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August 31, 2011

Travel Photo: Cobh Promenade, Ireland

Cobh Promenade, Ireland

Travel Photo: Blarney Woods, Ireland

Blarney Woods, Ireland

Travel Photo: Bible Gardens, Ireland

Bible Gardens, Ireland

Berlusconi’s Backpedaling May Push Italy Back Toward The Brink of Disaster

The Italian government has decided to gamble and it is undoing completely its 45 billion austerity plan.
Every single line of the austerity bill passed urgently after diktat from the EU is being scrapped, of course justyfing such changes with new taxes which the day after are immediately withdrawn after the usual protest of the affected lobby.
Actually today every single line of the early August plan has been changed or removed, Italy is saying thanks to the ECB for purchasing its bonds and can renege on the promises made to the EU as condition for the bailout. Just wandering who will help Italy in September with bond purchases if the government is clearly a group of liars and crooks.

Of course the Italian government has been doing it stealthy convinced that no one abroad would notice what is called by them a simple correction.
Unfortunately for them Bloomberg has released an analysis titled "Berlusconi’s Backpedaling May Push Italy Back Toward The Brink of Disaster."
It is rather self-explanatory: as a reminder the ECB is only buying Italy bonds as part of its SMP monetization expansion due to promises that Italy would slash its deficit and implement austerity.

From Bloomberg:
Italian Prime Minister Silvio Berlusconi may be steering his country back toward the eye of the sovereign debt- crisis storm as he tests the European Central Bank’s commitment to saving the Mediterranean country from a full-blown economic and financial crisis.

Berlusconi, responding to domestic opposition, said on Tuesday that a previously announced 45 billion euro austerity package, which may have swayed the European Central Bank to buy Italy’s government bonds, will be pruned. The new version will drop the “solidarity tax”, which would have taken an extra 5 percent or more of annual incomes exceeding 90,000 euros. In addition, cuts in funding to regional and local governments that totaled 9 billion euros in the original plan will be trimmed by about 2  billion euros. The Senate will vote on the revised plan next week. The reduction of the austerity package will probably leave the ECB’s Governing Council even less inclined to buy Italian government debt as it attempts to cut its overall level of bond purchases from the 22 billion euros acquired during the week ended Aug. 12, after the 10-year Italian sovereign yield reached 6.2 percent. The central bank had already reduced its weekly purchases to 14.3 billion euros during the period ended Aug. 9 and 6.7 billion euros last week.
The vigilantes are already reminding Berlusconi they are watching his every lie.
The spread between the 10-year yield of Italy’s government bonds and those of Germany rose by 11 basis points on Tuesday, as investors digested the latest amendments to the austerity package, and has increased by 30 basis points since the ECB completed the Aug. 12 round of purchases, its largest weekly intervention.

Italian stupidity apparently knows no bounds, as it is testing the ECB ahead of the crucial month of September:
Italy can ill afford to test the ECB’s commitment as the country prepares for a serious test of its ability to continue accessing financial markets in September, when it will need to refinance 46 billion euros of maturing bonds. That is about six times the amount successfully raised by the Italian Treasury on Tuesday.

August 27, 2011

World Population approaching the 7 billion mark

Another great graphics from Reuters:

Food Riots and Protests Visualized

The excellent Google Maps overview on the food riots situation is showing an alarming spread to Europe.
North Africa and Middle East are still the hot spots for riots and revolutions but the financial crisis is starting to bite in Europe as well with protests spreading to the Balkans. Decreasing living conditions are going to exacerbate the situation in Western Europe as well in the following months.

View Inflation Riots and Protests 2011 in a larger map

Market crash 'could hit within weeks', warn bankers

From The Telegraph:

A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets.
Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during the 2008 financial crisis.
Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender's bonds against default is now £343,540.
"I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank. 

read more HERE

Travel Photo: Blarney House, Ireland

Blarney House, Ireland

August 23, 2011

Travel Photo: Blarney Castle Ireland

Blarney Castle, Ireland

The Detached look: Bill Cunningham

For those who are still looking out there for authenticity and detachment from the conformism of the modern society Bill Cunnigham New York is the documentary to watch.
Cunningham, 81, has been documenting the fashions found on New York Streets for the last 50 years. With a battered Nikon camera, he goes everywhere on his bicycle, snapping anything that catches his eye.
Reclusive, and fiercely private about his personal life, it took Richard Press, the film's director and his producer, Philip Gefter, eight years to convince their subject to appear in the documentary.
From Upper East Side swans, European royalty and aspiring fashionistas; to street gangs, punks, downtown transvestites and even bicycle messengers - if there is something interesting to say about the clothes, Cunningham will snap them.

Cunningham attends the fashion shows in New York and Paris, he also covers the most prestigious social events each night in New York for his page in the New York Times called "Evening Hours."
Cunningham must be history's most frugal fashion observer. He sleeps on a camp bed in his studio surrounded by filing cabinets. The bathroom is down the hall and shared with other tenants. He never eats out and owns perhaps four outfits at most - his uniform is a blue workman's smock (with lots of pockets) which he buys from a DIY store in Paris. The street-sweepers there wear the same shirt. In the rain, he cycles in a plastic poncho full of holes repaired with gaffer tape. He is on his 28th bicycle, having had 27 stolen in New York over the years.
Of his reluctance to accept even a glass of water at any of the events he covers, he tells the cameras: "You see, if you don't take money they can't tell you what to do, that's the key to the whole thing."

In 2008, Cunningham was awarded the Ordre des Arts et des Lettres , by the French Ministry of Culture. In his speech, he was overcome with emotion. He told the assembled: "It's as true today as it ever was. He who seeks beauty, will find it".

August 22, 2011

Top Italian government leader declares country bankrupt

Mr. Bossi
In the last few hours there has been a series of declarations from Italian political leaders that are appalling!
The first was the leader of the Northern League, Umberto Bossi who is also the number two after Berlusconi in the current government coalition saying clearly that he knows Italy is gone and that he wants the Northern regions to become independent from the rest of the country. Today he reiterated that Italy will not survive, it is bankrupt and that the only solution he sees is to split the country so that the North can keep his money and not contributing to the rest of the country any more (hope they keep their debts as well which amount to the majority of the Italian debt).
For those who are not acquainted with Mr. Bossi, he is the leader of a racist party who obtained in the last national election 8% of the national votes with peaks of 20+ % in 2 northern regions, Mr. Bossi has always been famous for his colourful language, he is used to give the bird at every major event when talking of Italy or immigrants, his party has been advocating for throwing immigrants to the sea, shooting them before approaching the Italian coasts, reserving to immigrants special train wagons and buses so they do not mix with Italians since according to them they stink and are criminals.
His party is also strongly anti-rest of Italy and he has been advocating for years first the independence of the north from the rest of Italy, then at later stage a loose federal government and today he is back with his independence leitmotiv.
Berlusconi on the other side today declared the following after the reaction of the Italian President Napolitano asking serious and decisive action to the government in particular to fight the tax evasion and fraud epidemic: "I have done what I had to do, it is not my concern any-more now it is Parliament's business to decide" washing his hands of any responsibility and adding clearly the what he did was ordered to him from France and Germany, should anyone had a doubt that Italy was still a sovereign country.
Aside from any other consideration, declarations as such would be proof enough in any serious country that those persons are unfit to rule a country and would have been forced to resign.
The image international investors will get from this is that Italy is completely without leadership and ruled by madmen, which is true unfortunately.
Confidence in the country is fading fast and we are seeing a total disconnection from reality when it comes to Italian politicians.
While any other government enforce careful media declarations during a crisis, the two Italian top politicians are talking and shouting as if they were in a hill billy low-life bar talking of cars and chicks while burping and playing beer pong.
This is the image the Italian government is broadcasting internally and to the world
There has been of course no comment on any Italian newspaper in regards to those declarations, 90% of the media is controlled by Berlusconi but aside from this what is clear is that Italians are apathetic to this kind of language, what is appalling when seen from abroad is normal in Italy.
Proper language in the political life has never been a requirement..
Although this time, every single comment from the government is important, international markets have eyes and ears on Italy, they may not understand Italian antics, they may not be used to Berlusconi or Bossi saying one thing and after 24 hours do U-turn on their previous comments, but they are used to make conclusions on investments based on media declarations and political comments and the conclusion they are reaching right now is to run away from Italy and its foolish leaders.
Next week the current budget proposals could not be enough to stop the haemorrhage and thanks to this confident messages from our government we can count on increased pain to reach Italian people very soon. Never as before it is true that silence is gold, maybe it is time for the Italian political class to silence themselves for the greater good of the economy and our brains.

Daily Photo: The Bounty

August 21, 2011

Libya's war close to end, who is next?

It appears the unreported and unofficial war in Libya could be close to an end. It appears, according to mainstream media, rebels are close to the capital and our fearless leader Gaddafi is close to throwing the towel and leave the ring. Regardless of the reliability of this information is clear that strong powers want the war ended and fast.
Together with the latest news from Syria this is indicating we are getting closer to the turning point I was mentioning at the start of the Libyan war.
Once Libya will be under control and it could be a matter of months things will turn nasty, once the Libyan oil will be on the grid again the situation will unravel fast. It seems we are facing a crisis escalation on both the military and financial side, the financial domino both in Europe and the USA is falling and a major rush to get control of Libyan oil reserves is becoming imperative at this point.
To understand this chess game is possible only if we consider the broader picture, the financial crisis, the war in Libya and the unrest in the Middle East and North Africa are all connected pieces of a bigger puzzle.
The reality is that the financial system has reached a terminal stage, leverage is getting harder and harder and cash injection has reached a structural limit, there is not enough money to bailout the black hole of debt created and  peak oil is already here making impossible to go back to growth and inflate ourselves out of this mess.
Growth is not available because the current system has reached the maximum capacity and is deflating fast while debt has reached levels never seen before in history.
There are few options left either declare insolvency and bring the entire system down or go to war and make harsh austerity a war necessity for the population while stealthily bankrupting the western world and all its creditors.
In this situation there is a rush to control and manage the reduced resources available and gain the preservation or well reduced deterioration of the population's standard of life together with a competitive advantage over other nations who are not so blessed of controlling those essential resources.
It is a strategic imperative for every nation to get access by any necessary mean to strategic resources whose lack would bring to an halt the economy and its democracy.
No wonder China is getting very jittery lately although regardless of its strategic links with Iran will not react aside from verbal shows when the situation will escalate.
After all should China lose access to the western world markets and treasuries It would risk economical and social collapse, they will play along with US and EU since they are into the same game, they will get concessions due to their symbiotic relation with the West after all the West still need China's cheap productive capacity but they are caught into the same game all right.
The next target is clearly Syria, which has been thrown into chaos already although with this week clear innuendo from Obama is clearly the next regime to be toppled down as soon as the major Libyan headache will be solved.
The only major variable in this scenario is Turkey, the situation is very volatile at this moment with the confrontation between the Muslim Erdogan's government and the secular Turkish Army, how Turkey, a member of NATO will play this game is a major diplomatic variable to be considered.
One thing is clear Middle East and Central Asia is the prize in this dangerous power game and this could escalate quickly if financial distress will raise in the following months.

August 18, 2011

Undisclosed European Bank allotted $500 million from ECB

Markets are in full rout as was to be expected after the latest French-German emergency meeting added more clouds to an already dark sky.
But one of the main reasons markets are panicking is the mysterious emergency tender.
One undisclosed bank had to borrow in one shot yesterday 500 million dollars from the ECB something that last time happened in March 2011. The amount borrowed is staggering when compared to previous emergency interventions of the ECB (see graph below). This is clearly indicating that a major bank in Europe is on the edge therefore the panic spree we are witnessing today together with the fading effect of the short-selling ban which has been useful only to buy few days of relative calm.

Serious levels of Radiation detected in Tokyo

Serious news from Fukushima and as usual completely ignored by mainstream media and authorities.
Radiation expert Dr. Chris Busby says that huge quantities of radiation - 1013 or 10 trillion becquerels per hour - are still being released from Fukushima.
This is down slightly from some of the radiation levels observed in March but given that the Fukushima crisis has continued for months, Fukushima dwarfs Chernobyl in terms of radiation released.

Busby brought sophisticated radiation testing equipment to Japan, and says that the radiation from one sample from Tokyo was higher than existed inside the Chernobyl exclusion zone.

According to wide-spread but unsubstantiated rumors, Fukushima workers say that the ground under the plant has cracked, and radioactive steam is being released from the cracks.

And another interesting piece of news from the prestigious scientific journal Nature notes:
Shortly after a massive tsunami struck the Fukushima Daiichi nuclear power plant on 11 March, an unmanned monitoring station on the outskirts of Takasaki, Japan, logged a rise in radiation levels. Within 72 hours, scientists had analysed samples taken from the air and transmitted their analysis to Vienna, Austria — the headquarters of the Preparatory Commission for the Comprehensive Nuclear-Test-Ban Treaty Organization (CTBTO), an international body set up to monitor nuclear weapons tests.
It was just the start of a flood of data collected about the accident by the CTBTO's global network of 63 radiation monitoring stations. In the following weeks, the data were shared with governments around the world, but not with academics or the public.

Travel Photo: Blarney Lake, Ireland

Blarney Lake, Ireland

August 17, 2011

Financial costs of banking crises

An Interesting chart from Standard & Poor's on the cost of bank bailouts, hardly surprising that Ireland has trashed more than 30% of its GDP in keeping alive Irish zombie banks but a surprising result is South Korea which appears to be facing the same faith of Ireland on this aspect.

Spanish Army delinquent on its weapon purchases

El Pais is reporting how the Spanish Army is in arrears of payments for its latest toys and is at risk of not being able to pay at all.

Just wondering how the repo men will seize the assets this time, will they recruit mercenaries or send the Marines!

Translation from Spanish below:
The overall bill called special weapons' programs includes 19 weapons systems that mostly incorporate new technologies - totals 30 billion, around 3% of Spanish GDP, of which Defence has so far paid just under 5 billion.

Companies should be paid the remaining 26 billion in instalments until 2025, but defense officials themselves acknowledge that this is impossible without a drastic increase in the budget, which is unthinkable given that Spain has set a priority to reduce the deficit 6% at the end of this year and 3% in 2013 (with 2010 data, the deficit of all government is 9.2% of GDP).

Already this year the Ministry of Defence has been in serious trouble to meet their obligations.
Defence sources said they would not have enough money even if there were no additional expenditures through 2025.

In his appearance before Congress last October to present the budget for this year, Secretary of State for Defence, Constantino Mendez , already referred in the starkest terms to the situation: "We should not have purchased weapons we are not going to use for scenarios of confrontation that do not exist and, more seriously, with money that we did not have then and do not have now." 

Florida and California in state of financial emergency again

Being European I have devoted too much time lately to the sorrow state of the Eurozone and lost focus on the twin crisis evolving on the other side of the pond, while in Europe we have failing nations the situation in US is not dissimilar with the MUNI Crisis and the failing states. A couple of new reports today from Florida and California highlighted below:

Miami Declares Financial State of Emergency

Bloomberg reports Miami Declares ‘Financial Urgency’ as It Moves to Cut Worker Pay, Benefits
Miami, facing a $61 million fiscal 2012 deficit, declared a state of “financial urgency” for a second straight year, moving toward wage and benefit cuts.

The declaration gives unions for municipal workers two weeks to agree to contracts for the year that starts in October or be subject to actions imposed by the City Commission. Workers including police and firefighters absorbed about $80 million in reduced pay, health insurance and pensions in fiscal 2011.

Miami joins at least two Florida cities that also have invoked the fiscal statute, including one that may force reductions on union workers. Hollywood, which made a declaration in May, is set to cut salaries, including for police and firefighters, as much as 12.5 percent. State law gives cities special powers when they declare financial urgency.

Standard & Poor’s cut Miami’s general-obligation bond rating two steps to BBB, the second-lowest investment grade, on June 28 and gave it a negative outlook, partly because of lawsuits from city unions stemming from cuts imposed in August 2010. The legal actions “expose the city to significant liabilities at a time when its available reserves and liquidity are low,” S&P said in a report.
California Revenue $541 Million Below July Forecast

More budget cuts are coming to California where Revenue Fell $541 Million Below July Forecast.
California revenue fell short of budget estimates by $541 million or 9.2 percent in July, the first month of the 2012 fiscal year, the state Finance Department reported.

The data was similar to figures from Controller John Chiang, who said Aug. 9 that cash receipts for the month missed the forecast by $538.8 million. Chiang said the shortfall may mean further budget cuts are needed.

Finland asking for a "deposit" to Greece in exchange for bailout

For those who have doubts that the current Euro situation is getting crazier by the day please consider Finland and Greece agree on loan guarantees

Finance Minister Jutta Urpilainen said in a Tuesday press conference that Finland and Greece have reached common ground on loan guarantees demanded by Finland for its participation in the Greek bailout package. The agreement still requires approval from other eurozone states.

The Finnish and Greek Finance Ministries have agreed that the Greek state will transfer a sum to the Finnish state, which, together with interest on that sum, will serve to guarantee Finland's share in the bailout loan to the troubled southern state. 

The guarantee sum would, however, be only a fraction of the money that Finland is contributing to the rescue package. 

Urpilainen has not divulged a concrete sum, because that is still being negotiated. 

So Finland agrees to lend let's say 10 Euro to junk Greece and in exchange will get a deposit of 1 Euro which will keep as a guarantee that Greece will pay back the other 9 euro, with interest, at an agreed upon rate.
This is clearly a political trick to avoid anti-bailout resentment in the population as per the practicality of the agreement, it is absurdly laughable. Another proof of desperation rising in Europe and the complete ineffectiveness of any government in dealing with the situation aside from implementing ridiculous publicity stunts.

August 12, 2011

Travel Photo: MUSeum of Modern Art, Matera, Italy

MUSMA, Matera, Italy

Irish Garden Shoes

Travelling around Ireland you can find here and there used shoes decorating gardens, some of the most original below, quite a mixed feeling on this, not sure if bad taste or originality, let me have your thoughts!

Zombie Safe House

The 2011 Zombie Safe House Competition is an annual design competition focused on creating the best safe house for a zombie apocalypse.
If you have any great ideas on this worth checking the link above and submit your plan.