http://blogs.telegraph.co.uk/finance/jeremywarner/100024151/why-cant-the-imf-face-up-to-the-truth-about-the-failing-euro/

I've been in Washington most of this week for the spring meeting of the International Monetary Fund. I wish I could say there was light at the end of the tunnel, but the reality is still deeply depressing. Sorry to use cliches, but two sayings spring to mind: fiddling while Rome burns, and re-arranging deck chairs on the Titanic... In "The Economic Consequences of the Peace", the British economist, John Maynard Keynes, wrote that his preference in any negotiation or arbitration was for "violent and ruthless truth telling" but there has been very little evidence of that in this week's discussions. Instead of addressing the underlying causes of today's economic funk – the failing euro – debate has focused on marginal fiscal and monetary issues such as whether the UK and the US are consolidating too fast.

That the IMF's chief economist, Olivier Blanchard, and his managing director, Christine Lagarde, could think some minor loosening of the fiscal purse strings in the UK either appropriate or capable of getting growth going again, when there is such a deep seated crisis going on in Europe is not just odd, it is pitiful. I've already written about the wider failings of the IMF in confronting the worst economic crisis since the second world war in today's print edition of the Daily Telegraph, but there is a lot more to say about it.

Instead of forcing eurozone leaders to face up to the truth – that their project in its present form is failing not just them, but the whole world economy – the IMF busies itself with irrelevances such as whether the UK has the fiscal space for a little more debt fuelled demand management. Worse, it meakly goes along with attempts to sustain what is plainly in its current form a completely unsustainable endeavour.

One of the big "puzzles" under discussion this week at the IMF is why the massive degree of monetary stimulus applied to advanced economies over the past four years has gained so little traction. I would have thought the answer was obvious. You can have as much demand management as you like, but as long as underlying imbalances in the world economy go unaddressed and unresolved, companies and households are not going to have the confidence to spend and invest...The crisis, I fear, is going to have to get very considerably worse before the collective resolve emerges to deal with its underlying causes. How sad it is that in order to get yourself admitted to hospital you have to shoot yourself in the foot first.


HEY EU, CAN YOU HEAR HIM NOW?

http://www.nakedcapitalism.com/2016/02/grexit-risk-may-be-back-sooner-than-you-think.html

Even though the talk of Grexit has receded from the headlines due to the Troika’s apparent success in reducing Greece to a vassal state, that operation is in fact not complete. Both unresolved elements of the seemingly permanent bailout negotiations, and a new set of confrontations created by the refugee crisis, means that the Greeks and their putative masters may be at loggerheads sooner rather than later.

As an article in Politico describes, Greece and its creditors are still at odds over a key point in the funding talks: that of Greece’s supposedly lavish pension system. What the European press has conveniently failed to report is that Greece lacks most elements of the sort of social safety nets that other European countries have, such as disability insurance, and the pensions have wound up serving as one-stop shopping. The IMF actually appeared to appreciate the point, since in the later stages of the seemingly endless negotiations of early 2015, the agency put forward a proposal that would require Greece to create some proper social support programs as it cut pensions.

Here is the current state of play, per Politico:


The Syriza-led coalition has only a three-seat majority, so its hold on power is fragile. The creditors don’t appear to think they are much at risk if they break the current government. The new head of the center-right New Democracy party, Kyriakos Mitsotakis, is the presumed replacement for Alex Tsipras, and the lenders anticipate he’ll be more pliant. But how does this logic hold together if the reason for new elections is opposition to pension cuts? It’s not obvious how this favors the formation of a coalition that would be softer on this issue. Yet the reading in Politico is that the IMF, which earlier had made noises that it would either require the creditors to provide real debt relief to Greece or it would not participate in the upcoming round of rescues, has now relented in the face of creditor refusal to provide much relief. That means the IMF has returned to its traditional role of kneecap-breaker.

The new fault line that has opened up is over the flood of refugees into Europe, and a high proportion transit through Greece. Greece is being charged with failure to stop the influx. Again from the article:



This is even more disingenuous than it seems. Greece has an insanely long coast and land borders in underpopulated areas. Please tell us when to expect the German Navy to assist Greece in repelling refugees...The “hotspot” label is an astonishingly dishonest term for open air prison camps. You can imagine why Greece is not keen to become a gaoler unless it is compensated very well for taking on that nasty role. But per the discussion above, no such rewards appear to be planned. In fact, the Troika seems to think it has the whip hand and can force Greece into compliance. It’s effectively being made the whipping boy for problems that are ultimately American but more immediately Turkish in origin. Turkey is refusing to stop the refugee flow in part because that would be work, but in part because that gives the government a very powerful bargaining chip with the Europeans and the US. But since Turkey is playing footsie with Russia too, persuading it to reduce the flow of migrants isn’t as high on the horse trading list as one would think it ought to be. But you can see the logic from the discussion above: the Eurocrats think it’s easier to get Greece to do their dirty work than cut a deal with Turkey, which even if Turkey complied, would probably only reduce rather than stop the problem.

As the article concludes:



Shorter: expect a hot and nasty summer.

http://www.reuters.com/article/ecb-policy-eurozone-idUSF9N12101C

The European Commission could act as a treasury for the euro zone, a top European Central Bank policy setter said on Monday, arguing for politicians to take steps to show they want the euro to be a lasting success...Benoit Coeure, who sits on the ECB's Executive Board, called for "a strong political commitment to complete Economic and Monetary Union so as to give the public, businesses and markets a strong signal that we are serious about making the euro a lasting success."

He backed the idea of creating a euro zone treasury, a step that would be unpopular by many euro zone states who want to protect their autonomy.

"One element here will be to strengthen the euro area executive with a euro area treasury, be it within the Commission or as a separate body," he said.

"Another element will be to build up a genuine legislative capacity at euro area level and to make institutions acting in the euro area's interest, such as the European Stability Mechanism, accountable to it."

Coeure also argued that for Europe's recovery to become structural, and thus to increase growth potential and reduce structural unemployment, monetary policy action is not enough on its own.

The Teenagers' first single, 1956's "Why Do Fools Fall in Love," was also its biggest hit. After Lymon went solo in mid-1957, both his career and that of the Teenagers fell into decline. He was found dead at the age of 25 in his grandmother's bathroom from a heroin overdose.
https://en.wikipedia.org/wiki/Frankie_Lymon

Three major corporations have cornered the market for providing services to the needy and destitute through the federal food stamp program — now called the Supplemental Nutrition Assistance Program (SNAP) — J.P. Morgan EFS, Affiliated Computer Services, and eFunds. That’s according to a report released last week by the Governmental Accountability Institute. The title of the report — Profits from Poverty: How Food Stamps Benefit Corporations.

The report quotes an executive from JP Morgan, the largest food stamp industry player, as saying that the business of food stamps “is a very important business to JP Morgan. It’s an important business in terms of its size and scale . . .Right now volumes have gone through the roof in the past couple of years or so. The good news from JP Morgan’s perspective is the infrastructure that we built has been able to cope with that increase in volume.”

Originally conceived as a means to prop up sagging crop prices to support American farmers, the Food Stamp Program, now called the Supplemental Nutrition Assistance Program, or SNAP, has exploded into a welfare program that costs taxpayers a record $75.67 billion in 2011, the group reported.

- See more at: http://www.corporatecrimereporter.com/news/200/profitsfrompoverty04182013/#sthash.5BBo8xEt.dpuf

I think it's despair...oil crashing, Cruz and Clinton crashing, markets crashing, China crashing; US never stopped crashing, nor did the eurozone....

http://www.bloomberg.com/news/articles/2016-02-01/asian-futures-diverge-as-investors-weigh-fed-policy-oil-slump

Stocks fell around the world, with the Dow Jones Industrial Average shedding more than 290 points as U.S. crude oil’s renewed plunge below $30 a barrel reignited anxiety over global growth. Treasuries climbed with the yen amid demand for the safest assets.

The Dow Average tumbled amid declines in Exxon Mobil Corp., after the energy company reported its biggest earnings drop in more than a decade. Goldman Sachs Group Inc. sank the most since 2012, driving a rout in banking stocks as yields on 10-year Treasury notes slid below 1.86 percent. BP Plc was among the biggest losers in Europe after its quarterly profit slumped 91 percent. Russia’s ruble led a retreat in high-yielding currencies as West Texas Intermediate crude capped its steepest two-day selloff since 2009.

Energy prices are crumbling as expanding U.S. stockpiles reinforce concern over a global oil glut. A Citigroup Economic Surprise Index shows data in Group of 10 economies are falling short of estimates by the most since May 2013, reinforcing concern over the global outlook amid heightened market volatility. Corporate results in the U.S. and Europe are threatening to join the list of worries in 2016. Banks contributed the most to declines in major U.S. indexes as yields on government bonds plunged and results disappointed.

“People are very spooked about what they can’t see, and at the moment they can’t see where global growth will come from,” said Justin Urquhart Stewart, co-founder of Seven Investment Management in London, which oversees about $13 billion. “In a market like this, less certainty around the U.S. election cycle will add further nerves. The last thing investors need is more background noise.”

more doom and gloom

http://www.bloomberg.com/news/articles/2016-02-02/rates-less-than-zero-is-bank-stress-fed-wants-to-test-in-2016

As interest rates turn negative around the world, the Federal Reserve is asking banks to consider the possibility of the same happening in the U.S...In its annual stress test for 2016, the Fed said it will assess the resilience of big banks to a number of possible situations, including one where the rate on the three-month U.S. Treasury bill stays below zero for a prolonged period.

"The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities," the central bank said in announcing the stress tests last week.

In that particular simulation, the unemployment rate doubles to 10 percent, the same level it reached in the aftermath of the last financial crisis.

Three-month bill rates have slipped slightly below zero several times in recent years, including in September after the Fed delayed rate liftoff amid global financial market turmoil, touching a low of minus 0.05 percent on Oct. 2.
But in the stress test, banks would have to handle three-month bill rates entering negative territory in the second quarter of 2016, and then falling to negative 0.5 percent and holding there through the first quarter of 2019...

http://www.bloomberg.com/news/articles/2016-02-02/for-once-low-oil-prices-may-be-a-problem-for-world-s-economy

For the last 75 years, almost every economic crisis has been preceded by an oil price spike. The worry now is that low energy prices are pushing the global economy into a tailspin.

While the idea is counter-intuitive, it’s gaining traction because a growing share of the world’s consumers and investors are in the very places getting hammered by the rout in commodities prices. Apple Inc., for example, blamed weaker sales last quarter on lower economic growth in some oil-rich countries.

“I never thought I would wish, let alone pray, for higher oil prices, but I am,” said Han de Jong, chief economist at ABN Amro Bank NV in Amsterdam. “The world badly needs higher oil prices.”

The problem is that the world’s economy relies far more today on emerging countries than 15 or 25 years ago -- the last periods of ultra-low oil prices. In another twist, the U.S. has emerged to vie with Saudi Arabia and Russia as the world’s biggest oil producer. In the past, the harm done to exporters was more than offset by importers’ gains. And with the exception of China and India, most big emerging countries are oil and commodities rich. Such economies now account for about 40 percent of global gross domestic product, about double their share in 1990, according to the International Monetary Fund...

more

2/1/16 Yanis Varoufakis: The Origins of the European & Global Economic Crisis

In this video, acTVism Munich interviews Yanis Varoufakis, a world renowned economist who was a former member of the Greek parliament. He gained immense popularity when he served as finance minister (27 January 2015 – 6 July 2015) for the Greek government, a post that he left shortly after he found out that Greek government made the decision to implement the austerity package of the Troika against the popular vote (OXI) of the Greek people . This interview focuses on the history of the global economic system, the transformations that it underwent after World War II and attempts to connect it to the current economic crisis that is sweeping throughout Europe and the globe.

- Is there such a thing as a "Greek-crisis"?
- Are pensions, social security benefits & high-wages the reasons why we are facing an economic downturn or are there underlying factors involved?
- What is the history of the global capitalist system and how is it affecting states and individuals today?

These questions are answered in this interview with Yanis Varoufakis.

appx 10.5 minutes

http://www.marketwatch.com/story/biggest-part-of-us-economy-not-growing-as-fast-ism-finds-2016-02-03