Tag Archives: Bailout Fail

Greek Taxes Are So High That People Are Turning Down Inheritances

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“People once hoped that if they came into property they could sell it and live easier; now they fear that they will be unable to sell it and the taxes will drag them down. …After many years in which only very valuable properties were taxed, many Greeks went from paying almost no taxes on real estate to not having enough money to pay.”

https://fee.org/articles/greek-taxes-are-so-high-that-people-are-turning-down-inheritances/

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Global Debt Bomb Continues Ticking Into 2017

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Japan, already carrying the highest debt to GDP ratio of all OECD countries, has approved a record spending bonanza of 97.5 trillion yen in its 2017 budget, even while the Japanese birth rate has collapsed to 1899 levels, prompting questions as to how its mounting debt could ever be retired.

Italy, carrying the third-highest debt to GDP ratio and having been mired in recession for eight consecutive years, plans to nationalize four failing banks, borrowing at least 20 billion euros to do so.  Since taxpayer bailouts were ostensibly banned by Europe in 2015, an exception to the rule will be invoked to enable the Italian bailout.  But who would lend to the already massively indebted Italian government to fund its acquisition of zombie banks, especially after the IMF’s recent warning that Italy is on course to remain in recession for another decade, the government’s recent collapse after a failed referendum to increase executive powers, and in light of the half-dozen active Italian secession movements?  Well, likely the same sort of institutional investors who recently bought 16.5 billion euros’ worth of 50-year Italian government debt, expecting to be able to flip it to the European Central Bank in a hypothetically-expanded bond-buying program down the road.

Sweden, facing a debt bubble and soaring housing prices, with mortgage loans now averaging between 105 and 140 years amortization, has seen its central bank’s board requiring a tie-breaker vote to continue its negative interest rate policy and bond-buying program.

European Union officials have decided to force Apple Computer to pay a retroactive 13 billion euros in tax to the Irish state for the activities of Apple’s Irish subsidiaries, which employ around 6000 individuals.  The Irish government, not wishing to see an economic golden goose killed if Apple were to pack up and leave Ireland, insisted that it had not given Apple any special treatment warranting the tax and did not want the ordered transfer.  The EU budgets cash it ‘earns’ from fines as a normal revenue item, so if Ireland refuses to collect the tax it may be transformed into an EU fine under competition rules instead.

Every day provides increased evidence that developed-world sovereign debt is quite literally “a bubble in search of a pin”, as Peter Schiff put it in his 2011 book ‘Crash Proof’.

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First Italy, Now Portuguese Banks “Unexpectedly” Need A Taxpayer Bailout

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“Portuguese banks, already undercapitalised and loaded with bad debt, are bracing for even more heavy losses from Lisbon’s so far unsuccessful attempts to sell Novo Banco.  Estimates of the potential bill facing banks, which finance the resolution fund that bailed out Novo Banco in 2014, range from €2.9bn to €3.9bn. Some bankers are even doubtful that the rescued lender will attract any acceptable offers, leading to its possible break-up or liquidation.  In a recent report, Barclays estimated that Portuguese lenders could need up to €7.5bn to resolve a ‘systemic banking crisis’ that was bringing the country under ‘close market scrutiny’.”

http://www.zerohedge.com/news/2016-07-24/first-italy-now-portuguese-banks-unexpectedly-need-taxpayer-bailout

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Bank Crisis Arrives: €29B Bremen Landesbank On The Verge Of Failure

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“Germany’s Handelsblatt writes that ‘shipping loans have brought Bremer LB into distress and the bank can not survive without government help, but a direct capital injection from Lower Saxony now looks unlikely.’  The punchline, and where the narrative veers dramatically from the smooth sailing scenario presented last month by the FT, is that according to Lower Saxony President Stephen Weil, a capital increase by his state and Bremen for the ailing bank is currently not realistic. ‘The classic method, namely when partners provide the necessary capital, does not seem to work,’ the Prime Minister said to the ‘Weser-Kurier’.”

http://www.zerohedge.com/news/2016-07-07/europes-bank-crisis-arrives-germany-%E2%82%AC29-billion-bremen-landesbank-verge-failure

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Bancopalypse 2.0 Is Bigger

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“Meanwhile in Italy, nearly the entire Italian banking system is rapidly sliding into insolvency.  Italian banks are sitting on over 360 billion euros in bad loans right now and are in desperate need of a massive bailout.  IMF calculations show that Italian banks’ capital levels are among the lowest in the world, just ahead of Bangladesh.  Spanish banks have been scrambling to raise billions in capital to cover persistent losses that still haven’t healed from the last crisis.  In Greece, over 35% of all loans in the banking system are classified as ‘non-performing.  The ratio of non-performing loans has actually been increasing for several years since the country’s supposed bailout.”

http://www.valuewalk.com/2016/07/deutsche-bank-scare/

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Deutsche Bank’s Chief Economist Calls For €150 Billion Bank Bailout

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“David Folkerts-Landau, the chief economist of Deutsche Bank, has called for a multi-billion dollar bailout for European banks.  Speaking to Germany’s Welt am Sonntag, the economist said European institutions should get fresh capital for a recapitalization following a similar bailout in the US. What he didn’t say is that the US bailout took place nearly a decade ago, in the meantime Europe’s financial sector was supposed to be fixed courtesy of ‘prudent’ fiscal and monetary policy. It wasn’t.  As Landau says the US helped its banks with $475 billion dollars, and such a program is now needed in Europe, especially for Italian banks.”

http://www.zerohedge.com/news/2016-07-10/deutsche-banks-chief-economist-calls-%E2%82%AC150-billion-bailout-european-banks

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John Hussman: Bearishness Is Strictly For Informed Optimists

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“When the primary use of fiscal policy is to wipe up the catastrophe of weak productivity, lost income, unemployment, and malinvestment created in the repeated aftermath of collapsed financial bubbles, the endgame is going to be stagnant living standards and a debased currency.  Ultimately, QE may finally create inflation by provoking a loss of fiscal control.  Central banks have risked just that by encouraging yet another speculative bubble, heavy issuance of low-grade debt, and the diversion of savings toward unproductive investment. The inevitable fiscal consequences are likely to include bailouts, income-replacement and transfer payment programs as the third bubble since 2000 collapses.”

http://www.hussmanfunds.com/wmc/wmc160314.htm

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You Can’t Argue With a Sick Mind …

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“We have experienced two general strikes in the past three weeks. This is the first time we have seen general strikes in Greece since Tsipras came to power in January. What is even stranger is that the strikes are being organized by Tsipras’s own party … Syriza, to protest its own government.  Few actual steps have been taken to implement the list of EU demands, except for raising the VAT to 23%, further strangling an economy that is on its last breath. The banks successfully completed a capital raise of €14.4 billion.  Now that the banks have raised their funds, they are finally [admitting] just how bad the NPL problem really is.”

http://www.huffingtonpost.com/david-c-wittig/you-cant-argue-with-a-sic_b_8891412.html

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European Central Bank sued by 200 investors over Greek debt deal

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“In a case which could pave the way for a raft of legal action from the private sector, a group of Italian retail investors are claiming damages in excess of €12m from the ECB for an alleged violation of its ‘equal’ creditor status during the biggest private sector debt restructuring in history in 2012.  During the episode, the ECB was able to ‘swap’ its holdings of Greek government debt for protected bonds with no repayment date. The move ensured the ECB did not suffer losses from the deal to stave off a Greek bankruptcy in March 2012.  Private sector creditors, however, were forced into accepting a 53.5pc ‘haircut’ on their holdings.”

http://www.telegraph.co.uk/finance/economics/11907490/European-Central-Bank-sued-by-200-investors-over-Greek-debt-deal.html

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Greece passes more spending cuts, tax hikes after third EU bailout

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“The approved budget makes 5.7 billion euros ($6.2 billion) in spending cuts and gathers 2 billion euros in higher taxes. The cuts include 1.8 billion euros from pensions and 500 million from defense.  There have been strikes by public and private workers over the austerity and restructuring reforms sought by the EU as part of the financial bailout aimed at keeping Greece in the eurozone.  Greece’s debt is forecast to grow to 327.6 billion euros or 188 percent of gross domestic product (GDP) from 180% in 2015. Tsipras, who came to power in January promising to defend Greeks from EU-imposed cuts and was then re-elected in September, described the budget’s passage as a ‘difficult exercise.'”

http://www.dw.com/en/greek-parliament-narrowly-approves-tough-budget-with-spending-cuts-and-tax-hikes/a-18897432

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