Russia Discovers American-Style "Capitalism", Completes Record Bailout Of Fifth Largest Bank

Just in case there was any speculation that American-style communism as any different from Russian-style capitalism, any concerns that the Bernanke put has now gone airborne can be put to rest. As the BBC reports, "Russia's fifth largest bank, Bank of Moscow, has been given the biggest bail-out in Russian history." The hilarity ensues: the $14bn rescue came after another bank, VTB, gained control through a hostile bid, only to uncover bad loans valued at $9bn - a third of the bank's assets. So let's get this straight: VTB bid a premium to the equity price only to find out that not only was the entire market cap worth nothing, but that the purchase could have been completed by buying up Bank of Moscow's bonds at 66% cents on the dollar, promptly followed by a debt for equity swap, in which the bulk of the debt could have been equitized, and the resulting company could have been a lean mean lending machine, without a single taxpayer cent spent. Instead, Russia took the American way out, and pretended assets are worth something. Under the rescue deal, the Russian central bank will provide a 295bn rouble ($10.6bn) 10-year loan at a negligible interest rate to Bank of Moscow. But that's not all: Bank of Moscow's former head, Andrei Borodin, has fled the country, and a warrant has been issued for his arrest. And to think that only a week ago the head of the Afghanistan Central Bank Fitrat, who "obviously" is absolutely innocent of all allegations he stole hundreds of millions from Bank of Kabul, escaped to the US. And to keep some illusion as to which countries are now final destinations to exiled global kleptocrats, Borodin has decided to run away to London, until such time as he takes over some Goldman Sachs M&A banker in the New York office. And how you know how capitalism works under central planning.

Guest Post: Where The Cops Actually Treat You Like A Human Being…

When is the last time you shook a policeman’s hand, appreciative of the good work he had done for you? I live in Chile and I just did so. In North America, I would never think of doing the same thing. Cops are to be feared there. They are not helpful allies in the fight against crime. A North American is more likely to be victimized by the police rather than helped by them. In Europe, citizens are more likely to be clubbed than supported. YouTube is full of police abuse in the developed world; it is becoming a common reality of a politically correct society rather than a shocking exception. These uniformed thugs break down doors and intimidate innocent people. They plant GPS tracking devices on the cars of private citizens. They arrest people for dancing, arrest them for having a “bad attitude,” harrass people for taking photographs, and otherwise go out of their way to threaten what they are charged with protected. In Chile, things are different. Not only are the cops not corrupt like they are in every other Latin American country, they are actually helpful and efficient. Examples abound.

RBA board member warns of Europe meltdown  

Despite Deadline Uncertainty, U.S. Faces Bad Choices if Debt Limit Not Raised. 

Morici argues there is one way for the government to keep paying its bills for a year or longer: "The Treasury can print money and the Federal Reserve can buy back that cash when it goes into circulation with its portfolio of bonds, and keep going quite a bit that way.” 

Greece Passes Steep Cuts as Riots Seize Capitol 




Unemployment Rises in More than Half of US Metros




The looming Missouri dam flood.

Economic Forecasts: Lies or Idiocy? Part II

In the first part of this commentary, we observed how the entire body of “experts” and “economists” who populate the mainstream media had not only shown a stunning collapse in the accuracy of their forecasts, but that their lack of accuracy was entirely due to a large, persistent bias toward optimism (i.e. an “economic recovery”).

I offered two explanations for the sudden and pervasive change in the behavior and performance of this group. The “obvious explanation” was that these people were nothing but cynical shills, deliberately “pumping” markets in order to induce investors to funnel their money into Wall Street’s crooked casinos (i.e. U.S. equities markets).

I also discussed the explanation put forth by two Reuters writers who had compiled the data I used for reference, that this behavior was based upon the assumption of “mean reversion” by these experts: simply assuming that our economies would revert back to “normal”. I explained how even if we accepted this explanation that it directly implied that these experts were doing nothing but “guessing” about our economies. And they weren’t even good guesses.

I pointed out how the massive debt-loads which Western economies have inflicted upon themselves and the enormous costs of servicing those debts make it mathematically impossible for our economies to perform at a level equal to the previous (“normal”) trend. Thus, if we accept the Reuters explanation for the sudden, massive failure of these experts to forecast (and understand) our economies it implies incompetence and outright negligence at a phenomenal extreme.

However, there is certainly another way to account for the “herd behavior” of practically all mainstream economists and analysts. Another obvious explanation for the robotic group-think of these individuals is that they, themselves, are victims of brainwashing. Here, the evidence is both abundant and persuasive.

To begin with, we have the two classic ingredients of the propaganda campaign necessary to induce brainwashing: repetition and consistency. It is common knowledge in the field of psychology that if you repeat any premise enough times (no matter how shocking or absurd) that more and more people will come to believe it as true, completely based upon the frequency of the message and absolute consistency in repeating the propaganda.

In this respect, I need merely refer to one of my own, favorite pet-phrases: “media parrots”. The slavish insistence of virtually all business reporters to precisely repeat the propaganda sound-bites which are fed to them is literally maddening. It is equally obvious who the “conductor” has been of this choir of talking-heads: Ben Bernanke.

Go back to 2005 and 2006, the absolute peak of the Wall Street-created housing-bubble (and the $trillions in fraud they had built upon it) and the media parrots were endlessly repeating the Bernanke lie of a “Goldilocks Economy”, where U.S. house prices (and markets) would just keep going up and up forever.

Move on to 2007, to just after the obvious bursting of that bubble, and Bernanke the Puppet-master had the talking heads repeating the lie of a “Soft Landing” over and over and over. This was to try to dupe market chumps into keeping their money on the table, while all of Bernanke’s bankster-buddies were desperately trying to unload $trillions in financial feces.

Then there was the “Mother of All Propaganda Campaigns” which began early in 2009, when Bernanke’s mission was to convince market sheep that a “U.S. economic recovery” had begun. Thus Bernanke had his flock of mainstream media parrots regurgitate the phrase “Green Shoots” countless millions of times. Indeed, if I had heard those two words myself even one more time I would have certainly “snapped” – and gone on a killing-rampage. Read more: Economic Forecasts: Lies or Idiocy? Part II 

Greece is not stupid.  They are desperate for cash yet they buy gold bullion.


(courtesy Wall Street Journal)

Greece Boosts Its Gold Holdings



By Rhiannon Hoyle
The Wall Street Journal
Thursday, June 30, 2011
Greece's central bank increased its gold reserves marginally in May, choosing not to sell some of its vast holdings as efforts continued to trim the public debt.
The International Monetary Fund's statistics on international reserves show Greece bought 1,000 troy ounces of bullion, increasing gold reserves to 3.584 million ounces last month, according to a person who saw the data. The May figures are to be made public in the coming days.
If bought at average spot market value during May, the purchase would have cost $1.51 million.
Greece's gold reserves remain down slightly, however, from the 3.601 million ounces held at the same time a year ago, after the central bank sold a small amount of its holdings in mid-2010.
The debt crisis in Greece and other euro-zone nations such as Portugal has led to speculation among market participants and observers over whether Europe's debt-laden countries may move to liquidate their gold holdings in order to raise cash.
Last month Germany's governing coalition budget speaker Norbert Barthle and his counterpart Carsten Schneider from the Social Democrats urged Portugal to consider selling some of its gold pile to ease debt woes.
"There has been a lot of speculation about what Greece will do with its gold, but I am very doubtful that sales will be on the table," a senior trader at a European bank said. "When I speak with central banks, they acknowledge that gold sales make people worry even more. It's like selling the family silver."
In May last year, Greece -- which holds about 78% of its total reserves in gold -- narrowly avoided default with the help of a E110 billion ($159 billion) bailout from its euro-zone partners and the International Monetary Fund. Still facing prohibitively high borrowing costs on international markets, Greece is now seeking about E100 billion in fresh aid.
However, as analysts at the Royal Bank of Scotland pointed out in a note to clients last week: "Gold is held under the auspices of the central banks and politicians are not allowed" under the constitution of the European Union "to take hold of it as this would compromise the independence of the central banks themselves."
RBS also noted that sales of gold reserves by countries like Greece would do little to help trim public debt.
"It is understandable that some observers would argue that gold is a sterile asset and could be mobilized in these very testing times," the bank's analysts, Nick Moore and Daniel Major, said. "At the same time, the scale of the debt problem is too big for gold sales to make any difference. For instance, Greece's gold holdings account for 1% of the country's government debt."
-END-

 

 

 

 

 

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