Moody's, that venerable credit rating agency, just acknowledged what the entire financial universe has known for months: Greece is not an investment grade credit! Really? Even Standard & Poors figured that out nearly two months ago.
In making the 4-step downgrade to Ba1 from A3, Moody’s cited risks to economic growth from the austerity measures tied to a €110 billion ($134.5 billion) aid package from the European Union (EU) and the International Monetary Fund (IMF). Obviously, the Moody's analysts must be regular readers of Marko's Take.
Greece has cut spending, raised taxes and trimmed public-sector wages and benefits to reduce the deficit, which ballooned to 13.6% of Gross Domestic Product (GDP) last year, more than four times the EU maximum. The government pledged to trim the shortfall to 8.1% of GDP this year and bring it back under the 3% EU limit by 2014.
Spain's problems, which are far less severe than those of Greece, is struggling to raise financing for debt maturities of €16.2 billion by July.
Spain disclosed yesterday that the European financial crisis is taking a toll on the country's banks, with foreign banks refusing to lend to some, while Germany said the EU stands ready to help if Madrid needs a Greek-style rescue.
With the 4th largest economy in the EU, Spain is coping with 20% unemployment and an 11.2% budget deficit. Spain has among the lowest sovereign debt ratios in the Euro-Zone, at less than 60% of GDP.
Despite growing investor concerns amid a tougher credit environment, Madrid was able to place €5.2 billion at its 12- and 18-month bill auctions, but investors demanded a big yield premium.
Spanish 10-year bond yields rose nearly a quarter of a point yesterday, to 4.67%, while financial sector shares also came under pressure, down nearly 1% as they underperformed the broader market.
The demands on Germany and France, the EU's most healthy countries, continued to exert political problems.
German chancellor Angela Merkel's center-right coalition government may be close to collapse, stung by a string of disagreements and intense infighting over austerity cuts, policy reform and the departure of senior conservatives. With elections coming up in the next few weeks, German voters appear inclined to make wholesale changes.
The bail-out package has also raised the ire of Merkel's French counterpart, Nicolas Sarkozy, who has accused the Germans of creating an atmosphere that will thwart growth in Europe at a time when it should be stimulated. Relations between the two politicians are at an all-time low.
Ireland was also able to sell €1.5 billion of new debt, but at much higher yields than in previous auctions. The average yield on the 2016 bond rose to 4.521% from 3.663% at the last comparable auction in April. The 2018 bond had a yield of 5.088%, up from 4.55% last August.
The credit window is still open for European sovereign debtors but could slam shut at any time. If, and when it does, the toll on the world financial system will be particulary acute as governments will be forced to make substantially greater cuts to bolster investor confidence. Marko's Take? Avoid these issuers and focus on the only winner in this entire financial crisis: Gold.
Marko's Take
Some sites we really like and hope that you visit: http://www.lemetropolecafe.com/, http://aegeancapital.com/,
http://marketviews.tv/, and, of course, our ever-so-informative and entertaining You Tube channel at http://www.youtube.com/markostaketv.
Showing posts with label France. Show all posts
Showing posts with label France. Show all posts
Tuesday, June 15, 2010
Saturday, May 29, 2010
World War III Continued
Inevitably, difficult financial times lead to more militarism. Currently, there are more than 50 military conflicts that are active and some, like the Middle East and the Korean Peninsula, are threatening to explode into all-out multi-nation wars.
The continent of Africa has been plagued by no less than 20 civil wars in the last few decades, although these are primarily tribal conflicts which are very localized. The MAJOR conflicts include the U.S. presence in Afghanistan and Iraq, the threatened nuclear showdown in the Middle East over proposed sanctions against Iran and the recent escalation of tension in North Korea. Lesser conflicts, tame for now, include the Chechen and Georgian civil wars which have threatened Russia.
Global military spending has grown sharply at a time when few countries can afford it given the massive budget deficits so many of them face. World military expenditures in 2008 are estimated to have reached $1.464 trillion in current dollars versus just over $1.2 trillion in 2005 adjusted for inflation.
This represents a 4% increase in real terms since 2007 and a 45% increase over the 10-year period since 1999. Put differently, worldwide military spending equates to 2.4% of world Gross Domestic Product (GDP), or $217 for each person in the world.
The U.S., with its massive spending budget, is the principal determinant of the current world trend and its military expenditure now accounts for 41.5% of the world total.
After Washington, the next highest spenders are China (5.8% of world total), France and Britain (4.5% each) and Russia (4.0%). The next 10 countries combined represent about 21.1% of the total with the rest of the planet making up the remaining 18.6%.
The total U.S. military budget of approximately $700 billion, if completely wiped out, would not even cut the budget deficit in half! It represents more than 50% of the entire discretionary portion of the budget. Of that total, about $200 billion is being spent annually in Iraq and Afghanistan.
Sadly, rising tensions in two key areas of the world, the Middle East and Korea, suggest that a reduction in military spending is very unlikely in the intermediate term.
Korean tensions have resulted from recent revelations that North Korea is responsible for the sinking of South Korean warship Cheonan in March. Because nuclear power North Korea shares a border with China, Beijing has been restrained about supporting sanctions against Pyongyang. That seems to have changed.
During a visit to Seoul yesterday, China’s premier Wen Jiabao said that China would not protect “whoever sank” the South Korean warship, offering Seoul some encouragement that Beijing might not block moves to punish North Korea at the United Nations Security Council for killing 46 sailors.
South Korea has given China the complete technical report on the sinking and has said it would welcome a Chinese delegation should they want to inspect the shattered hull and corroded torpedo retrieved from the seabed.
North Korea has put its oversized army on alert and has threatened to invade South Korea if Seoul breaches any restricted areas. The last thing China wants is a nuclear civil war on its southern border with millions of Korean refugees seeking asylum.
Russia also has a keen interest in the Korean Peninsula. Moscow said on Thursday that it would stage large-scale naval exercises off North Korea next month that were planned before the stand-off on the peninsula. Sailors “will be on a high level of alert and capable of reacting adequately to any threat”, the Russian Navy told Interfax.
Iran sits on the second largest oil reserves on the planet and is vying to join the nuclear club, a policy vehemently opposed by Israel and the United States as well as the United Nations Security Council. Opposition to Tehran's plans now includes France, China, Russia and Britain - making it virtually certain that sanctions will be imposed. Iran has responded to the possibility of sanctions by threatening military action in the region and cutting off oil exports which need to go through the Straits of Hormuz.
The criticality of maintaining oil flow virtually assures a multi-nation armed conflict and the possibility of the use of nuclear weapons by Israel or Iran with the inevitable rise in global terrorism. It is also likely that any regional conflict would draw in nations such as Syria, Pakistan, Turkey, Yemen and Egypt who will oppose any action taken by Israel.
Unfortunately, the militarism witnessed today is only likely to grow worse. As nations become more determined to "look out for number one", the ability to cooperate diplomatically will be less likely. Otherwise, passive domestic populations will become more supportive of military actions to protect their countries economic interests. Defaulting debtor nations will incur the wrath of their creditors. Protective trade restrictions, which were utter failures during the Great Depression, will become more politically popular.
This is yet another reason to maintain a heavy stake in Gold. If free trade becomes restricted, currencies will be less useful as a means of exchange and the use of the only globally recognized currency will increase exponentially.
Marko's Take
Our latest video blog which proposes a 7-Step solution to fixing Social Security will be posted in the next day. If you want to know the important aspects of that fraud and ponzi scheme called Social Security, check out our video entitled "Social In-Security: The Problem' by clicking here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI.
The continent of Africa has been plagued by no less than 20 civil wars in the last few decades, although these are primarily tribal conflicts which are very localized. The MAJOR conflicts include the U.S. presence in Afghanistan and Iraq, the threatened nuclear showdown in the Middle East over proposed sanctions against Iran and the recent escalation of tension in North Korea. Lesser conflicts, tame for now, include the Chechen and Georgian civil wars which have threatened Russia.
Global military spending has grown sharply at a time when few countries can afford it given the massive budget deficits so many of them face. World military expenditures in 2008 are estimated to have reached $1.464 trillion in current dollars versus just over $1.2 trillion in 2005 adjusted for inflation.
This represents a 4% increase in real terms since 2007 and a 45% increase over the 10-year period since 1999. Put differently, worldwide military spending equates to 2.4% of world Gross Domestic Product (GDP), or $217 for each person in the world.
The U.S., with its massive spending budget, is the principal determinant of the current world trend and its military expenditure now accounts for 41.5% of the world total.
After Washington, the next highest spenders are China (5.8% of world total), France and Britain (4.5% each) and Russia (4.0%). The next 10 countries combined represent about 21.1% of the total with the rest of the planet making up the remaining 18.6%.
The total U.S. military budget of approximately $700 billion, if completely wiped out, would not even cut the budget deficit in half! It represents more than 50% of the entire discretionary portion of the budget. Of that total, about $200 billion is being spent annually in Iraq and Afghanistan.
Sadly, rising tensions in two key areas of the world, the Middle East and Korea, suggest that a reduction in military spending is very unlikely in the intermediate term.
Korean tensions have resulted from recent revelations that North Korea is responsible for the sinking of South Korean warship Cheonan in March. Because nuclear power North Korea shares a border with China, Beijing has been restrained about supporting sanctions against Pyongyang. That seems to have changed.
During a visit to Seoul yesterday, China’s premier Wen Jiabao said that China would not protect “whoever sank” the South Korean warship, offering Seoul some encouragement that Beijing might not block moves to punish North Korea at the United Nations Security Council for killing 46 sailors.
South Korea has given China the complete technical report on the sinking and has said it would welcome a Chinese delegation should they want to inspect the shattered hull and corroded torpedo retrieved from the seabed.
North Korea has put its oversized army on alert and has threatened to invade South Korea if Seoul breaches any restricted areas. The last thing China wants is a nuclear civil war on its southern border with millions of Korean refugees seeking asylum.
Russia also has a keen interest in the Korean Peninsula. Moscow said on Thursday that it would stage large-scale naval exercises off North Korea next month that were planned before the stand-off on the peninsula. Sailors “will be on a high level of alert and capable of reacting adequately to any threat”, the Russian Navy told Interfax.
Iran sits on the second largest oil reserves on the planet and is vying to join the nuclear club, a policy vehemently opposed by Israel and the United States as well as the United Nations Security Council. Opposition to Tehran's plans now includes France, China, Russia and Britain - making it virtually certain that sanctions will be imposed. Iran has responded to the possibility of sanctions by threatening military action in the region and cutting off oil exports which need to go through the Straits of Hormuz.
The criticality of maintaining oil flow virtually assures a multi-nation armed conflict and the possibility of the use of nuclear weapons by Israel or Iran with the inevitable rise in global terrorism. It is also likely that any regional conflict would draw in nations such as Syria, Pakistan, Turkey, Yemen and Egypt who will oppose any action taken by Israel.
Unfortunately, the militarism witnessed today is only likely to grow worse. As nations become more determined to "look out for number one", the ability to cooperate diplomatically will be less likely. Otherwise, passive domestic populations will become more supportive of military actions to protect their countries economic interests. Defaulting debtor nations will incur the wrath of their creditors. Protective trade restrictions, which were utter failures during the Great Depression, will become more politically popular.
This is yet another reason to maintain a heavy stake in Gold. If free trade becomes restricted, currencies will be less useful as a means of exchange and the use of the only globally recognized currency will increase exponentially.
Marko's Take
Our latest video blog which proposes a 7-Step solution to fixing Social Security will be posted in the next day. If you want to know the important aspects of that fraud and ponzi scheme called Social Security, check out our video entitled "Social In-Security: The Problem' by clicking here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI.
Saturday, May 8, 2010
Iran Nuclear Showdown Looms Closer
Iran's nuclear program is one of the most controversial issues in one of the world's most volatile regions. American and European officials believe Tehran is planning to build nuclear weapons, while Iran's leadership mainains that its goal in developing a nuclear program is to generate electricity and preserve its vast oil reserves.
Top American military officials said in April 2010 that Iran could produce bomb-grade fuel for at least one nuclear weapon within a year, but would most likely need two to five years to manufacture a workable atomic bomb.
Pronouncements from Tehran have been all over the map. In a recent statement by Iranian cleric Ahmad Khatami, Iran has entered the world's "nuclear club" and major powers should accept it.
Khatami, a conservative hardliner also warned the major powers that Iran could "endanger your entire world" in any future confrontation.
The United States and Israel, Iran's arch foes, have not ruled out military action if diplomacy fails to resolve the row.
Iran, a predominantly Shi'ite Muslim state, has said it would respond to any attack by targeting U.S. interests in the region and Israel, as well as closing the Strait of Hormuz, a waterway crucial for global oil supplies.
One key to reaching a non-military solution has been the cooperation of the United Nations Securtiy Council. China, which imports 12% of its oil from Iran, has been the most reluctant to endorse stringent sanctions.
President Nicolas Sarkozy of France told President Hu Jintao of China that nations would have to impose new sanctions on Iran if it refuses to curb its nuclear program, official Chinese news organizations reported on last week.
France has joined with the United States and Britain in pushing for a new package of economic sanctions from the United Nations (UN). Those countries accuse Iran of using its nuclear program to try to develop weapons. Iran has said it is interested in pursuing nuclear power, not arms.
Addressing the UN, President Mahmoud Ahmadinejad of Iran said that relations with the United States might never be repaired if new sanctions were imposed against his country, that the United Nations atomic agency had no authority to interfere into matters like missiles and that, despite his contested re-election last year, Iran had not become a republic of fear.
Later in the day, he suggested that relations with Tehran might never recover from a United States push for new economic and military sanctions against Iran through the United Nations Security Council. New penalties would “mean relations between Iran and the U.S. will never be improved again,” Mr. Ahmadinejad said at a news conference.
Of major concern is what options the U.S. has in response to a threatened attack by Iran against Israel or in attempting to sabotage Middle East oil supplies.
Defense Secretary Robert M. Gates has warned in a secret three-page memorandum to top White House officials that the United States does not have an effective long-range policy for dealing with Iran’s steady progress toward nuclear capability, according to government officials familiar with the document.
One senior official, speaking anonymously, described the document as “a wake-up call.” But White House officials dispute that view, insisting that for 15 months they had been conducting detailed planning for many possible outcomes regarding Iran’s nuclear program.
Mr. Gates’s memo appears to reflect concerns in the Pentagon and the military that the White House did not have a well prepared series of alternatives in place in case all the diplomatic steps finally failed. Separately, Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, wrote a “chairman’s guidance” to his staff last December conveying a sense of urgency about contingency planning. He cautioned that a military attack would have “limited results,” but he did not convey any warnings about policy shortcomings.
Thus, as Iran continues the development of its nuclear arsenal, options available to contain the situation appear limited. Israel has repeatedly warned of a pre-emptive strike if diplomatic initiatives fail. So far, the Obama Administration has successfully convinced Israel to remain patient while discussions are taking place.
However, given the stated intention of Iran to retaliate if sanctions are imposed, the potential outcomes are strewn with high risk. The last thing the sputtering world economy needs is a major disruption of Middle East oil supplies or an all-encompassing regional war.
Marko's Take
Our latest You Tube video, entitled "Social In-Security: The Problem", which tells you everything you need to know about the world's largest Ponzi scheme is now posted here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI. Our subsequent video, entitled "Social In-Security: The Solution" outlines a 7-step program to fix the mess. Hope you tune in!
Top American military officials said in April 2010 that Iran could produce bomb-grade fuel for at least one nuclear weapon within a year, but would most likely need two to five years to manufacture a workable atomic bomb.
Pronouncements from Tehran have been all over the map. In a recent statement by Iranian cleric Ahmad Khatami, Iran has entered the world's "nuclear club" and major powers should accept it.
Khatami, a conservative hardliner also warned the major powers that Iran could "endanger your entire world" in any future confrontation.
The United States and Israel, Iran's arch foes, have not ruled out military action if diplomacy fails to resolve the row.
Iran, a predominantly Shi'ite Muslim state, has said it would respond to any attack by targeting U.S. interests in the region and Israel, as well as closing the Strait of Hormuz, a waterway crucial for global oil supplies.
One key to reaching a non-military solution has been the cooperation of the United Nations Securtiy Council. China, which imports 12% of its oil from Iran, has been the most reluctant to endorse stringent sanctions.
President Nicolas Sarkozy of France told President Hu Jintao of China that nations would have to impose new sanctions on Iran if it refuses to curb its nuclear program, official Chinese news organizations reported on last week.
France has joined with the United States and Britain in pushing for a new package of economic sanctions from the United Nations (UN). Those countries accuse Iran of using its nuclear program to try to develop weapons. Iran has said it is interested in pursuing nuclear power, not arms.
Addressing the UN, President Mahmoud Ahmadinejad of Iran said that relations with the United States might never be repaired if new sanctions were imposed against his country, that the United Nations atomic agency had no authority to interfere into matters like missiles and that, despite his contested re-election last year, Iran had not become a republic of fear.
Later in the day, he suggested that relations with Tehran might never recover from a United States push for new economic and military sanctions against Iran through the United Nations Security Council. New penalties would “mean relations between Iran and the U.S. will never be improved again,” Mr. Ahmadinejad said at a news conference.
Of major concern is what options the U.S. has in response to a threatened attack by Iran against Israel or in attempting to sabotage Middle East oil supplies.
Defense Secretary Robert M. Gates has warned in a secret three-page memorandum to top White House officials that the United States does not have an effective long-range policy for dealing with Iran’s steady progress toward nuclear capability, according to government officials familiar with the document.
One senior official, speaking anonymously, described the document as “a wake-up call.” But White House officials dispute that view, insisting that for 15 months they had been conducting detailed planning for many possible outcomes regarding Iran’s nuclear program.
Mr. Gates’s memo appears to reflect concerns in the Pentagon and the military that the White House did not have a well prepared series of alternatives in place in case all the diplomatic steps finally failed. Separately, Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, wrote a “chairman’s guidance” to his staff last December conveying a sense of urgency about contingency planning. He cautioned that a military attack would have “limited results,” but he did not convey any warnings about policy shortcomings.
Thus, as Iran continues the development of its nuclear arsenal, options available to contain the situation appear limited. Israel has repeatedly warned of a pre-emptive strike if diplomatic initiatives fail. So far, the Obama Administration has successfully convinced Israel to remain patient while discussions are taking place.
However, given the stated intention of Iran to retaliate if sanctions are imposed, the potential outcomes are strewn with high risk. The last thing the sputtering world economy needs is a major disruption of Middle East oil supplies or an all-encompassing regional war.
Marko's Take
Our latest You Tube video, entitled "Social In-Security: The Problem", which tells you everything you need to know about the world's largest Ponzi scheme is now posted here http://www.youtube.com/markostaketv#p/u/0/twFn9XyP2rI. Our subsequent video, entitled "Social In-Security: The Solution" outlines a 7-step program to fix the mess. Hope you tune in!
Monday, April 12, 2010
Finally, A Rescue Plan To Save Greece: But, Will It Work?
Over the weekend, the details of a plan to bail out Greece were finalized.
Euro-Zone members have promised to provide up to €30 bilion ($40.5 billion) in loans to Greece over the next year to ward off an oncoming debt crisis that has de-stabilized financial markets and posed the most serious challenge to the Euro in its history.
Those funds were agreed to during an emergency teleconference of Euro-Zone finance ministers on Sunday and would be supplemented by contributions from the International Monetary Fund (IMF) that could produce an additional €15 billion ($20.2 billion).
The rates charged to Athens would be around 5% for a 3-year fixed loan – above the IMF’s standard lending rate but below those currently demanded by institutional investors. Two-year Greek bonds were trading at 7.45% last week.
One of the most contentious issues was interest rates, with Germany insisting that Greece pay “market rates” while France and other Euro-Zone members pushed for subsidized rates.
News of the rescue plan gave Greek debt and Credit Default Swaps (CDS) a significant bounce.
The cost of insuring Greek sovereign debt against default dropped sharply in early trading Monday, with 5-year sovereign CDS trading at around 3.64%, down sharply from a closing level of 4.26% Friday. That is the equivalent of a drop of €62,000 in the annual cost of insuring €10 million of Greek government debt for 5 years. Greece's 5-year CDS hit 4.70% at their highest last week . They are now at their tightest levels since March 5.
In cash bonds, the brighter market mood was most evident in short-term debt, demonstrating that investors see a much lower risk of an imminent Greek debt default. Greece's 1-year CDS dropped to 4.62% Monday morning, from 6.50% Friday, while 3-year CDS fell to 3.97% from 5.14%.
Despite the relief emmanating from the new plan, a significant hurdle comes later in the month, when Greek government officials will fly to the U.S. around April 20 to test investor interest in a planned dollar-denominated bond issue of $10 billion. The debt placement is deemed important to help fill Greek funding gaps through the end of May.
The compromise on the interest rates charged Greece has raised questions. A 5% rate for a 3-year fixed-rate loan represents a concession relative to last week's market levels. But, this is still 3.7% over 3-year German debt — a long way north of where the Greeks would like to be able to borrow. If Greece were to take a 10-year loan under the package, it would be at a rate of more than 7%, a yield Athens deems extreme.
This may act as a floor to private-market rates. Institutional investors may wonder why they should receive less than Greece's fellow Euro-Zone members.
Now that the immediate funding issue has given Athens a sigh of relief, the key will be whether Greece can reign in its budget deficit, which last year ran at 13% of GDP. Given the high level of debt and the accompanying high levels of interest rate on that debt, this may prove to be a tall order without draconian budget cuts.
Marko's Take
Our new YouTube video on the Legality Of The Personal Income Tax is now posted. You can access the video here (http://www.youtube.com/markostaketv#p/u/2/1TInKnCIikg).
Euro-Zone members have promised to provide up to €30 bilion ($40.5 billion) in loans to Greece over the next year to ward off an oncoming debt crisis that has de-stabilized financial markets and posed the most serious challenge to the Euro in its history.
Those funds were agreed to during an emergency teleconference of Euro-Zone finance ministers on Sunday and would be supplemented by contributions from the International Monetary Fund (IMF) that could produce an additional €15 billion ($20.2 billion).
The rates charged to Athens would be around 5% for a 3-year fixed loan – above the IMF’s standard lending rate but below those currently demanded by institutional investors. Two-year Greek bonds were trading at 7.45% last week.
One of the most contentious issues was interest rates, with Germany insisting that Greece pay “market rates” while France and other Euro-Zone members pushed for subsidized rates.
News of the rescue plan gave Greek debt and Credit Default Swaps (CDS) a significant bounce.
The cost of insuring Greek sovereign debt against default dropped sharply in early trading Monday, with 5-year sovereign CDS trading at around 3.64%, down sharply from a closing level of 4.26% Friday. That is the equivalent of a drop of €62,000 in the annual cost of insuring €10 million of Greek government debt for 5 years. Greece's 5-year CDS hit 4.70% at their highest last week . They are now at their tightest levels since March 5.
In cash bonds, the brighter market mood was most evident in short-term debt, demonstrating that investors see a much lower risk of an imminent Greek debt default. Greece's 1-year CDS dropped to 4.62% Monday morning, from 6.50% Friday, while 3-year CDS fell to 3.97% from 5.14%.
Despite the relief emmanating from the new plan, a significant hurdle comes later in the month, when Greek government officials will fly to the U.S. around April 20 to test investor interest in a planned dollar-denominated bond issue of $10 billion. The debt placement is deemed important to help fill Greek funding gaps through the end of May.
The compromise on the interest rates charged Greece has raised questions. A 5% rate for a 3-year fixed-rate loan represents a concession relative to last week's market levels. But, this is still 3.7% over 3-year German debt — a long way north of where the Greeks would like to be able to borrow. If Greece were to take a 10-year loan under the package, it would be at a rate of more than 7%, a yield Athens deems extreme.
This may act as a floor to private-market rates. Institutional investors may wonder why they should receive less than Greece's fellow Euro-Zone members.
Now that the immediate funding issue has given Athens a sigh of relief, the key will be whether Greece can reign in its budget deficit, which last year ran at 13% of GDP. Given the high level of debt and the accompanying high levels of interest rate on that debt, this may prove to be a tall order without draconian budget cuts.
Marko's Take
Our new YouTube video on the Legality Of The Personal Income Tax is now posted. You can access the video here (http://www.youtube.com/markostaketv#p/u/2/1TInKnCIikg).
Thursday, April 1, 2010
Iran Sanctions Gain Momentum
The nuclear threat posed by Iran has proved to be nettlesome for the U.S. The world community, given America's tendency toward interventionism, has viewed our hard line towards Iran with suspicion. Especially worrisome has been the fear that the U.S. and/or Isreal would employ some sort of military strike against facilities in Iran, believed to be capable of producing nuclear weapons, which could be used to either strike Israel or threaten Iran's neighbors.
The world community has substantially shifted its stance. With French President Nicolas Sarkovsky at his side, President Barack Obama stated Tuesday, that he hopes to have international sanctions against Iran in place "within weeks," not months, because of its continuing nuclear program. However, the full support of the United Nations is not yet solidified.
For his part, Sarkozy told reporters, "Iran cannot continue its mad race" toward acquiring nuclear weapons.
On the U.N. Security Council, permanent members Russia and China, have previously expressed reservations toward a tougher set of sanctions, as have several of the rotating members who do not have veto powers.
However, recently, both China and Russia have signalled, overtly or covertly, marked shifts in their stances.
Secretary of State Hillary Rodham Clinton predicted new sanctions would be forthcoming, hinting that skeptical nations, such as China and Russia, would eventually come along. At the conclusion of an international meeting of 8 major powers in Canada, Clinton cited a growing alarm around the world about the consequences of a nuclear Iran.
According to diplomats in other countries, China has recently agreed to begin discussing specific sanctions against Iran, offering the first sign that Beijing may be willing to back a new round of United Nations measures.
Such a shift would be a major breakthrough for the U.S., which views China’s previous reluctance to back sanctions as the biggest obstacle to its intention of ratcheting up the pressure on Iran. Washington believes that if Beijing’s support is obtained, a security resolution would be a done deal.
The diplomats cautioned that difficult negotiations lie ahead over the scope of any sanctions. Washington hopes they would be designed to thwart Iran’s nuclear and missile programs, punish the Revolutionary Guard and increase the country’s financial isolation.
Russia has already signalled its willingness to support sanctions on Iran, although like China, it favors less stringent measures than the U.S. and its allies.
American diplomats added that countries with temporary membership of the Security Council, such as Turkey and Brazil, whose votes are not necessary for passage, but who could help convey a message of international unity, are more likely to be secured if China is brought on board.
Assisting the U.S. in its attempt to pursuade the international community is the defection of a key Iranian nuclear scientist, Shahram Amiri to the United States.
According to the people briefed on the intelligence operation, Amiri's defection was part of a long-planned CIA operation. The CIA reportedly approached the scientist in Iran through an intermediary, who made an offer of resettlement on behalf of the United States.
Using information gathered from Amiri and other sources, the CIA has produced a new report on Iran's nuclear capabilties.
The CIA report is the latest official study expressing concern over Iran's continuing nuclear activities. The International Atomic Energy Agency recently issued a report warning that continuing nuclear activities in violation of U.N. resolutions raise "concerns about the possible existence in Iran of past or current undisclosed activities related to the development of a nuclear payload for a missile."
Isolating Iran, without military intervention represents a major international victory for the Obama Administration and lessens the liklihood, in the near-term of unilateal military action, which would be dangerous and de-stabilize the entire Middle East. It would also, in all probability, cause a major disruption to oil supplies and deal a blow to global efforts to continue to engineer an economic recovery.
Marko's Take
We want to wish everyone a wonderful Good Friday and Easter. Please visit our new YouTube channel at http://www.youtube.com/markostaketv or our friends, the very excellent LeMetropole http://www.lemetropolecafe.com/ or Stock Mavrick http://www.stockmavrick.com/.
The world community has substantially shifted its stance. With French President Nicolas Sarkovsky at his side, President Barack Obama stated Tuesday, that he hopes to have international sanctions against Iran in place "within weeks," not months, because of its continuing nuclear program. However, the full support of the United Nations is not yet solidified.
For his part, Sarkozy told reporters, "Iran cannot continue its mad race" toward acquiring nuclear weapons.
On the U.N. Security Council, permanent members Russia and China, have previously expressed reservations toward a tougher set of sanctions, as have several of the rotating members who do not have veto powers.
However, recently, both China and Russia have signalled, overtly or covertly, marked shifts in their stances.
Secretary of State Hillary Rodham Clinton predicted new sanctions would be forthcoming, hinting that skeptical nations, such as China and Russia, would eventually come along. At the conclusion of an international meeting of 8 major powers in Canada, Clinton cited a growing alarm around the world about the consequences of a nuclear Iran.
According to diplomats in other countries, China has recently agreed to begin discussing specific sanctions against Iran, offering the first sign that Beijing may be willing to back a new round of United Nations measures.
Such a shift would be a major breakthrough for the U.S., which views China’s previous reluctance to back sanctions as the biggest obstacle to its intention of ratcheting up the pressure on Iran. Washington believes that if Beijing’s support is obtained, a security resolution would be a done deal.
The diplomats cautioned that difficult negotiations lie ahead over the scope of any sanctions. Washington hopes they would be designed to thwart Iran’s nuclear and missile programs, punish the Revolutionary Guard and increase the country’s financial isolation.
Russia has already signalled its willingness to support sanctions on Iran, although like China, it favors less stringent measures than the U.S. and its allies.
American diplomats added that countries with temporary membership of the Security Council, such as Turkey and Brazil, whose votes are not necessary for passage, but who could help convey a message of international unity, are more likely to be secured if China is brought on board.
Assisting the U.S. in its attempt to pursuade the international community is the defection of a key Iranian nuclear scientist, Shahram Amiri to the United States.
According to the people briefed on the intelligence operation, Amiri's defection was part of a long-planned CIA operation. The CIA reportedly approached the scientist in Iran through an intermediary, who made an offer of resettlement on behalf of the United States.
Using information gathered from Amiri and other sources, the CIA has produced a new report on Iran's nuclear capabilties.
The CIA report is the latest official study expressing concern over Iran's continuing nuclear activities. The International Atomic Energy Agency recently issued a report warning that continuing nuclear activities in violation of U.N. resolutions raise "concerns about the possible existence in Iran of past or current undisclosed activities related to the development of a nuclear payload for a missile."
Isolating Iran, without military intervention represents a major international victory for the Obama Administration and lessens the liklihood, in the near-term of unilateal military action, which would be dangerous and de-stabilize the entire Middle East. It would also, in all probability, cause a major disruption to oil supplies and deal a blow to global efforts to continue to engineer an economic recovery.
Marko's Take
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Tuesday, March 30, 2010
Taxing Banks Gains Favor, But Is It The Answer?
In January, President Obama floated an idea to tax banks as a means of compensating America for the tremendous financial damage caused by the collective stupidity and greed of the banking sector. That idea is gaining support on both sides of the Atlantic.
Anti-Wall Street sentiment, in conjuction with concerns over the ballooning budget deficit, have Democratic leaders on Capitol Hill embracing the proposal. Obama's proposal is expected to raise up to $117 billion to cover projected bailout losses. Republicans have been silent as their instinctive opposition to tax increases is in conflict with their fear of defending big bankers.
The administration has opposed interfering with bonuses in the past, saying shareholders and Boards of Directors should be responsible for determining corporate compensation.
“We’re already hearing a hue and cry from Wall Street suggesting that this proposed fee is not only unwelcome but unfair,” he said. “That by some twisted logic it is more appropriate for the American people to bear the cost of the bailout rather than the industry that benefited from it, even though these executives are out there giving themselves huge bonuses.”
The proposed tax would apply to bank, thrift and insurance companies with more than $50 billion in assets and would start after June 30. It would not apply to certain holdings, like customers’ insured savings, but to assets in risk-taking operations.
The concept is gaining momentum in Europe. However, different countries have proposed varying structures.
Germany and Sweden would use the money to fund a "resolution authority" that would use the money to shut troubled banks whose failure would put the broader economy at risk. Others, such as France, would assess the fee after a crisis passed.
Officials in the U.S., Europe and the IMF say the bank-tax concept has gained so much momentum that it is likely to be on the agenda when of the Group of 20 industrial and developing nations meet in Canada in June. "Reforms would put in practice the principle that large institutions should bear the costs of any losses to the taxpayer," U.S. Treasury Secretary Timothy Geithner said in a speech last week.
In the U.K., Prime Minister Gordon Brown has been championing a global levy, including one in which revenues would be used to help pay down deficits. The opposition Conservative Party says it will press ahead regardless, although the fee's size will depend on how far other countries follow
The IMF plans to recommend a bank tax when global economic officials convene in Washington in April and is leaning toward a fee in advance to fund a resolution authority, said officials involved with the IMF effort.
Support for a bank tax isn't unanimous among the G-20. Canada, which now has an outsized role in the group's deliberations because it hosts this year's meeting, opposes a tax on its banks.
Instead, Canada, whose banks weathered the crisis well, is pressing the G-20 to stiffen leverage requirements to avert problems, a proposal that has already been on the group's agenda. India and China haven't taken positions.
Unfortunately, any industry specific tax, like the old "windfall profits tax" imposed on oil companies in the 1970's, will only make a troubled situation worse. The problem in the finacial industry has always been "moral hazard", the practice of allowing banks take excessive risks and then rescuing them when their ill-advised risk-taking backfires. This practice incentivizes a "heads I win, tails I DON'T lose" mentality.
The other problem is the very "cozy" relationship between the big banks, the Treasury, the Federal Reserve and the administration itself. Major banks should be treated at arms-length, but they're not. With an administration made up of Goldman Sachs alumni, the "conflicts of interest" will undoubtedly lead to legislation that looks tough on the surface, but will instead leave the banks with a "bank-door" way to coin money.
The only mechanism to enforce a fair playing field is to HAVE a fair playing field. WE DON'T.
Marko's Take? Don't waste our time with legislation that will only buy votes from angry Americans and get out-of-bed with these institutions. Only then can we create a competitive and fair financial system.
Marko's Take
Please visit us on You Tube at http://www.youtube.com/markostake and our friends at LeMetropole http://www.lemetropolecafe.com/ and http://www.stockmavrick.com/.
Anti-Wall Street sentiment, in conjuction with concerns over the ballooning budget deficit, have Democratic leaders on Capitol Hill embracing the proposal. Obama's proposal is expected to raise up to $117 billion to cover projected bailout losses. Republicans have been silent as their instinctive opposition to tax increases is in conflict with their fear of defending big bankers.
The administration has opposed interfering with bonuses in the past, saying shareholders and Boards of Directors should be responsible for determining corporate compensation.
“We’re already hearing a hue and cry from Wall Street suggesting that this proposed fee is not only unwelcome but unfair,” he said. “That by some twisted logic it is more appropriate for the American people to bear the cost of the bailout rather than the industry that benefited from it, even though these executives are out there giving themselves huge bonuses.”
The proposed tax would apply to bank, thrift and insurance companies with more than $50 billion in assets and would start after June 30. It would not apply to certain holdings, like customers’ insured savings, but to assets in risk-taking operations.
The concept is gaining momentum in Europe. However, different countries have proposed varying structures.
Germany and Sweden would use the money to fund a "resolution authority" that would use the money to shut troubled banks whose failure would put the broader economy at risk. Others, such as France, would assess the fee after a crisis passed.
Officials in the U.S., Europe and the IMF say the bank-tax concept has gained so much momentum that it is likely to be on the agenda when of the Group of 20 industrial and developing nations meet in Canada in June. "Reforms would put in practice the principle that large institutions should bear the costs of any losses to the taxpayer," U.S. Treasury Secretary Timothy Geithner said in a speech last week.
In the U.K., Prime Minister Gordon Brown has been championing a global levy, including one in which revenues would be used to help pay down deficits. The opposition Conservative Party says it will press ahead regardless, although the fee's size will depend on how far other countries follow
The IMF plans to recommend a bank tax when global economic officials convene in Washington in April and is leaning toward a fee in advance to fund a resolution authority, said officials involved with the IMF effort.
Support for a bank tax isn't unanimous among the G-20. Canada, which now has an outsized role in the group's deliberations because it hosts this year's meeting, opposes a tax on its banks.
Instead, Canada, whose banks weathered the crisis well, is pressing the G-20 to stiffen leverage requirements to avert problems, a proposal that has already been on the group's agenda. India and China haven't taken positions.
Unfortunately, any industry specific tax, like the old "windfall profits tax" imposed on oil companies in the 1970's, will only make a troubled situation worse. The problem in the finacial industry has always been "moral hazard", the practice of allowing banks take excessive risks and then rescuing them when their ill-advised risk-taking backfires. This practice incentivizes a "heads I win, tails I DON'T lose" mentality.
The other problem is the very "cozy" relationship between the big banks, the Treasury, the Federal Reserve and the administration itself. Major banks should be treated at arms-length, but they're not. With an administration made up of Goldman Sachs alumni, the "conflicts of interest" will undoubtedly lead to legislation that looks tough on the surface, but will instead leave the banks with a "bank-door" way to coin money.
The only mechanism to enforce a fair playing field is to HAVE a fair playing field. WE DON'T.
Marko's Take? Don't waste our time with legislation that will only buy votes from angry Americans and get out-of-bed with these institutions. Only then can we create a competitive and fair financial system.
Marko's Take
Please visit us on You Tube at http://www.youtube.com/markostake and our friends at LeMetropole http://www.lemetropolecafe.com/ and http://www.stockmavrick.com/.
Tuesday, January 19, 2010
The Haitian Situation
Last week, Haiti was rocked by a devastating earthquake registering 7.0 on the Richter scale. The country was ill-prepared. Already, 200 thousand Haitians are believed dead, while one-third of the island's population of 9 million has been affected.
The disarray resulting from the earthquake has been massive. Looting, rioting and violence have broken out as food, medical and water supplies have been exhausted. This has led to a comprehensive multi-country effort in order to both keep the peace, but also to allocate and distribute vital supplies.
France has accused the U.S. of playing a heavy-handed role. So far, the U.S. has sent 10,000 troops and taken over air traffic control. As a result, planes carrying medical supplies have been allegedly and needlessly delayed.
This accusation by France appears to be as erroneous as their claim to the international intellectual property rights of "French Fries" and "French Toast". Not to mention, that by now they would have surrendered to someone!
Haiti has ONE landing strip in its capital: Port-Au-Prince. The airport, called the Touissant Louventure International Airport is hardly what it's name implies. It wasn't designed to handle the barrage of inward coming traffic and was not designed to handle the large jets used by Russia.
The United States has made modifications to the strip to permit the larger planes and taken heroic efforts to allow an unprecented amount of incoming traffic.
On Sunday night alone, 50 planes with supplies were able to land. By Monday morning that number had exceeded 800!
Every flight in is critical. Yet each inbound flight believes that their flight is THE most important. Thus, there is a need to prioritize given the very limited facilities that exist.
Fortunately, the European Union (EU) has distanced itself from France's accusations. In fact, the EU has expressed gratitude for the heroic efforts of the United States in not only modifying the sole landing strip, but in recognition of the skill required to accept the hundreds of planes attempting to take off and land.
As Ban Ki-moon, UN Secretary-General, headed for Haiti to see for himself the extent of the worst humanitarian disaster that the world body has had to cope with in decades, concern grew over delays in the airlift to the capital’s airport, which is under US control.
Alain Joyandet, French co-operation minister, told reporters at the airport he had protested to Washington. He complained to the US ambassador about the US military’s management of the airport where he said a French medical aid flight had been turned away.
Marko's Take? The U.S. deserves kudos. Marko's 2nd Take? Mr. Joyandet might wish to recall why his country continues to be known as "France" rather than referred to as "Germany".
Of course, if you disagree, you know what to do. TAKE ME ON!
Marko's Take
The disarray resulting from the earthquake has been massive. Looting, rioting and violence have broken out as food, medical and water supplies have been exhausted. This has led to a comprehensive multi-country effort in order to both keep the peace, but also to allocate and distribute vital supplies.
France has accused the U.S. of playing a heavy-handed role. So far, the U.S. has sent 10,000 troops and taken over air traffic control. As a result, planes carrying medical supplies have been allegedly and needlessly delayed.
This accusation by France appears to be as erroneous as their claim to the international intellectual property rights of "French Fries" and "French Toast". Not to mention, that by now they would have surrendered to someone!
Haiti has ONE landing strip in its capital: Port-Au-Prince. The airport, called the Touissant Louventure International Airport is hardly what it's name implies. It wasn't designed to handle the barrage of inward coming traffic and was not designed to handle the large jets used by Russia.
The United States has made modifications to the strip to permit the larger planes and taken heroic efforts to allow an unprecented amount of incoming traffic.
On Sunday night alone, 50 planes with supplies were able to land. By Monday morning that number had exceeded 800!
Every flight in is critical. Yet each inbound flight believes that their flight is THE most important. Thus, there is a need to prioritize given the very limited facilities that exist.
Fortunately, the European Union (EU) has distanced itself from France's accusations. In fact, the EU has expressed gratitude for the heroic efforts of the United States in not only modifying the sole landing strip, but in recognition of the skill required to accept the hundreds of planes attempting to take off and land.
As Ban Ki-moon, UN Secretary-General, headed for Haiti to see for himself the extent of the worst humanitarian disaster that the world body has had to cope with in decades, concern grew over delays in the airlift to the capital’s airport, which is under US control.
Alain Joyandet, French co-operation minister, told reporters at the airport he had protested to Washington. He complained to the US ambassador about the US military’s management of the airport where he said a French medical aid flight had been turned away.
Marko's Take? The U.S. deserves kudos. Marko's 2nd Take? Mr. Joyandet might wish to recall why his country continues to be known as "France" rather than referred to as "Germany".
Of course, if you disagree, you know what to do. TAKE ME ON!
Marko's Take
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