When the ATMs Went Dark …

There’s a time for calm, rational behavior … and a time to panic. On Tuesday, investors in U.S. stocks decided not to panic. Monday’s sell-off halted. But it did not reverse.

And it left the street with its worst half-year performance since 2010. Gain for 2015 so far? Zilch. But have we seen the top? We will have to wait to find out.

Fox News reports that Greeks are eyeing Bitcoin to protect their savings. At midnight Tuesday night, the Greek government defaulted on a €1.5-billion loan repayment to the IMF. And it has imposed a 60-euro-a-day limit on cash withdrawals.


50As of today, depositors reportedly only get 50 euro per day, because the banks have run out of 10s and 20s.


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Latest Developments

Alexis Tsipras has sent a letter to Jeroen Dijsselbloem of the euro-group (you can download the letter here, pdf), in which he requests a separate bailout from the ESM, essentially proposing that the ESM take over Greece’s liabilities for a period of two years. Unsaid, but implied, is that this would result in the referendum being recalled. More likely it is just a ploy to enhance Syriza’s chances of obtaining a “no” vote in the referendum.


Image via dreamstime.com


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Loaves and Fishes

Jonathan Bernstein over at BloombergView has just published an article entitled “Obamacare Narrows the Deficit.  Let’s Move On.”  It can be found here. To put it mildly, the argument is far from the slam dunk that Bernstein imagines.

Bernstein reports on a recent study from the Congressional Budget Office (“CBO”) entitled “Budgetary and Economic Effects of Repealing the Affordable Care Act” (the “ACA”), and which can be found here.  The report finds that, on a “static” basis [1], repealing the ACA would increase the Federal deficit by $353 billion over a 10-year projection period from 2016 to 2025.


26.09.09-Martin-Rowson-on-005Luxury miracle required

Cartoon by Martin Rowson


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The Beginning of the End

Over the weekend, the lines in Greece stretched along the street. Around the corner. Down the block. Lines to get cash. Lines to buy gas. Lines of people eager to get their hands on something of value. Food. Fuel. Cash. Pity the poor guy who was last in line …

… the poor taxi driver, for example, standing behind 300 other people, trying to get 200 lousy euros out of an ATM. Like a tragic nightclub customer … among the last to smell the smoke. By the time he headed for the exit, it was clogged with desperate people, all struggling to get through the same narrow door at the same time.


last in lineBeing the last in line usually means you have waited too long.

Image via archives.gov, Al Capone’s Soup Kitchen, Chicago 1931

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Nothing to Worry About …

It was clear that stock markets would sell off and US treasuries would catch a bid on the news of the failure of negotiations between the former “troika” and Greece. What was less clear was that gold would actually fail to catch a bid, but we are putting this down to the fact that another surprise event occurred: the euro, after initially declining, actually ended the trading day slightly higher.

Some of this has to do with positioning: there were already lots of speculative shorts in the euro, and speculators added some 24,000 contract to their long position in gold futures ahead of the weekend. When a big move higher failed to make an appearance, some of these positions in gold were evidently sold again, while euro shorts welcomed an opportunity to cover on a dip caused by widely unexpected news.




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June 26 Silver Flash Crash: A Forensic Analysis

On Friday morning, at around midnight (Arizona time), the price of silver had a little crash.


 $_32Photo credit: doomu


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Capital Controls Have Arrived …

This is an “Amber Alert” day in the markets. “Greeks Line Up at Banks; ATMs Run Dry” was the headline over at the Drudge Report. Versions of it ran throughout the financial media.

Greece is the canary in the coal mine for what could one day happen to your savings. You’ll recall our prediction: In a crisis, banks will move fast to block access to your money.

First, they will limit withdrawals. Then they will either close their doors or run out of cash. That’s what’s happening in Greece right now…


CanaryInACoalMineWhen the canary dies, you know the air is poisoned …

Photo via forbes.com


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Has the Leopard Really Changed its Spots?

Back in February, a brief article at the BBC remarked on the seeming transformation of Syriza from a bunch of Marxist dreamers into (shudder..) quasi-“Blairites”. To be sure, we also approved of the signs of pragmatism that emerged at the time. The party had seemingly ditched its previously implacable opposition to privatizations and didn’t even try to tax the country’s shipping magnates. The tax exemptions enjoyed by the latter strike many as unjust, but the fact is that they provide around 7% of Greek employment and their assets are out at sea. It is up to them under which flag said assets are sailing and it would be self-destructive to chase them away.




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Tsipras Takes Door Number Three

Late last week, Greece’s creditors offered a bailout extension of several months, in the course of which Greece would have received sufficient funding to make all payments due during this time period. In order to receive this package the Greek government would have had to sign a final offer made by the creditors. If one looks at the details of the negotiations, only a tiny difference remained between the Greek offer and the offer made by the creditors in the end, reportedly amounting to approximately €100 million. This makes the Mr. Tsipras’ assertion that the final offer tabled by the creditors was an “affront to Greek dignity” not especially credible. It should be noted in this context that these arithmetic games are complete nonsense anyway. In light of €360 billion of public debt, does anyone really believe it will make an iota of difference whether the retirement age in Greece is increased in 2022 or 2025, or whether the small VAT exception for the tourism industry is revoked or not? We believe there are far more important reforms Greece needs to implement.


image1In the meanwhile, somewhere in Athens …

Photo via allaksogolies.gr

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France Is Dead



We were down in the subway in Paris last night. At about midnight. At the École Militaire station. All of a sudden, we heard screaming. Girls. Shrieking more than screaming. Not in trouble. But not laughing either.


artworks-000086852589-4ni3t8-t500x500Photo credit: Getty Images


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