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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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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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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%.

 

gdpnow-forecast-evolutionGDP Now goes Blutarsky – via Atlanta FED

 

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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.

 

chicken-620x412

Photo credit: Pressmaster via Shutterstock

 

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Oil Prices, Deflationary Pressures, Bonds and Gold

The transcript of the Incrementum Fund’s fourth advisory board discussion is available for download below. The fund is managed by Ronald-Peter Stoeferle (formerly of Erste Bank, author of the annual “In Gold We Trust” report) and Mark J. Valek, employing a strategy focused on the effects of monetary policy on asset prices, with the help of proprietary indicators based on the monetary theory of the Austrian School of Economics. Here is Ronald’s brief summary of the discussion:

 

“The main topic of the discussion was the increasing deflationary pressure and its consequences on markets and central bank policy. We discussed the consequences of collapsing oil prices, a potential case for new all-time highs in treasury bonds, the impeding currency wars and the consequences for gold. As readers of our previous Advisory Board transcripts may remember, we already discussed the possibility of another round of quantitative easing in the US in our last advisory board meeting. It seems, as if the odds of such an event have increased since then, but generally still are considered as a highly improbable event by most market participants.

Perhaps the whole discussion can be accompanied by this quote by the great Ludwig von Mises: “No very deep knowledge of economics is usually needed for grasping the immediate effects of a measure; but the task of economics is to foretell the remoter effects, and so to allow us to avoid such acts as attempt to remedy a present ill by sowing the seeds of a much greater ill for the future.”

 

ludwig-von-mises

Ludwig von Mises, who first came to the world’s attention in 1912, as an eminent European monetary theorist with the publication of “The Theory of Money and Credit”

Photo via mises.ca

 

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Greek Election – Decisive Victory by SYRIZA

With more than 95% of the votes in Greece’s parliamentary election counted as of the time of writing, Greece’s far-left Syriza led by Alexis Tsipras was already certain to have won a decisive victory.

 

Greek election resultGreek election results after more than 95% of the votes had been counted – click to enlarge.

 

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US Airdrops Ensure that ISIS Remains Well Supplied …

The US air force recently engaged in an air drop of various supplies in Kobani, including high quality weapons and ammunition, which were intended to aid the remaining Kurdish fighters still holed up in the town. ISIS will probably soon send a “thank you” telegram to Mr. Obama. They have every reason to. According to Reuters:

 

“A Pentagon spokesman says a U.S. airdrop over the Syrian border with Turkey “did not make it into the right hands.”

Rear Admiral John Kirby told reporters on Tuesday, “that we are very confident that the vast majority of the bundles did end up in the right hands. In fact we’re only aware of one bundle that did not.”

The Pentagon is working to determine the authenticity of the amateur video posted online on Tuesday appearing to show a U.S. air drop containing military supplies, intended for Kurdish fighters in Kobani, in the hands of Islamic State fighters.

The U.S. military said it conducted six air strikes on Islamic State militants near Kobani on Sunday and Monday. It said one of the strikes destroyed a stray bundle of supplies from a U.S. air drop in order to prevent them from falling into enemy hands. The video was posted on a social media website and Reuters is unable to independently verify the location, the date and whether it was the consignment that the U.S. said it had bombed. It bears a logo which commonly features on Islamic State videos. The video shows what appears to be an airdrop of several boxes and containers with an attached parachute lying on the ground. A man wearing a black balaclava and combat fatigues opens boxes in the video, revealing packaged grenades and what appear to be rocket propelled grenades (RPGs).

 

(emphasis added)

So now the US air force is busy bombing its own “stray weapons” again…it seems much of the Pentagon’s work is based on the broken window fallacy. Order new weapons, drop them somewhere, and then destroy them. This will surely please US weapons manufacturers and we’re just waiting for Paul Krugman to explain what a great boon to the US economy these activities are.

The Reuters video the transcript above refers to can be viewed here.

Here is the video posted by an ISIS related account on You-tube about the incident (note that we cannot be sure for how long it will remain accessible, as You-tube often erases IS-sourced content):

 

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Former Iraqi Pilots Allegedly Training ISIS Fighters to Fly Captured Syrian Planes

The immense Islamic radical fighting force that “came out of nowhere” already has everything from tanks, anti-aircraft weapons, heavy artillery, and so forth. Ultimately they have all these weapons were provided to them courtesy of US tax payers, who paid for the equipment that was originally given to Iraq’s army only to be later captured by ISIS with astonishing ease.

The only military plaything ISIS hasn’t had at its disposal so far is an air force. However, even that may be about to change according to recent press reports:

 

“Islamic State group jihadists are being trained by Saddam Hussein’s former pilots to fly three fighter jets captured from the Syrian military, a monitoring group said Friday.

The planes, which are believed to be MiG-21 and MiG-23 jets, are capable of flying although it is unclear if they are equipped with missiles, according to the Syrian Observatory for Human Rights.

The jets were seized from Syrian military airports now under IS control in the northern provinces of Aleppo and Raqa, according to the Britain-based group, which has a wide network of sources inside the war-torn country.

It said that former Iraqi army officers who once served under Saddam were supervising the training at the military airport of Jarrah, east of the city of Aleppo. Witnesses have reported seeing planes flying at a low altitude to avoid detection by radar after taking off from Jarrah.

It comes as the United States and its allies carry out a wave of air strikes on IS positions in Syria and Iraq. The jihadists also control two other airports in Syria — Albu Kamal near the Iraqi border and Tabqa in Raqa province.

 

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Destroying Iraq's Cultural Heritage

The fundamentalist retro-gang that has conquered Northern Iraq has decided it needs to go Taliban on cultural monuments it disapproves of. One of the most recent outrages was the destruction of the tomb of Yunus, better known in the West as the prophet Jonah (yes, the biblical one who spent some time in the belly of a whale). Jonah is one of the prophets revered by both Christians and Muslims, so the motivation is not entirely clear. However, this is by far not the only ancient religious site ISIS has destroyed in the vicinity of Mosul. Reportedly the group has by now destroyed some 30 ancient shrines, churches, mosques and Hussainiyas in the area of Mosul alone. Oddly, this included at least four Sunni mosques, so there appears to be a certain degree of arbitrariness to these actions. Yazidi monuments are of course also on the list of things ISIS destroys whenever an occasion presents itself.

In short, the group is not only killing people that don't conform to its harsh version of Islam, it is also trying to erase all traces of their history and culture. It cares not one whit how old or unique these buildings and monuments are. For instance, the mosque of Yunus was built on an archeological site the oldest parts of which date back to the 8th century BC. In short, there are buildings in Iraq that have survived 2,800 years of upheaval and strife, but they haven't survived the coming of ISIS. Apparently ISIS considers all the shrines and mosques it destroys “places of apostasy”. In the course of its rampage it has also burned the books of the Diyala province's library, so reading is apparently a no-no for ISIS as well.

 

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A Preliminary Assessment – From the OSCE Mission

Mish recently posted about the German aviation expert Peter Haisenko, who claimed that the photographic evidence from the cockpit parts of flight MH 17 suggested that the plane must have been downed by air-to-air fire, not a surface-to-air missile.

The photographic evidence consisted inter alia of this high resolution picture of what was left of the cockpit. The decisive point according to Haisenko was the shape of the holes (round) and the fact that the metal was bent outward in several places (according to Haisenko, evidence of high caliber bullets entering the cockpit on one side,  traversing it and exiting on the other side). Haisenko argued that missile shrapnel would leave different marks.

Mish reasonably concluded that non-experts cannot really confirm whether these claims have merit. However, a very interesting recent interview with someone from the OSCE mission examining the crash site has recently turned up in this context. 

To our knowledge this interview went unreported in the Western mainstream media so far (which never fail to report claims made by the Kiev government, no matter how dubious they are – see this article by William Boardman who inter alia dissects a poorly sourced article in the WSJ – see also below).

We find the fact that this went unreported in the Western mainstream press almost more interesting than what the man is saying. He is seemingly confirming Haisenko's claims, while allowing that a final expert assessment remains to be awaited – so this is not yet definitive.

One thing is absolutely certain though: this version of events would fly in the face of everything Kiev and Washington have so far claimed about the incident – the storyline also promoted in the mainstream press with few or no questions asked. Given that multiple sources seem to confirm that Ukrainian war planes were actually shadowing MH 17, this would certainly be a piquant development, to put it mildly:

 

OSCE monitor notes there is evidence of machine gun fire in MH 17's fuselage, but “no evidence of a missile strike”. Oops.

 

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