Soros bets against Euro

[Jan Klimkowski]

Recite after me:

We're all in this together. We're all in this together.


Christine Lagarde is exposed as a Bond S&M villain in drag.

Christine Lagarde, scourge of tax evaders, pays no tax

IMF boss who caused international outrage when she suggested that Greeks should pay their taxes earns a tax-free salary

Kim Willsher in Paris

guardian.co.uk, Tuesday 29 May 2012 14.23 BST

Christine Lagarde, the IMF boss who caused international outrage after she suggested in an interview with the Guardian on Friday that beleaguered Greeks might do well to pay their taxes, pays no taxes, it has emerged.

As an official of an international institution, her salary of $467,940 (£298,675) a year plus $83,760 additional allowance a year is not subject to any taxes.

The former French finance minister took over as managing director of the IMF last year when she succeeded her disgraced compatriot Dominique Strauss-Kahn, who was forced to resign after he faced charges later dropped of sexually attacking a New York hotel maid.

Lagarde, 56, receives a pay and benefits package worth more than American president Barack Obama earns from the United States government, and he pays taxes on it.

The same applies to nearly all United Nations employees article 34 of the Vienna convention on diplomatic relations of 1961, which has been signed by 187 states, declares: "A diplomatic agent shall be exempt from all dues and taxes, personal or real, national, regional or municipal."

According to Lagarde's contract she is also entitled to a pay rise on 1 July every year during her five-year contract.

Base salaries range from $46,000 to $80,521. Senior salaries range between $95,394 and $123,033 but these are topped up with adjustments for the cost of living in different countries. A UN worker based in Geneva, for example, will see their base salary increased by 106%, in Bonn by 50.6%, Paris 62% and Peshawar 38.6%. Even in Juba, the capital of South Sudan, one of the poorest areas of the world, a UN employee's salary will be increased by 53.2%.

Other benefits include rent subsidies, dependency allowances for spouses and children, education grants for school-age children and travel and shipping expenses, as well as subsidised medical insurance.

For many years critics have complained that IMF, World Bank, and United Nations employees are able to live large at international taxpayers' expense.

During the 1944 economic conference at Bretton Woods, where the IMF was created, American and British politicians disagreed over salaries for the bureaucrats. British delegates, including the economist John Maynard Keynes, considered the American proposals for salaries to be "monstrous", but lost the argument.

Officials from the various organisations have long maintained that the high salaries are a way of attracting talent from the private sector. In fact, most senior employees are recruited from government posts.

[Keith Millea]

Well, Well, Well.......

I can't wait for her response........:finger:

[Jan Klimkowski]

Well, Well, Well.......

I can't wait for her response........:finger:

Yup - I'm sure her lackeys and PRs will be out there spinning that she's "entitled" to such a huge sum tax free, and could earn much more in private industry...

I think Lagarde and DSK should be locked in a hotel room together for a week.

[Magda Hassan]

Well, Well, Well.......

I can't wait for her response........:finger:

Yup - I'm sure her lackeys and PRs will be out there spinning that she's "entitled" to such a huge sum tax free, and could earn much more in private industry...

I think Lagarde and DSK should be locked in a hotel room together for a week.

They certainly deserve each other. Some how I think DSK would have been more supportive of the Greeks and less so of the Germans though. But we will never lnow for sure now that they installed Leona Helmsley's soul sister as IMF top dog.

[Keith Millea]

But we will never lnow for sure now that they installed Leona Helmsley's soul sister as IMF top dog.

Yep,Leona ("only the little people pay taxes") was the first person I thought of when I read about this other "Queen of Mean"...:vomit:

[Magda Hassan]

Panic in Spain as money flies out of country and head of European bank says Eurozone is 'unsustainable'

By HUGO DUNCANPUBLISHED: 17:45 GMT, 31 May 2012 | UPDATED: 00:51 GMT, 1 June 2012Senior European officials last night issued a grave warning that the very survival of the euro is at risk as the crisis in Spain threatens to tear the region apart.Politicians and central bankers said the situation in the eurozone was unsustainable and drastic action was needed to prevent the disintegration' of the single currency.They spoke out as European leaders scrambled to stop the financial crisis in Spain spiralling out of control and infecting other countries such as Italy.



One analyst warned of a perfect storm' in Spain as the country's deputy prime minister held crunch talks in Washington with US Treasury Secretary Tim Geithner and the head of the International Monetary Fund, Christine Lagarde.It is thought the IMF is drawing up contingency plans for Spain to prevent a cataclysmic financial meltdown.The euro crashed to a 23-month low against the US dollar at $1.2335 but was up slightly against sterling having recovered from its lowest level since late 2008. Last night, £1 was worth 1.2460 euros.



Mario Draghi, president of the European Central Bank, said the eurozone was unsustainable in its current form. In his sharpest criticism yet of eurozone leaders' handling of the crisis, he said the ECB could not fill the vacuum' left by governments in terms of economic growth or structural reforms.



And he called for overwhelming force to be used to shore up Europe's battered banks to restore confidence in the financial system.
Ignazio Visco, governor of the Bank of Italy and a senior ECB member, said political inertia and bad economic decisions have put the entire European edifice' at risk. There are growing doubts among international investors about governments' ability to ensure the survival of the single currency,' he said.


Olli Rehn, EU economic and monetary affairs commissioner, said bold action was required if we want to avoid a disintegration of the eurozone'.The apocalyptic tone from usually measured EU officials betrayed the spreading sense of panic.
Irish voters are likely to approve a European treaty on budget discipline in yesterday's referendum securing continued aid. The result will be announced later today.But the outcome of a second Greek election on June 17 seen as crucial for the country's future in the eurozone is too close to call.

And fears are mounting that Spain, the fourth biggest economy in the eurozone, will be the fourth country to need a bailout.
City commentator David Buik, of financial betting firm BGC Partners, said: There is an uncomfortable feeling out there. Whilst EU politicians and bureaucrats continue to waffle and the army of intellectual egg-heads proffer their useless economic advice, sentiment will continue to be negative.'
Investment bank JP Morgan warned that Spain would need £280billion to keep it afloat, with UK taxpayers potentially forced to stump up billions through the IMF.
The Spanish banking system has been crippled by nearly £150billion of toxic loans to homeowners and developers. One in four Spaniards are now out of work.
Bankia, one of the country's biggest lenders, has asked the government for a £15billion lifeline, triggering concerns about the scale of the losses at other Spanish banks.
With Spain's regions also in trouble, international investors are betting that the Spanish government will not be able to foot the bill for it all. Edward Thomas of investment firm Quantum Global Wealth Management declared: It's a perfect storm for Spain.'

Read more: http://www.dailymail.co.uk/news/article-...z1wYODpGKq

[Magda Hassan]

I don't actually like UKIP or Nigel Farage too much at all but this is quite fun. In a black sort of way.

[Magda Hassan]

It's all just a game for some...
Spain didn't need a bail out. Just some of the banks there. But they wouldn't lend to them because they know they'll go bust. So they make the Spanish people pay instead. Free markets. What a joke. :ballchain:

Deutsche Bank: "The Spanish Recapitalization Is Not Working" - A Market Shock Is Required

Submitted by Tyler Durden on 06/16/2012 09:01 -0400

This weekend, everyone's attention will be on the Greek elections, however it is Spain that has now become the "fulcrum security" of Europe. As such, events in Greece are merely a catalyst that will set off a chain of events that will have an impact not only on Spain, but on all of Europe, and thus, the world.
As we pointed out last week after the Spanish bailout announcement, based on a preliminary analysis which had been compiled by Deutsche Bank's europhiles hours before the formal announcement, and one which just happened to be a carbon-copy of what was proposed as the 'final (and failed) Spanish solution', it appears that the events in Europe are if not orchestrated by the largest German bank, then certainly receiving part-time advice.
Which is why we were somewhat disturbed to read Gilles Moec's summary this morning, which points out the patently obvious: "Spain recapitalization: it's not working." Whether it is that Europe's brightest minds forgot about the threat of subordination (promptly reminded by Zero Hedge hours after the formal announcement), and that the scars of the Greek cramdown are still fresh in the private sector's mind, it does not matter: as DB says: "Unfortunately, the market reaction was clearly negative, with Spanish 10 year rate brushing past 7% for the first time since 1996. Two main elements probably explain the market reaction: first, the increase in public debt triggered by the recapitalization whose cost will stay on the sovereign's balance sheet under the current rules); second the seniority attached to ESM loans, if this scheme is used as the final channel for the EU loan instead of the EFSF."
Yes, it is "unfortunate" that Spain's bailout plan was poorly planned, organized and executed. It is not unfortunate that some are still left who can do simple math and call out Europe's failed plans. Which brings us to the present, where we find that even Deutsche Bank has given up hope for interim solutions, having realized that the market will no longer accept transitory, feeble arrangements. Instead DB is now formally calling for a big bang resolution, one coming from the ECB. Here is the punchline: "ECB has room for manoeuvre, but needs political cover for a big' policy" or said otherwise, "A shock is required to get a liquidity response." In other words: Europe's only real hope for even a stop gap solution... is a wholesale market crash, not surprisingly the very same conclusion that Citi reached on May 19 when they warned that only Crossover (XO) at 1000 bps or wider could push Europe into acting...
Basically stated, anything less than a controlled market crash,one that finally gets the ECB involved with Germany's permission of course, merely pushes the market higher on nothing but hope of an intervention that said market lift makes even more improbable, as now both Citi and DB admit, which can and will lead to an uncontrolled market collapse, one from which not even the ECB will be able to extricate Europe.
In this light, will Greece simply be the start of the much overdue "controlled demolition", that will bring the ECB out of hibernation, that is paradoxically instrumental in avoiding an uncontrolled demolition, where not even the ECB will have any powers left to prevent a collapse?
Here is how Deutsche Bank sets the strawman - on the recapitalization, the market is wrong, and our advice was, well, right:

The statement by the German finance minister on Monday that he found find an ESM solution "more efficient" may have rekindled among investors the fear that the "Greek blueprint" would be replicated for Spain, with the private sector left to bear the brunt of any restructuring.

We think that the risk to Spain's public debt sustainability, even after a EUR100bn recapitalization effort, would remain manageable under what we consider realistic assumptions on growth and interest rates (see FE Europe 8 June). Spanish public debt would remain significantly lower than in Italy and not so far above that of France, for instance.

There is always a but. And in this case, it is yet another event out of left field that will likely send spreads soaring even more than before:

However, even if we think that the long-term issues surrounding Spanish public debt are overstated, meeting the government's refinancing needs in the next few months is getting increasingly difficult, in our view, since the war chest' accumulated by Spanish banks in the LTROs of December and February is drying up. At peak, in March 2012, Spanish banks had accumulated EUR 88.7bn on the ECB's deposit facility. This has fallen to EUR 36.8bn in May. Spanish banks have committed to lend EUR 35bn to the regions this year to help them pay down their arrears. They need to refinance c.EUR 80bn of their own debt before the end of the year. Taking the slack from nonresidents reducing their exposure to the Spanish sovereign is going to stretch their resources further. By March 2012 (latest available data), non residents had reduced their holding of Spanish public debt to EUR 158.7bn (31.6% of the total), down EUR 6.4bn in a month and down EUR 26.1bn in a year. The valve of adjustment under the current circumstances would be to cut lending to the private sector further, thus sending domestic demand into more contraction.

In other words, "the money, it's a gone." Needless to say, the bank that will do everything to avoid the market's attention being focused on its capitalization and leverage ratio, already has a follow up plan, after its first one failed:

To unlock the Spanish situation, we think that three ingredients should be envisaged:

1. Another round of long term liquidity injection by the ECB. Even if the political conditions are not met at this stage (see last section of this article), we believe that this would be the only possibility for local banks to continue to support their sovereign. Further tweaks in the collateral rules would probably be needed to ensure that banks could take full advantage of this additional round. In our view, to try to incentivize banks to re-start lending to the private sector, the rules could be changed to allow only recently originated loans to corporations, for instance.
   
2. Announcing recourse to the EFSF rather than the ESM to recapitalize Spanish banks. This could be seen by the market as a sign that seniority is not a major preoccupation of the Europeans when dealing with Spanish bank recapitalization. This would entail a negotiation with Finland on a collateralization of its support which, given the size of the Finnish contribution, is manageable, in our view.
   
3. Ideally, the most powerful signal would be to open the possibility for direct recapitalization of banks by the euro rescue mechanism. This could not be done via the EFSF, but is still doable for the ESM, either via a unanimous change in the list of instruments by the board (article 19 procedure), or via a revision in the treaty which still has not been ratified by Germany - if the legal basis for an "internal modification" is too weak.
   

Fair enough, "Door 1" it is, as further confirmed by yesterday'sstatements out of Draghi, and various media leaks, that a European ZIRP may be just around the corner. There is, however, a problem with getting another LTRO out of the ECB. As Moec says, "ECB has room for manoeuvre, but needs political cover for a big' policy."
Again, from DB:

With the market unconvinced by the Spanish bank recap package and near-term prospects of an ERF unconvincing, the market will be looking to the ECB as a last resort to restore some order.

There were mixed messages from ECB President Draghi's comments on Friday, 15 June. In his address to the annual ECB Watchers conference, he claimed the objectives of the 3Y LTRO have been "broadly met", in particular the easing of supply constraints on private credit, but pledged to provide liquid "where needed". He claimed economic stabilization remains the ECB's baseline, while at the same time pointing to the weak data since the baseline was agreed and "serious downside risks" to growth. He claimed that the ECB cannot "fill holes" in the EU's process of mending heterogeneity, but that the ECB "partly responded" to heterogeneity with the enlarged collateral pool, specifically the credit claims collateral.

And here we get to the crux of the issue, the one that has inverted the expectations outcome out of Greece, whereby if Syriza wins, the market's Pavlovian dogs are now fully expecting a global central bank intervention, aka the Bank. Should Syriza disappoint and Greece end up ungoverned, or paradoxically get a pro-Europe government, the lack of response will likely result in a risk off mood come Monday especially since the entire upward move in the past week was purely short covering on fears of monetary policy response:

A shock is required to get a liquidity response

Draghi discussed the concept of "adequate liquidity" on Friday. He differentiated between normal times, when the volume of liquidity is determined by banks' obligatory reserve requirements and other autonomous factors, and times of financial instability, when the central bank must counteract bank funding market tensions and "systemic consequences". Financial stability is an ECB responsibility. Compared to the comments from Draghi at the 6 June press conference, when the hurdles to more liquidity seemed high, there is more of a sense of readiness to act'. That this message came right at the start of Draghi's address to the ECB Watchers conference implies the importance of the readiness' message. The full allotment regime remains in place. Banks can get as much liquidity as they require for one week and for three months. The 3Y LTRO Draghi describes as having "broadly met" its objectives, specifically, easing credit constraints. He admitted it would take longer to judge full success (a flow of credit to the private sector), but demand may be weak. We have highlighted the importance of the next ECB Bank Lending Survey on 25 July of the ECB's judgment regarding the need for additional vLTROs. It is possible in the context of more disorderly market scenarios that the ECB pre-empts the BLS to reengage the vLTRO policy which has, in Draghi's view, already broadly' worked in similar market conditions.

And there you have it: if have more "disorderly market scenarios" read market crash, but not terminal crash, then ECB brings out the firepower.
Anything less, and everyone will be disappointed as it merely enforces the continuation of a now failing, and obvious to all, status quo, one which sees Spanish bond yields leaking ever wider, until Italy too finds itself beyond the dreaded 7% barrier.
Will Greece be the catalyst to bring on this much needed response from the Central Banks? Or will Greece "muddle through" for however many weeks before it needs another bailout, and/or finally throws in the towel, while the global central banks do nothing?


Find out on Sunday night.

http://www.zerohedge.com/news/deutsche-b...k-required

[Jan Klimkowski]

It's degenerated into a complete Ponzi scheme.

Some august organisation announces an injection of faux "money", whose real world value is equivalent to that of Monopoly notes.

There's some pass the parcel, with banks borrowing at say 3% and then relending at say 6% - in effect being gifted a free profit.

But it's not risk free. It must be tied to some collateral.

And there's the problem. All the collateral - be it a house in a ghost town, or a future promise to pay by some sovereign nation - is junk. Worth a fraction of the value at which it is marked as collateral.

Small and institutional investors are finally realizing that when default or "haircuts" happen, they're being pushed to the back of the queue, and getting pennies back on their investments.

There is too much debt in the world.

This debt will never be repaid.

The bubble will burst.

ATMs will stop working.

Pensions will stop paying out.

Teachers, doctors, nurses, will no longer be paid.

The system will reset as dramatically as Weimar Germany.

The only question is When?

[Magda Hassan]

Googlish translation from French

In Helsinki, rather out of the euro rather than pay the debts of others


latribune.fr (with branches) | 06.07.2012, 12:04 - 251 words
Defending a "hard line" within the euro area, Helsinki shows his reluctance vis-à-vis support for countries most in need. A position that the Finnish Minister of Finance, Jutta Urpilanen translated into hard term: it prefers to see the country out of the euro rather than pay for the debt of its European partners.
Finance Minister Jutta Urpilainen - Copyright Reuters


"Finland does not cling to the euro at any price and we are ready for all scenarios, including abandon the single European currency". The affirmation of the Finnish Minister of Finance, Jutta Urpilainen, transcribed this Friday in the business daily Kauppalehti clearly announces the color. If it finds that "the euro is beneficial for Finland", the Minister considers that his country did not support the "collective responsibility for the debts" nor the "risks of other countries".
Helsinki has declared its refusal to any redemption of government securities on the secondary market via the European Stability Mechanism, which was nonetheless one of the main achievements of the European Summit held in Brussels in late June. In another interview, published Thursday, Jutta Urpilainen defended the Finnish position that represents the "hard line" in Europe. "We are constructive and we want to solve the crisis, but not in any condition," she said.
Bilateral agreements
Already last year, the Finnish government had obtained a bilateral agreement with Greece when a second aid plan had been decided. After this treaty, Athens ensured the country to repay the sums advanced. Other similar agreements are under discussion with Spain in exchange for assistance to banks Iberian.
Finally, among other objects of distrust: the Tobin tax. The government objected in February to the tax on financial transactions in which members of the Eurozone finally agreed in late June, but has yet to be ratified in each country.