Category Archives: Wealth

Tape proves Rousseff ouster really was a coup


Anyone with the slightest doubt that the impeachment of Brazilian President Dilma Rousseff is anything other than a coup should be disabused of their credulity by events coming out of that Latin American nation today.

The scenario unfolding in Brasilia has elements of the Nixonian [tapes], touched with good old-fashioned corruption.

We open with the Independent:

Brazil’s interim leader Michel Temer is facing his first full-blown political crisis following the release of tape recordings seemingly showing that the suspension two weeks ago of President Dilma Rousseff was the result less of legitimate constitutional complaints and more of a plot.

After a day of frantic speculation in the capital, Brasilia, the country’s barely installed planning minister and top Temer ally, Romero Juca, announced he was temporarily stepping aside after admitting earlier in the day that his was one of two voices heard on the tape.

>snip<

Mr Temer became interim president of Latin America’s largest economy earlier this month after the upper chamber of the National Congress voted to suspend Ms Rousseff and begin an impeachment trial against her on charges she fiddled the nation’s books to paper over a dire budget deficit.  She and her allies contended however that she was in fact a victim of a “coup”.

The bomb was dropped on the Temer team early Monday when one of Brazil’s leading papers, the Folha de São Paulo, released chunks of a 75-minute conversation from early March between Mr Juca, who was then a Senator, and Sergio Machado, also a former senator and the head of a state oil company.  Who made the tape and why is not clear.

Al Jazeera English examines the timing and identifies the suspected Taper, whose motivations weren’t exactly Nixonian:

The scandal threatens Temer only 11 days after taking power from Rousseff, whom the Senate suspended as president on May 12 at the start of an impeachment trial on charges of breaking government accounting rules.

The Folha newspaper released what it said were recordings of conversations in March between Juca and Sergio Machado, a former oil executive.

The recordings were allegedly made secretly by Machado who, like Juca, is the target of an investigation into massive embezzlement centred on state oil company Petrobras.

In the conversations, Juca is heard calling for a “national pact” that he appears to suggest would stop the investigation, known as Operation Car Wash, in which dozens of top-ranking politicians from a variety of parties, as well as business executives, have been charged or already convicted for involvement in the Petrobras scheme.

MercoPress covers embarrassment:

Juca’s decision to take a leave from his post to defend himself is a huge blow for Interim President Michel Temer, who counted on the experienced senator to secure legislative support for key economic measures and reforms.

The new scandal also raises fears of further political instability in Brazil less than two weeks after President Dilma Rousseff was suspended to stand trial in the Senate for allegedly breaking fiscal laws.

>snip<

In recorded comments made before Rousseff was suspended and published by newspaper Folha de S. Paulo on Monday, Juca told an ally he agreed on the need for a “national pact” to circumscribe the probe known as “Operation Car Wash.”

Asked for help by a friend and former senator under investigation in the probe, Jucá replied, “The government has to be changed in order to stop this bleeding.”

There’s a whole lot more after the jump. . . Continue reading

Spanish Prime Minister’s secret Troika promise


Spain’s prime minister is the target of outrage today after one of the country’s leading newspapers revealed a secret promise he’d made to the a Troika member promising to inflict yet another round of austerity on a country already wracked by high unemployment and a stumbling economy.

The Troika, comprised of the European Commission, the European Central Bank, and the International Monetary, disperses funds to bail out countries effectively bankrupted by the collapse of their banks at the start of the Great Recession.

From El País:

The Spanish political scene was in turmoil on Monday after EL PAÍS revealed the contents of a letter that acting prime minister Mariano Rajoy sent to the European Commission.

In the letter, Rajoy said that if he is re-elected at the upcoming elections of June 26, he is “prepared to adopt new measures, if required, in order to meet the [deficit] target.”

In public, Rajoy, of the Popular Party (PP), has denied that Spain will require any further spending cuts following a raft of unpopular measures that were taken at the height of the economic crisis.

Spain’s population has already been hit with pay and pension cuts and selloffs of public property in previous rounds of austerity, yet the promised economic recovery has failed to transpire.

From the National Institute of Statistics, here are the latest jobless percentages for Spain’s provinces, with the national rate represented by the darker bar:

BLOG Spanish jobless

IMF issues a call for major Greek debt relief


One of the three members of the Troika administering post-crash debt relief loans to Greece is calling for major concessions to the austerity-wracked nation, including outright loan balance cuts of up to half.

The call comes the day after the Greek government passed yet another round of pay and pension, cuts, tax increases, and further sell-offs of the national commons.

From Greek Reporter:

The International Monetary Fund (IMF) released its preliminary draft Debt Sustainability Analysis (DSA) on Monday, May 23. the DSA was prepared by the fund staff in the course of policy discussions with the authorities and the European institutions in recent months.

The report, published a day ahead of the crucial Eurogroup on May 24, calls for an “upfront” and “unconditional” debt relief. Without immediate debt relief the recession-ravaged country would deteriorate dramatically over the coming decades. In fact, at the current pace debt would eat up 60 percent of the budget by 2060.

The report states that “providing an upfront unconditional component to debt relief is critical to provide a strong and credible signal to the markets about the commitment of official creditors to ensuring debt sustainability, which in itself could contribute to lowering the market financial costs. An upfront component can also help garner more ownership for reforms.”

The report states that public debt was projected to surge from 115 percent to 150 percent of the GDP because of the expected internal devaluation. A deeper-than-expected recession necessitated significant debt relief in 2011-2012 to maintain the prospect of restoring sustainability. Serious implementation problems caused a sharp deterioration in sustainability that raised new doubts on the realism of policy assumptions from mid-2014 onwards.

More from the ANA-MPA news agency:

The measures recommended included a reprofiling of existing loans, necessary to cut funding needs to 20 pct by 2040. In this framework, the Fund recommends an extension of repaying loans received by the EFSF (130.9 billion euros) by 14 years, another 10 years for the loans received from ESM (186 billion) and another 30 year of bilateral loans from EU countries (52.9 billion).

The IMF also recommends extending a grace period for ESM loans by six years and a 17-20 year extension of EFSF and bilateral loans, respectively. This action would cut the funding needs by 17 pct of GDP by 2040 and by 24 pct by 2060.

The Fund also recommends a reduction in the margin (0.5 pct) added on a floating interest rate in bilateral loans and introducing an 1.5 pct ceiling on interest rates for the other two types of loans by 2040. This would reduce public debt by 53 pct of GDP by 2040 and by 151 pct by 2060 and the country’s funding needs by 22 pct by 2040 and 39 pct by 2060, safeguarding debt sustainability.

The IMF significantly reduced privatization proceed targets to 5.0 billion euros.

As the IMF summary notes:

Greece continues to face a daunting fiscal consolidation challenge. After seven years of recession and a structural adjustment of 16 percent of GDP, Greece has only managed to achieve a small primary surplus in 2015, and this due to sizeable one-off factors. This is still far away from its ambitious medium-term primary surplus target of 3½ percent of GDP. Reaching this target still requires measures of some 4½ percent of GDP. Low-hanging fruit have been exhausted, and the scope for new significant measures is limited.

The full report is here [PDF].

Greece surrenders to the troika, more austerity


As thousands of Greeks demonstrated in Syntagma Square outside the national legislature, the national parliament drank the Kool-Aid and passed the austerity measures demanded by the Troika of international lenders, a move that may foreshadow the end of the Syriza Party’s term at the helm of the national government.

Alexis Tsirpras and his party emerged as the victors last year on a promise to overwthrow the yoke of imposed austerity.

Instead, they have embraced it.

From eKathimerini:

Greek MPs approved on Sunday night a multi-bill containing a range of measures, including another 1.8 billion euros in tax hikes and the framework for a vast new privatization fund, paving the way for the Eurogroup to release more loans to Athens.

Prime Minister Alexis Tsipras saw 152 of his 153 MPs back the controversial package of legislation, meaning the government’s slim parliamentary majority was not put at risk.

Vassiliki Katrivanou voted for the legislation “in principle” but against the articles regarding the privatization fund and an automatic mechanism applying fiscal cuts if the primary surplus target is not met.

Eurozone finance ministers are due to meet in Brussels on Tuesday to decide whether Greece has done enough to complete the first review of its latest bailout program. If the green light is given, Athens is set to receive a minimum of 5.7 billion euros in fresh funding. However, there are still questions regarding whether the eurozone creditors and the International Monetary Fund will agree on how to reduce Greece’s debt or whether this will prove an obstacle to the next disbursement.

Some of the reaction to the vote and more on the measures embraced from the Guardian:

“They are with the exception of the Acropolis selling everything under the sun,” said Anna Asimakopoulou, the shadow minister for development and competitiveness. “We are giving up everything.”

The multi-bill, which also foresees VAT being raised from 23% to 24%, is part of a package of increases in tax and excise duties expected to yield an extra €1.8bn in revenue. Earlier this month, Tsipras’s leftist-led coalition endorsed pension cuts that were similarly part of an array reforms amounting to €5.4 bn, or 3% of GDP.

At the behest of the EU and International Monetary Fund, the government has agreed to adopt tighter austerity in the form of an automatic fiscal brake – referred to as “the cutter” in the Greek media – if fiscal targets are missed.

Despite official claims that goals will be achieved, there is a high degree of scepticism as to whether this is feasible. The Greek economy has seen a depression-era contraction of more than 25% since the outbreak of the debt crisis in late 2009, and with high taxes likely to repulse investment, economic fundamentals are also unlikely to improve.

The Associated Press examines the causes and more of the effects:

Greece now hopes the creditors will complete the first assessment of its third bailout program, freeing loan disbursements that will allow Greece to meet its obligations and avoid default.

>snip<

[I]t will have to navigate differences between the International Monetary Fund, which call for a generous debt cut albeit with more austerity measures, and the Europeans, chief among them German finance minister Wolfgang Schaeuble, who want no such cuts.

At the end of an acrimonious four-day debate, including in committee, Prime Minister Alexis Tsipras blasted the main conservative opposition and other centrist parties for having supported last August’s third bailout deal, but not the laws that have been voted on as prerequisites for concluding the assessment.

Opposition leader Kyriakos Mitsotakis countered that the bailout terms never included the superfund, which will expire in 2115. He said the precise terms were the results of Tsipras’ failure to negotiate reforms he and his leftist party have never believed in. He said he would prefer spending cuts to higher taxes and would negotiate with the creditors for lower annual levels of budget surpluses (2 percent of GDP instead of 3.5 percent) from 2018 onward.

The government majority was momentarily shaken Saturday when the junior partner, right-wing Independent Greeks, objected to freezes in pay hikes for so-called “special categories” of civil servants, including military, police, diplomats, judges, public health service doctors and university professors.

The pay cuts, which would have saved about 120 million euros ($135 million), were shelved and will be partly replaced by bringing forward taxes on Internet users and beer.

There’s more, after the jump. . . Continue reading

Chart of the day: Treasures flow to tax havens


Treasury notes are a financial safe haven, backed by the full faith and credit of the U.S. government and paying a fixed interest rate. America’s foreign have traditionally purchased them with the hefty trade balances. And now hedge funds are scooping them up and hauling them to offshore tax havens with tight bank secrecy laws, just like those Panama Leaks folks.

And it took a Freedom of Information Act request to find out how much has been heading offshore.

And that leads to our Chart of the day:

BLOG Caymans

From Bloomberg, which reports:

A Caribbean financial center favored by hedge funds is now the third-biggest foreign owner of U.S. government debt.

The Cayman Islands, where more hedge funds are domiciled than anywhere else in the world, held $265 billion of Treasuries as of March, up 31 percent from a year earlier, according to data the U.S. Treasury Department released Monday. It was the first time that the U.S. released details of bond holdings among OPEC and Caribbean countries, and it came in response to a Freedom-of-Information Act request submitted by Bloomberg News.

The stockpile makes the British territory, an offshore tax haven with about 60,000 residents, the largest holder after China and Japan. Those nations, the world’s second- and third-biggest economies, each own more than $1 trillion of Treasuries.

 The surge in ownership of U.S. debt for the Caribbean getaway shows that hedge funds are joining more traditional mutual fund managers in buying Treasuries amid lackluster returns in other assets, with many global stock indexes posting losses in 2016. Negative bond yields in Europe and Japan are also pushing asset managers into the $13.4 trillion Treasuries market, which is on pace to gain for a third consecutive year.

Brazil’s acting president hews to neoliberal line


Michel Temer, Brazil’s acting president and chief neoliberal, is setting about the most ruthless privatization of the nation’s commons since the Portuguese colonialist first arrived.

And just as with the Portuguese, the nation’s indigenous peoples are shapping up to be the first victims of the relentless drive to turn everything public into a center of private profit.

From the Thomson Reuters Foundation:

Brazil’s interim government is moving ahead with plans for a constitutional amendment that would weaken indigenous land rights and pave the way for new plantations and dams to encroach on lands inhabited by native peoples, a United Nations official said.

Erika Yamada, a member of the U.N’s Expert Mechanism on the Rights of Indigenous Peoples, a human rights advisory body, said the proposed constitutional change would result in Brazil moving backwards on indigenous land rights.

The procedures used to identify and indigenous territories could be altered to give lawmakers more power to decide which territories belong to native peoples, she said.

>snip<

“They (lawmakers) will try and move forward with changes to the constitution that would make it much harder to defend indigenous rights,” Yamada told the Thomson Reuters Foundation in an interview this week.

“I think they will also weaken the process of authorization for large development projects with great social and environmental impact for traditional communities.”

And it’s not just the land and water of the indigenous that are marked for the auction block

From Bloomberg:

Brazil’s Acting President Michel Temer is studying the sale of state assets to shore up public accounts, as well as an audit of the country’s largest savings bank, said a government official with direct knowledge of the matter.

A government task force will consider selling stakes in companies such as power utility Furnas Centrais Eletricas SA and BR Distribuidora, a unit of Petroleo Brasileiro SA, the oil producer known as Petrobras, said the official, who asked not to be named because the plans haven’t been made public. The intention is to help plug a near-record budget deficit and improve the efficiency of state-owned enterprises.

Petrobras’s preferred shares rallied as much as 1.6 per cent on the report, after posting losses during most of the morning.

The plans are the clearest sign yet of a policy shift since the Senate’s suspension last week of President Dilma Rousseff, who had increased the role of the government and state companies in the economy.

Temer has also take the first steps to privatizing the national public broadcaster, reports teleSUR English:

Michel Temer, head of the coup government in Brazil, fired the head of the Brazil Communications Company, the public firm that manages the country’s public media outlets.

The action was rejected by the firm’s board of directors on the grounds that the law that regulates the company prohibits political interference.

“The notion that the president-director of the company should have fixed term, that does not coincide with a presidential mandates, was enshrined precisely to ensure the independence, impartiality and guiding principles of public outlets,” read a statement by the board of the Brazil Communications Company.

“The aim is to ensure autonomy from the federal government and protect the right of Brazilian society to free and public communications, which ensures the expression of diversity and plurality — foundations of a modern and democratic society,” added the statement.

The head of the company, Ricardo Melo, was appointed by democratically elected President Dilma Rousseff for a four year term earlier this month.

The coup government, however, ignored the concerns of the board.

Melo was replaced by Laerte Rimoli, who served as spokesperson for Aecio Neves, the right-wing candidate defeated by Rousseff in the 2014 presidential election. He also previously served as press officer for Eduardo Cunha, the embattled former head of the Chamber of Deputies who was recently suspended by the Supreme Court.

There’s much more, after the jump. . . Continue reading

Rallies across the world: March Against Monsanto


Narch agagaist Monstanto protesters in Mtubatuba, South Africa today.

March against Monsanto protesters in Mtubatuba, South Africa today.

Monsanto, the folks who brought you Roundup and all those patented Roundup Ready genetically modified crops they peddle, was the target and marches and rallies in more than 400 cities across the global today by folks angry at the firm’s control of so much of the world’s food supplies.

Big Agra’s been in a state of flux of late, with major mergers in the offing, as BBC News reported Thursday, when Bayer announced it wanted to buy the company:

There has been speculation for some months that Monsanto, the world’s biggest seed company, could become a target for either Bayer or BASF.

Bayer, which has a market value of about $90bn, is the second-largest producer of crop chemicals after Syngenta.

Monsanto, which has a market capitalisation of $42bn, attempted to buy Swiss rival Syngenta last year.

However, Syngenta ended up accepting a $43bn offer from ChemChina in February, although that deal is still being reviewed by regulators in the US.

Bayer’s acquisition of Monsanto is expected to be bigger in value than the ChemChina-Syngenta deal.

More from Reuters:

Deutsche Bank analysts said a deal could shift Bayer’s center of gravity to agriculture, accounting for about 55 percent of core earnings, up from roughly 28 percent last year excluding the Covestro chemicals business Bayer plans to sell.

That would have a negative impact on sentiment among Bayer’s healthcare-focused investor base, the bank said.

Bayer, which has a market value of $90 billion, said the merger would create “a leading integrated agriculture business”, referring to Bayer’s push to seek more synergies from combining the development and sale of seeds and crop protection chemicals.

Most of the major agrichemical companies are aiming to genetically engineer more robust plants and custom-build chemicals to go with them, selling them together to farmers who are struggling to contend with low commodity price.

And, just for the fun of it, some voideos from around the world and an image or two.

First, the march in Saarbrücken, Germany, from Heidi Schmitt:

March against Monsanto, 21.05.2016 in Saarbrücken

On to Paris, via Ruptly TV:

France: Parisians rally against Monsanto

Program notes:

Several thousand protesters took to the streets of Paris on Saturday for the ‘March against Monsanto,’ in a demonstration against multinational agrochemical corporation. Protesters held banners reading: “GMO/Pesticides = the next sanitary scandal” and “GMO no thanks.”

The activists are protesting against Monsanto’s Genetically Modified Organisms (GMO) products and the alleged monopoly that Monsanto has in the food supply market.

Saturday’s march will mark the fourth annual ‘March against Monsanto.’ The march is set to take place in over 400 cities in more than 40 countries around the world.

Then off to Innsbruck, Austria with Klaus Schreiner:

2016 Monsanto Marsch Innsbruck

And then back to France and a march in Bordeaux from Gilbert Hanna:

Contre Monsanto and CO à Bordeaux marche internationale

Next, Amsterdam, via kafx:

March against Monsanto

And an image from Basel, Switzerland, via GM Watch:BLOG Monsanto Basel

Then to Toronto, via SupportLocalScene:

March Against Monsanto 2016 at Yonge & Dundas

Program notes:

Yonge and Dundas sees the Millions March Against Monsanto 2016 marching in downtown Toronto, Canada, May 21st 2016.

Next, an image form New York by Alex Beauchamp:

BLOG Monsanto NYC

Then to Japan with Ruptly TV:

Japan: Thousands protest against Monsanto in Tokyo

Program notes:

Several thousand protesters took to the streets of Tokyo for the ‘March against Monsanto’ on Saturday, in a demonstration against multinational agrochemical corporation.

Finally, via GM Watch, a scene from China:

BLOG Monsanto Taipei