Televisa that he expected North American Free Trade Agreement negotiations with both the United States and Canada to begin this summer and conclude by the end of this year.

And promptly takes the first step

Guajardo’s warming was accompanied by action as well,

From teleSUR English:

Amid trade tensions with the United States, Mexico plans to send a delegation next month to visit Brazilian corn, beef, chicken and soy producers as an alterative to U.S. suppliers, its representative in Brazil said on Friday.

Mexican chargé d’affaires Eleazar Velasco said Brazil is uniquely positioned to expand agricultural commodity sales to Mexico if trade with the United States is disrupted because it is closer than other potential suppliers like Australia.

“The United States unilaterally wants to change the established rules of the game,” Velasco told Reuters. “This will evidently lead us to rebalance our trade relations.”

Mexican Agriculture Secretary Jose Calzada was due to visit Brazil last week but had to postpone his trip until March due to scheduling issues, Velasco said.

Calzada will bring Mexican food industry executives to do deals with Brazilian exporters, the diplomat said. The trip is part of a drive to lessen dependence on U.S. exports as President Donald Trump threatens to upend long-standing free trade between the two countries.

And Mexico acts on the financial front as well

The country has been engaged in a massive buttressing of its currency.

From CNNMoney:

Mexico’s currency, the peso, is one of the best performers in the world in February, up over 5%.

Before the U.S. election, the country’s central bank started implementing what its governor, Agustin Carstens, called a “contingency plan.” Carstens says Trump’s potential policies would hit Mexico’s economy like a “hurricane.”

For ordinary Mexicans, the peso’s momentum doesn’t mean much. Gas prices rose as much as 20% in January while economic growth and wages continue to be sluggish. Life is getting more expensive.

Still, it’s a swift turnaround for a country and currency facing an uncertain future with the U.S.

Since November, Mexico’s central bank has raised interest rates three times and sold U.S. dollars to international investors. Among other efforts, it’s all meant to buoy the peso that’s been weighed down by Trump’s threats.

Things are starting to get interesting. . .

Greek misery continues, no crash recovery yet


We begin with a dramatic graphic from Kathimerini, dramatic evidence that despite three rounds of bailout loans an ever-harsher austerity measures, the European economy hardest hit by the Great Recession is showing no signs of recovery as yet still more austerity is demanded:

blog-greece

The Greeks were left holding the string when the bubble popped, unable to pay loans to foreign banksters a lot of them in Germany. And the lenders wanted their money, even though the economy had crashed, unemployment skyrocketed, and the Greek industrial machine had ground to a halt.

To enable Greece pay the loans back, a Troika formed of the European Central Bank, th European Commission, and the International Monetary Fund imposed harsh austerity measures perfectly designed to ensure that the Greek people were reduced to serfs, sacrificing layoffs, pay, pension, and healthcare cuts for those lucky enough to keep their jobs.

Then there was the massive selloff of national assets, ranging from transit and power grids to ports and islands.

And still the troika wants more in exchange for another round of bailout loans.

From the London Telegraph:

Greece will need a fourth bailout as its debts remain utterly unsustainable despite years of austerity and attempted reforms, according to George Papaconstantinou, a former Greek finance minister.

A “radical liberalisation of the economy” is also necessary as the country needs to attract foreign investment because Greece lacks the domestic resources needed to grow its industries, he told an audience at the London School of Economics.

“Pretty much everyone agrees that Greek debt is not sustainable,” he said. “Is there a prospect of a fourth bailout? Yes. Even in the best case… I doubt that Greece will be able to stand on its own feet.”

Mr Papaconstantinou, who was Greece’s finance minister from 2009 to 2011, said that these measures have to be accompanied by serious economic reforms.

“Radical liberalization of the economy”?

Translate that as “more misery for the average Greek.”

The IMF lays down the law

Before taking the helm at the IMF, Lagarde served as Finance Minister for French President Nicolas Sarkozy.

In December a French court found her guilty of criminal negligence in her old job for arranging a payout of more than $400 million for businessman Bernard Tapie’s share of Addidas under questionable circumstances — though the court declined to impose either a jail sentence or a fine, rendering the guilt verdict moot.

The affair didn’t seem to bother either the French government or the IMF, so Lagarde kept her job.

More on her stance on the latest Greek bailout round from Bloomberg:

IMF Managing Director Christine Lagarde signaled that Greek debt restructuring can wait and the country should focus on overhauling its economy for the duration of its latest bailout, which expires in 2018.

Speaking in a German television interview after meeting Chancellor Angela Merkel in Berlin, Lagarde said “the volume of restructuring will clearly depend on how much reform, how much progress, how strong the Greek economy is” when the aid program ends.

What will probably be needed is a “significant” extension of maturities on Greek bailout loans and a “significant interest rate capping,” Lagarde told ARD television on Wednesday. “That will have to be discussed in greater detail later on” and “implementation of the debt restructuring will have to take place at the end of the program.”

The Washington-based fund is demanding additional debt relief measures as a condition for participating in the Greek bailout. Its participation, in turn, is a condition set by Germany when it agreed to help underwrite the latest aid package in 2015.

So who benefits?

Therein lies the rub.

Because much of the money won’t go to the banks who lent it to Greece.

Any of those lenders sold off their delinquent funds at a deep discount to that unique breed of banksters called “vulture funds,” speculators who buy up sovereign debt, then set about collecting it using all the ruthless ploys they can martial.

From the Committee for the Abolition of Illegitimate Debt:

The experience of the Greek debt restructuring of 2012 serves as a good example to show how vulture funds operate and the costs they can impose in a country and its population. The Greek case is quite interesting as not only involved the first major debt restructuring in Europe since 1953 but also it was the largest operation of its kind. The remarkable aspect of this episode is that the country decided to continue paying holdout creditors, and specifically vulture funds, in full. This was the case even though the process was organized with the support of the official creditors of the country. In this regard, it created yet another damaging precedent regarding the viability of the profits by litigation strategy followed by vulture funds.

>snip<

Just a month after the debt restructuring was completed, the government made an initial payment of 436 million Euros to a group of holdout investors led by Dart Management. This hedge fund, which had a long story of suing governments to get paid in full going back to the Brady plan in Latin America in the late 1980s, made a massive profit as it had bought the bonds on prices estimated between 60 to 70 cents on the Euro. By making that initial payment, the Greek government set a negative precedent as the rest of the holdouts were now able to use that decision to claim for equal treatment under a foreign court. The payments to holdouts continued uninterrupted afterwards parallel to the implementation of harsh austerity measures. For example, during 2013 the country paid a total of 1.7 billion Euros to holdout creditors. To date, most of the holdout claims have been paid in full by Greece. It is estimated that private investors currently have a total of 36 billion euros in government bonds that were either issued under the debt exchange of 2012 or in the debt issuance that took place in 2014.

As the Greek population continues to struggle under the imposition of harsh austerity measures and the debt burden of the country remains “highly unsustainable”, as the IMF characterizes it, it is evident that the decision to continue paying the holdouts was a mistake. It represented nothing short of rewarding dangerous speculators while transferring the costs of their actions on to the Greek people. Even more troublesome is the fact that the relationship between Greece and the vulture has not ended yet. In the aftermath of the debt restructuring of 2012, it is estimated that hedge funds have bought nearly 15 billion Euros in government bonds. As a new debt restructuring, or even unilateral default, is simply a matter of time is worth nothing that the country can still set a precedent against the actions of vulture funds. The country could begin by enacting a law, similar to that adopted in Belgium in 2015, to limit the actions of vulture funds. Furthermore, given the dire social situation in the country, it should declare the non-application of the 3rd memorandum and non-payment of all illegal, odious, illegitimate and unsustainable debts. After all it is never too late to state that sovereignty and the respect of human rights will always precede debt.

So the troika is really all about making sure predatory speculators collect their pound of flesh.

Greek crisis deepens; bad loan rate spikes


Greece, the nation hardest hit by the Great Recession, continues to stagger under the burdens imposed by the European Central Bank, the European Commission, and the International Monetary Fund.

The Troika, operating as the European Stability Mechanism, has imposed onerous pay and pension cut, mandated layoffs, forced the sale of billions in national assets [including power grids, healthcare institutions, toll roads, railways, ports, and even islands], while Greeks continue to suffer from massive unemployment.

And now the crisis is getting worse.

From Kathimerini:

Nonperforming loans last month posted a major spike of almost 1 billion euros, reversing the downward course set in the last few months of 2016. This has generated major concerns among local lenders regarding the achievement of targets for reducing bad loans, as agreed with the Single Supervisory Mechanism (SSM) of the European Central Bank for the first quarter of this year.

Bank sources say that after several months of stabilization and of a negative growth rate in new nonperforming exposure, the picture deteriorated rapidly in January, as new bad loans estimated at 800 million euros in total were created.

This increase in a period of just one month is considered particularly high, and is a trend that appears to be continuing this month as well. Bank officials attribute the phenomenon to uncertainty from the government’s inability to complete the second bailout review, fears for a rekindling of the crisis and mainly the expectations of borrowers for extrajudicial settlements of bad loans.

Senior bank officials note that a large number of borrowers will not cooperate with their lenders in reaching an agreement for the restructuring of their debts, in the hope that the introduction by the government of the extrajudicial compromise could lead to better terms and possibly even to a debt haircut.