A Strange Event
The topic of the SU-24 Russian plane shot down by Turkey over the weekend in Syria has been discussed all over the media ad nauseam by now, but we want to add a few observations and suggestions of our own. Some have perhaps not received the attention they possibly deserve.
Image of Russian jet shortly after it was hit by a Turkish missile. Luckily someone was promptly at hand to make a qualitatively acceptable video of the incident. As is well known, cameramen just waiting to film every remotely interesting activity are standing by all over Syria, which is why we get so much material about what is really happening there.
Photo credit: DPA
The Successes of the Global War on Terror
One would think that the so-called “Global War on Terror”, which has been given fresh impetus by the Paris attacks, must be going swimmingly. What else could explain the great enthusiasm with which it is pursued? It may be recalled that it started in earnest after the WTC attack – also a declaration of war, as it was put at the time.
As is often the case when Islamist fundamentalists strike, the actual attackers immolated themselves on occasion of the attack itself, making it impossible to exact retribution. Except by proxy, that is. This was playing right into the hands of those who had planned the attacks. It seems to us that they have ultimately succeeded beyond their wildest dreams. Not to put too fine a point to it, our wise political leaders have evidently been outfoxed by a bunch of turbaned cave dwellers and goat buggerers in the Hindu Kush.
Steve Bell on the reaction to the Paris attacks.
Venezuela: Real Wages Collapse amid Continuing Crack-Up Boom
While the crack-up boom in Venezuela continues, real wages in the country have have utterly collapsed. The bolivar is still trading close to 700 to the US dollar on the black market, and the Caracas stock index keeps making new all time highs in nominal terms almost every day. Ironically, Venezuela’s currency is called the “bolivar fuerte” (VEF), i.e. “the strong bolivar” ever since it has been “reverse split” 1 for 1,000 in January 2008.
Image via designlimbo.com
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
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.
In the meanwhile, somewhere in Athens …
Photo via allaksogolies.gr
GDP Now in Dangerous Waters
The Atlanta Fed has posted today that its GDP Now measure has reached exactly the same level as a certain Mr. John Blutarsky’s mid-term grade average. This is to say, it has declined to 0.0%.
GDP Now goes Blutarsky – via Atlanta FED
Game of Chicken Continues, EU Ratchets Up Pressure on Greece
After the ECB has made Greek debt no longer eligible for repos (note that this mainly concerns government bonds however, bank bonds that have been “guaranteed” by the government will however no longer be eligible after February 28 2015 either – these amount to a quite large € 25 billion), fears of an intensifying bank run in Greece are growing. At the end of December, Greek banks owed about € 56 billion to the euro system. This is estimated to have jumped to about € 70 billion since then.
These debts to the system have grown concurrently with a sharp decline in deposit liabilities since November last year, when it dawned on people that there might be an election. Unfortunately more up-to-date data aren’t available as of yet, but we will try to post them as soon as the Bank of Greece makes them available. However, there exist estimates regarding the extent of the decline in deposits since the end of December as well – very likely an additional € 15 billion has fled from the Greek banking system since then.
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