Roberto Abraham Scaruffi: Debts collapse economies and societies.

Tuesday 21 July 2015

Debts collapse economies and societies.

Posted: 21 Jul 2015 01:07 AM PDT

Banks made an additional 1.28 trillion yuan worth of loans to China in June.
Things are not looking for for China.
It seems like Beijing has averted a crisis as far as their stock markets are concerned with some heavy-handed intervention. But their corporate debt has already reached $ 16.1 trillion and is still rising.
Their corporate debt is currently at 160% of their GDP and that is twice as much as the US having deteriorated sharply in the last 5 years.
This debt mountain is going to climb an additional 77% to $ 28.8 trillion in the next 5 years.
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Posted: 21 Jul 2015 12:51 AM PDT

Barclays has reportedly announced plans to cut more than 30,000 jobs within two years, in a move that comes just two weeks after the bank’s chief executive Antony Jenkins was fired.
More than 30,000 employees of Barclays, the seventh-largest bank in the world in terms of managed assets, will be laid off within the next two years, in a development that comes amid the bank’s efforts to speed up a radical redundancy program after firing its CEO Antony Jenkins earlier this month, according to the British daily newspaper The Times.
The media outlet quoted senior sources as saying that this cost-cutting program could reduce the bank’s global workforce to less than 100,000 by the end of 2017. The program’s goal is to solve the under-performance problems of the centuries-old London-based banking giant and double its share price, the sources said.
The layoffs are most likely to ride roughshod over staff; hardest hit will be the company’s middle and back office operations, where the biggest savings have been achieved in the past.
According to the Times, the person who fills the shoes of the ousted chief executive may show more resolve when it comes to job cuts, and he is expected to cut jobs much faster and more deeply than Jenkins.
Commenting on its decision to fire Jenkins on July 8, Barclays said that “a new set of skills” is needed to tackle the financial challenges facing the lender.
The bank also said that Jenkins will be succeeded on an interim basis by Barclays board chairman John McFarlane until a new chief executive is appointed.
Jenkins, who had been Barclays’ CEO since August 2012, said, for his part, that he took the helm “at a particularly difficult time” for the bank, which was in a more secure position by the time of his resignation.
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Posted: 20 Jul 2015 04:43 AM PDT

The Chinese military prepares to take part in the International Army Games along with 14 other nations.
The Russian Ministry of Defense reported on the successful deployment of Chinese military personnel, along with tanks, artillery and other materiel in various regions of Russia. They are preparing to take part in the International Army Games along with 14 other nations.
The games are due to be held in the first fifteen days of August and encompass 13 different team competitions, of which The Tank Biathlon and Aviadarts aerobatics contests are the most prominent.
The International Army Games’ program includes an Open Water contest and a Safe Route engineering contest, where combat engineers will assist other units in passing thru different obstacles and barriers. Chief of the Russian Engineering Troops Lieutenant-General Yuri Stavitsky has announced plans to hold the Formula One-like competitions between military engineers in 2016, Russia’s RIA Novosti news agency reported lately.
Besides China, army teams from India, Kuwait, Venezuela, Angola, Mongolia, Belarus, Armenia, Kyrgyzstan, the hosting nation Russia and other countries will take part. Last year China won the bronze medal in the Tank Biathlon, while Armenia took the silver and the Russian team earned gold.
According to Sunday’s Russian Ministry of Defense report, the People’s Liberation Army of China has taken along four Type-96 tanks with them this year to compete in the Tank Biathlon and four IFVs for another competition during the course of the Games.
Moreover, there are also various People’s Liberation Army artillery systems that will be used during the competitions, for example, 120-mm self-propelled mortar-howitzer system PLL-05 will compete in the “Masters of artillery fire” competition near Saratov in the Volga Region.
In total, there are 13 army teams from China participating in the Russia-hosted competitions this year. It took two weeks and 166 train cars were used for the transportation of all the personnel and materiel, as the statement on the Russian MoD website reads.
Besides armored vehicles and artillery, various all-terrain, engineering and reconnaissance vehicles, air-defense systems, tractor trucks, ponton boats, a heavy mechanized bridge and a maintenance shop have been brought.
Moreover, Chinese pilots will be competing in the Aviadarts contest in their own Russian-made Su-30MKK strike fighters.
Cooperation between the Russian and Chinese armed forces has been reportedly intensified in all areas, including culture. An exhibition will be opened of artwork by the Russian Grekov Military art studio in the Military Museum of Chinese People’s Revolution in Beijing this September. The exhibition is devoted to the 70th anniversary of the end of WWII.
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Posted: 20 Jul 2015 04:09 AM PDT

The President of France has come up with a very creative way of solving the European debt crisis. On Sunday, a piece authored by French President Francois Hollande suggested that the ultimate solution to the problems currently plaguing Europe would be for every member of the eurozone to transfer all of their sovereignty to a newly created federal government. In other words, it would essentially be a “United States of Europe”. This federal government would have a prime minister, a parliament, a federal budget and a federal treasury. Presumably, the current national governments in Europe would continue to function much like state governments in the U.S. do. In the end, there may be some benefits to such a union – particularly for the weaker members of the eurozone. But at what cost would those benefits come?
When I first learned that French President Francois Hollande had proposed that the members of the eurozone should create their own version of a federal government, I was quite stunned. But I shouldn’t have been surprised. For the global elite, the answer to just about any problem is more centralization. The following comes from a Bloomberg article that was posted on Sunday…
French President Francois Hollande said that the 19 countries using the euro need their own government complete with a budget and parliament to cooperate better and overcome the Greek crisis.
“Circumstances are leading us to accelerate,” Hollande said in an opinion piece published by the Journal du Dimanche on Sunday. “What threatens us is not too much Europe, but a lack of it.”
So precisely what would “more Europe” look like?
Hollande envisions a central government that has both a parliament and a federal budget
“I have proposed taking up Jacques Delors’ idea about euro government, with the addition of a specific budget and a parliament to ensure democratic control,” Hollande said.
His remarks touched on what analysts have seen as a major flaw in the euro.
Under the 1992 Treaty of Maastricht, countries which share a common currency must obey rules on borrowing and deficit spending.
But the Greek crisis saw one of the 19 eurozone members notch up successive worsening deficits and amass a mountain of debt. The problems were only addressed by bailouts from the European institutions and the International Monetary Fund (IMF).
Critics say the problem stems from a lack of centralised control over national fiscal policies, which today are jealously guarded areas of sovereignty.
In addition, this eurozone government would have its own prime minister. In essence, he would be the European version of the president of the United States. The following comes from the Independent
There would be a eurozone government with its own prime minister, the officials said. This government would have its own budget – separate from the EU budget – to aid and invest in more fragile countries, It would try to harmonise corporation and pay-roll taxes to ensure fair competition in the eurozone.
Of course Hollande is not the only one calling for more centralization. Last month, European Central Bank President Mario Draghi, European Commission President Jean-Claude Juncker and Eurogroup President Jeroen Dijsselbloem proposed a plan that would create a shared European treasury
Draghi called for the creation of a shared treasury within 10 years in a joint proposal with politicians including European Commission President Jean-Claude Juncker and Eurogroup President Jeroen Dijsselbloem last month.
I don’t anticipate that we will see any of these things implemented immediately.
However, what is important is the fact that this is where the European elite plan to take Europe. And when the next great European financial crisis erupts, these proposals will be offered as the “solutions” necessary to end the crisis.
During times of emergency, the elite are often able to push things through that they would never be able to accomplish under normal circumstances. At the moment, it would be extremely difficult to get everyone to agree to a full-blown “United States of Europe”. But if things were to start spinning wildly out of control and people were suddenly desperately clamoring for solutions, the environment would be quite different.
What that time arrives, the key will be to get Germany and France to agree on what a “United States of Europe” should look like. If Germany and France can agree, it is inevitable that most of the other members of the eurozone would ultimately fall in line.
One potential hurdle for the creation of this new government would be the euro. The current treaty agreements concerning the euro are quite complicated and quite restrictive. If Germany and France decided that they did want to create a “United States of Europe”, they might have to create an entirely new currency in order to accomplish that.
I know that sounds kind of crazy right now, but at one time the concept of “the euro” sounded really crazy too.
For the moment, the debt crisis in Europe just continues to get even worse. Greece, Portugal, Ireland, Italy, Spain, Belgium and France are all drowning in debt. Whether or not we see a “Grexit” in the short-term, I fully expect that European bond yields will continue to rise and European stocks will take quite a tumble in the months ahead.
I believe that we are right on the verge of a very significant European financial crisis. In particular, keep on eye on the big banks. Just like in the United States, the “too big to fail” banks in Europe are massively overleveraged and are tremendously exposed to derivatives.
In fact, the bank with the most exposure to derivatives on the entire planet is Deutsche Bank. It has been reported that Deutsche Bank has a whopping 75 trillion dollars worth of exposure to derivatives, their co-CEOs were recently forced to resign, and there are all sorts of rumblings about troubles going on behind the scenes at the bank.
What do you think would happen if the biggest and most important bank in Germany suddenly became the next Lehman Brothers?
That is something to think about.
Meanwhile, the euro continues to fall. For a long time, I have been repeating my prediction that the euro would fall to parity with the U.S. dollar.
One year ago, the EUR/USD was sitting at 1.35.
Today, it has come all the way down to 1.08.
There will be more ups and downs, but we are almost there.
A time of great chaos is coming to Europe, and the eurozone will be deeply shaken.
But whether or not there is a break up of the eurozone in the short-term, in the long-term the goal of the European elite is even more integration and even more centralization.
So even though there will be significant bumps in the road, I fully expect to see the “United States of Europe” that French President Francois Hollande has proposed.
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Posted: 20 Jul 2015 03:43 AM PDT


NATO wants to help the Ukrainian Navy. On July 16, members of the Advisory Group of the North Atlantic Alliance continued analyzing the prospect for building a training facility for the Naval Forces of Ukraine in the city of Nikolaev.
Yesterday, the delegation visited the frigate “Getman Sahaidachny” in Odessa. NATO experts discussed “the development of a pilot project to restore the capacity of the Ukrainian Navy.”
Victor Murakhovsky, chief editor of “Arsenal of the Fatherland”:
“For NATO, I think, there is a more attractive idea here – they want to build their own base on the coast of Ukraine, rather than to restore the Ukrainian Navy. As of today, the Ukrainian Navy can hardly be referred to as such, because they do not have even second and third rank ships, let alone the first rank. In other words, they can not control even the near sea zone. What they have in the structure of their navy is boats, their former training ship “Sahaidachny” and that’s pretty much it. I really don’t know how NATO experts can help them.”
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Posted: 20 Jul 2015 03:30 AM PDT

China has ended six years of concealing its gold reserves, announcing a 57% rise in its hoard which puts it in the top five with the largest stash of the precious metal.
According to the People’s Bank of China, bullion assets totaled 3.31 million troy ounces or about 1,658 metric tons at the end of the June.
The US has the biggest reserves put by the World Gold Council at 8,133.5 tons followed by Germany, Italy and France. The jump in the gold holdings means China has overtaken Russia and Switzerland in terms of reserves.
China has been calling on the International Monetary Fund to recognize its yuan as an official reserve currency like the US dollar. The institute, which is under the American influence, is resisting the demand.
Washington is wary of Beijing’s growing financial clout and the serious challenge which the dollar faces as some of the emerging economies are switching to national currencies in their trade.
“China has ambitions to create a global reserve currency to challenge the hegemony of the US dollar and fill the void created by the declining holdings by central banks of the euro,” financial information website MarketWatch quoted Sharps Pixley CEO Ross Norman as saying.
China is the world’s largest producer of gold which has a prominent role in the global financial system as a bank reserve asset. India, another emerging economy, is the world’s largest consumer of the precious metal.
Gold holdings are a secure alternative for a country to diversify its foreign-exchange reserves and boost its currency profile. Many countries regard the metal as a buffer against volatile currency movements.
Nations around the world are expanding their gold reserves as the dollar and euro are standing on a shaky ground more than ever.
Russia, at odds with the West, has more than tripled its gold stockpiles since 2005 as it is pushing for currencies other than the dollar in its transactions.
The announcement is also a boost to China’s stock market which has dipped recently, sparking fears of a growth slowdown.
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Posted: 20 Jul 2015 03:24 AM PDT

The Greek Finance Ministry says it is has started payment of €6.8 billion to creditors after last week’s €86 billion bailout deal was adopted. Banks in Greece have reopened three weeks after the introduction of capital controls.
The payments announced on Monday include money owed to the ECB, the IMF and Greece’s central bank, a Finance Ministry official told Bloomberg, who preferred to stay anonymous.
The ECB will get €4.2 billion and the IMF – €2.05 billion that has been in arrears since June 30, when a deadline for June’s payments expired. Greece is also reimbursing a €500 million loan to the national central bank.
On Monday Greek banks reopened but capital controls remain in place. Limits on cash withdrawals from Monday will be more flexible, with a weekly limit of €420 instead of the previous daily limit of €60. The stock market will remain closed until further notice.
Last week, eurozone ministers agreed to unlock a €7 billion bridging loan to Greece. This sum will help Athens to pay its debt mentioned above and keep the economy afloat while the bigger money is canvassed.
Germany’s parliament, the Bundestag voted by a majority on Friday to support a third bailout package for Greece. This means negotiations on the €86 billion bailout were ratified by Greece’s biggest creditor.
The details of the aid package will now be thrashed out between Greece and the eurozone, the process is expected to last around four weeks.
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