Desperately avoiding default

One thing you have to understand about every federal debt-related action: it's not for the benefit of the borrowers, but for the benefit of the banks. We saw this in 2009 with "mortgage reform" and it will be the same with "student loan reform":

President Barack Obama is prepping new executive steps to help Americans struggling to pay off their student debt, and throwing his support behind Senate Democratic legislation with a similar goal but potentially a much more profound impact.

Obama on Monday will announce he's expanding his "Pay As You Earn" program that lets borrowers pay no more than 10 percent of their monthly income in loan payments, the White House said. Currently, the program is only available to those who started borrowing after October 2007 and kept borrowing after October 2011. Obama plans to start allowing those who borrowed earlier to participate, potentially extending the benefit to millions more borrowers.

 The problem Obama is addressing is that although it is impossible for graduates (and non-graduates) to formally default on their student loans, they will effectively default on them when they simply don't have the money to make their payments.

This is simply reducing the payments in order to keep them on the hook longer and thereby prevent the loans from being correctly recognized as bad loans that have to be written off. As Karl Denninger correctly ascertains, the ultimate goal is to keep the young borrowers on the hook, but force taxpayers to pay off their loans. It about the banks not the borrowers. It's ALWAYS about the banks.

The European Central Bank goes negative on interest rates: Negativity

Negativity

The European Central Bank goes negative on interest rates:

The European Central Bank broke new ground last week; it became the first of the monetary superpowers to cut its deposit rate below zero. This is truly desperate stuff. That nearly six years after the collapse of Lehman Brothers, Europe is still belatedly trying to address the twin afflictions of deflation and economic depression tells you as much about the political paralysis that grips the euro area as about the severity of the crisis.

These are not uncharted waters. Denmark and Sweden have experimented with negative nominal interest rates, and in any case, the difference between minus 0.1 per cent and the pre-existing deposit rate of zero is so marginal as to be almost irrelevant. Certainly, it’s hard to see why, beyond symbolism, it would make much difference to the eurozone’s beleaguered economies, even combined with other measures announced by the ECB on Thursday to ease credit conditions.

None the less, it is quite something when bankers actually have to pay a fee for the privilege of parking their money with the central bank, which is the effect of a negative deposit rate.

It's important to keep in mind that this is the interest rate paid to bankers by the central bank rather than the interest rate paid to depositors by the banks. Remember, the banks are just borrowing those loan-deposits from the public, so they will still compete on the interest rates they pay. There is a relationship between the two interest rates, of course, but it is not a fixed ratio. Depositors have to worry about bail-ins and manufactured fees more than they have to worry about the interest rates on their savings account going negative.

However, it is indicative of the strong grip that Keynesian economics still has on the central bankers. They are still trying to figure out the best way to fine-tune the magic financial remote for the economy, little realizing that they are the equivalent of children pressing buttons on an outdated remote for a cathode ray tube television, with no batteries in it, pointing it at a flatscreen and wondering why it doesn't work.

Everything revolves around the concept of the demand gap, and the idea that more liquidity will cause people to spend more. But credit money requires someone, somewhere, to borrow something and while one can print money, one can't print borrowers. As Americans learned in 2008, even if one creates a new class of borrowers by loosening the standards, they tend to fall behind on their payments and default so rapidly that it would be better to have never loaned them money in the first place.

As usual, the central bank is belatedly reacting to events; it isn't controlling them. This is merely another indication - not proof, but an indication - that the global economy is in a deflationary scenario rather than the inflationary one most people tend to assume. The takeaway: don't add to your debt with the assumption you'll be able to pay it off with cheaper currency.

Wes Montgomery - Full House Live (Full Album)

00:00 Full House
09:14 I've Grown Accustomed To Her Face
12:43 Blue 'N' Boogle
22:24 Cariba
32:07 Come Rain Or Come Shine (Take 2)
39:04 Come Rain Or Come Shine (Take 1)
46:23 S.O.S. (Take 3)
51:29 S.O.S. (Take 2)
56:18 Born to be Blue

Eric Lau - Gilles Peterson

1. Barney Kessel - Look Of Love
2. Heidi Vogel - Joy You Give 

3. Olutugu – Alter call ft Eska 

4. Yaw - Where Will U Be 

5. Carlos Nino & Miguel Atwood-Ferguson – Find A Way
6. D’angelo - Jonez In My Bones (Live Rehearsal)

7. Georgia Anne Muldrow - Pretty Roses

8. Muhsinah - JetBoat (Boozina Remix)

9. Annabel – January 10th

Rik Mayall, star of The Young Ones, dies aged 56 R.I.P

British comedian and actor Rik Mayall has died aged 56.

He played obnoxious, poetry-writing anarchist Rick in The Young Ones with his friend Adrian Edmondson. The pair later starred in the sitcom Bottom.
A pioneer of the 1980s alternative comedy scene, Mayall also appeared in Blackadder and The New Statesman.

"He was a quiet, polite, caring gentleman. The antithesis of the characters he played”

Laurence Marks Creator, The New Statesman

His manager Roger Davidson said: "It is a terrible shock. All we know... is that Rik died at home. He touched many lives, and always for the better."

Edmondson added: "There were times when Rik and I were writing together when we almost died laughing.
"They were some of the most carefree stupid days I ever had, and I feel privileged to have shared them with him.
"And now he's died for real. Without me. Selfish bastard."

 

 


Police said they were called to reports of a sudden death of a man in his 50s at 13:19 BST on Monday, in Barnes in south west London.
London Ambulance Service said "a man, aged in his 50s, was pronounced dead at the scene".
The Metropolitan Police said the death was not believed to be suspicious.

Rik was inspirational, bonkers, and a great life force”

Nigel Planer

The actor, who was married with three children, was left seriously ill after a quad bike accident in 1998 which left him in a coma for several days.

His big break came at The Comic Strip Club, performing with comedy partner Adrian Edmondson as 20th Century Coyote in the 1980s, which led to cult television hit The Comic Strip Presents.
He co-wrote The Young Ones with Lise Mayer and Ben Elton, which ran for 12 episodes between 1982 and 1985. It shared cult status and schoolboy humour with later sitcom Bottom.
Mayall and Edmondson's slapstick comedy often involved fires, explosions, and hefty blows to the head with a frying pan.
The pair met at Manchester University before forming the on-stage comedy duo The Dangerous Brothers.
It was there Mayall had befriended Elton, who said of his friend: "He changed my life utterly," adding: "He always made me cry with laughter, now he's just made me cry."
Anarchic characters Mayall's film roles included the comedies Drop Dead Fred and Guest House Paradiso.
He also famously played the loud-mouthed and lecherous Lord Flashheart in BBC comedy series Blackadder, starring Rowan Atkinson.
The actor appeared in the second and fourth series, shouting catchphrases such as "woof!" and "let's do-oo-oo it!".
But his early, anarchic characters gave way to the smooth, scheming Conservative politician Alan B'Stard in The New Statesman, which ran on ABC from 1986 to 1992.


Blackadder producer and writer John Lloyd paid tribute, telling the BBC: "It's really a dreadful piece of news."
"He was the most extraordinarily good actor as well as being an amazing stand-up comic. Apart from being great company, he was a great professional," said Lloyd.
Stephen Fry, who appeared with Mayall in Blackadder, described his co-star as "an authentic comedy genius and a prince among men," adding he was "simply distraught" at the news.
Writer Laurence Marks, who created The New Statesman, described Mayall as "a quiet, polite, caring gentleman".
"He was the antithesis of the characters he played," he said, adding that the comedian's health had deteriorated after his quad bike crash 16 years ago.
"I think he lost his long-term memory, so often when we were discussing The New Statesman, he couldn't remember it."
Nigel Planer, who played the hapless hippie Neil in The Young Ones, said he was "very, very sad and upset that we've lost Rik, who was inspirational, bonkers, and a great life force".
He described Mayall as "a brilliant comedian and someone who made everyone else's lives more fun. He will be really, really missed".
'Truly brilliant comedian' Among those paying tribute on Twitter was comedian David Walliams.
He wrote: "I am heartbroken that my comedy idol growing up Rik Mayall has died. He made me want to be a comedian."
"Growing up there was no one funnier," said The Mighty Boosh comedian Noel Fielding. "We will really miss you Rik Mayall you genius."
Alan Davies, who starred opposite Mayall in Jonathan Creek, said the star was "great to be around"
"Funny, funny man and a comic hero in my teens. Terrible news."
The BBC's director of television, Danny Cohen, paid tribute to his "vibrancy and energy".
"If you look at something like Blackadder Two, Rik just had quite a small part in that series as Lord Flashheart - but it's one of the most memorable scenes in any series of Blackadder.
"And I think that tells you something about Rik. He stole scenes because of his energy and his vibrancy and his comic performances and he was truly extraordinary."

Speaking about his 1998 quad bike accident last year, Mayall said doctors had kept him alive on a life-support machine for five days and were about to turn it off when he began to show signs of life.
He used to mark the occasion by exchanging presents with his wife and children and said the near-death experience changed his life.
He said: "The main difference between now and before my accident is I'm just very glad to be alive.
"Other people get moody in their 40s and 50s - men get the male menopause. I missed the whole thing. I was just really happy."

Last Week Tonight with John Oliver (HBO): Net Neutrality

a wonderful piece from John Oliver in which he skewers net neutrality and the cable companies.

As funny as this piece is (and it is hilarious), this issue is a tremendously important one that far too few people understand — something that is being counted upon by those looking to gain an advantage from proposed legislation — so share this with as many people as you can.

This won’t interest EVERYBODY, however. If you don’t use the internet, then this one probably isn’t for you...

Steen Jakobsen: Expect A 30% Stock Market Correction in 2014

Steen Jakobsen is one of the few CIOs of major banks who is prepared (and allowed) to say exactly what he thinks about the state of the global economy — even when the story he tells is somewhat alarming.

In this great interview with Chris Martenson, Steen explains why he is 70% in fixed income and why he expects a 30% stock market correction before 2014 is in the books.

There’s plenty more to get your teeth into, so sit back and enjoy Steen’s take...

Stephanie Pomboy Wine Country Conference 2014 "Confessions of Ben Bernanke"

Stephanie Pomboy gave a tour de force performance at this year’s Wine Country Conference in Sonoma in early May, with her presentation of “The Confessions of Ben Bernanke.”

There are many reasons why Stephanie is followed by many of the smartest people in the world of finance, and this presentation gives a glimpse into why...

“The 50-50-90 rule”.

“The 50-50-90 rule: anytime you have a 50-50 chance of getting something right, there’s a 90% probability you’ll get it wrong.”

— Andy Rooney

Russia-China gas deal could ignite a shift in global trading

Russia-China gas deal could ignite a shift in global trading

“The unipolar model of the world is over”, declared Vladimir Putin last week.

“The global picture has completely changed”.

The St Petersburg International Economic Forum was less well-attended than usual. During previous visits to this annual “Russian Davos”, now in its 18th year, I’ve regularly been mown down by American and West European CEOs, as they’ve purposefully stomped down carpet-tiled corridors, their retinue of aides and cameras in tow.

This year, while plenty of Western executives did make the annual trek to Russia’s beautiful second city, keen to sell more cars, soap powder and financial services in Europe’s most valuable consumer market, the corridors were safer. Many of the top names stayed away.

The sanctions imposed on Russia in response to events in Ukraine put Western business leaders under pressure. Fearing unsavoury headlines, and often responding to specific government requests, some of our best-known corporate pole-climbers gave “Putin’s vanity summit” a miss.

Such absences, along with the UK’s local and European election shenanigans, meant the St Petersburg Forum generated less comment than usual. Yet I’d say this year’s event provided confirmation of one of the most important pieces of news to emerge from Russia since the Soviet Union was dissolved a quarter of a century ago.

I’m referring to the $400bn (£237bn) deal struck between Moscow and Beijing, under which Russia will supply 38bn cubic metres (bcm) of gas to China over 30 years from 2018. Before that happens, the two sides are to share the estimated $77bn cost of building the new “Power of Siberia” pipeline, stretching from Eastern Siberia to China’s populous north-east.

While that will already amount to the world’s biggest construction project, this joint initiative could yet see a second pipeline built to the Western Provinces of the People’s Republic, expanding Russia’s annual Chinese gas sale to 61bcm.

This deal has been a long time coming. Last spring, after a decade of negotiation, state-run energy giants Gazprom and CNPC signed a memorandum of understanding regarding the initial pipeline route. Putin’s visit to China last week, followed by events in St Petersburg, cemented the high politics of the tie-up.

Some say the Ukrainian crisis has forced an “isolated” Russia to do this China deal now, in a scramble for allies. Others judge that Beijing, showing its disapproval of Western adventurism and lingering Cold War attitudes, is deliberately standing next to Moscow in a joint display of strength. Whichever way you spin it, the outcome is the same. Russia, source of a third of all natural gas used in Western Europe, will soon have a major alternative market for its vast exports. And that can only put upward pressure on both wholesale and retail gas prices.

Enemies for much of the Cold War, Russia and China are now building serious commercial ties across their 2,700-mile border. Under-reported in the West, this fast-strengthening relationship will do much to shape the world economy in the years and decades to come.

As recently as 2003, cross-border trade between Russia and China amounted to just $12bn. Over the last decade, that’s expanded more than seven-fold, reaching $90bn last year. Both sides recognise the synergies between the world’s largest energy exporter and the world’s most populous nation and biggest manufacturer.

In 2009, Russia’s oil giant Rosneft secured a $25bn oil swap contract with China. Last year, that relationship deepened, after Rosneft agreed to double oil supplies to China in a deal valued at a colossal $270bn. This reflected Russia’s plan to shift its focus away from saturated and crisis-ridden European energy markets and towards Asia — a plan well in train years before recent events in Ukraine.

Under the latest oil agreement, Russia pumps an extra 300,000 barrels to China daily for the next 25 years, doubling the crude it already sells to the energy-hungry People’s Republic. The speed of change in the direction of Russia’s oil exports has been stark. Russia now sends about 750,000 barrels a day to Asia, a fifth of the oil it sells abroad, helped by the East Siberia Pacific Ocean crude pipeline, linking Russia to China, which opened in 2010....

Interview with Marine Le Pen: “I Don’t Want This European Soviet Union”

Interview with Marine Le Pen: “I Don’t Want This European Soviet Union”http://www.spiegel.de/international/europe/interview-with-french-front-national-leader-marine-le-pen-a-972925.html

SPIEGEL: Ms. Le Pen, having won 25 percent of the French vote, your Front National party stands as one of the primary beneficiaries of the May 25 European Parliament election. How could such a thing come to pass?

Le Pen: The French want to regain control of their own country. They want to determine the course of their own economy and their immigration policies. They want their own laws to take precedence over those of the European Union. The French have understood that the EU does not live up to the utopia they were sold. It has distanced itself significantly from a democratic mode of operation.

SPIEGEL: Yet, prior to the election, it was said that the establishment of lead candidates for the two biggest groups — Jean-Claude Juncker for the center-right and Martin Schulz for the center-left — would strengthen democracy in the EU.

Le Pen: That is totally bogus. Everybody knew that the parliament wouldn’t be making the final decision on the next president of the European Commission.

SPIEGEL: Do you want to destroy Europe?

Le Pen: I want to destroy the EU, not Europe! I believe in a Europe of nation-states. I believe in Airbus and Ariane, in a Europe based on cooperation. But I don’t want this European Soviet Union.

SPIEGEL: The EU is a vast project for peace. It has helped ensure 70 years without war on the Continent.

Le Pen: No. Europe is war. Economic war. It is the increase of hostilities between the countries. Germans are denigrated as being cruel, the Greeks as fraudsters, the French as lazy. Ms. Merkel can’t travel to any European country without being protected by hundreds of police. That is not brotherhood.

SPIEGEL: You now intend to head to Brussels only to fight the system.

Le Pen: And why not? The EU is deeply harmful, it is an anti-democratic monster. I want to prevent it from becoming fatter, from continuing to breathe, from grabbing everything with its paws and from extending its tentacles into all areas of our legislation. In our glorious history, millions have died to ensure that our country remains free. Today, we are simply allowing our right to self-determination to be stolen from us.

SPIEGEL: In truth, though, you didn’t win the elections because of the EU, but because the French are furious with their economic situation and with President François Hollande. Have you thanked him?

Le Pen: No. Then I would have had to call Nicolas Sarkozy as well. France is in this situation because the conservative Union for a Popular Movement (Sarkozy’s party) and the Socialists (Hollande’s party) submitted to European treaties. These treaties promote German interests quite well, but they are poor at defending France’s interests.

SPIEGEL: Germany is to be blamed for France’s misery?

Le Pen: Whenever I hear people utter anti-German sentiments, I say: You can’t blame Germany for defending its own interests. I can’t blame Ms. Merkel for saying she wants a strong euro. I place the blame with our own leaders who are not defending our interests. A strong euro is ruining our economy.

SPIEGEL: Why would you say that the euro is only helping Germany?

Le Pen: For a very simple reason: It was created by Germany, for Germany.

SPIEGEL: It was François Mitterand who wanted the euro in order to contain Germany. In fact, it was difficult for the Germans to give up their beloved deutsche mark.

Le Pen: That’s another story. Mitterand wanted to push integration forward with the euro. But from an economic standpoint, the euro is German. Were we to return to our national currencies, the D-Mark would be the only one to appreciate in value, which would be a competitive disadvantage for Germany. Our currency, by contrast, would be devalued, which would give us a bit of room to breathe.