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Meanwhile in Ukraine, default is all but certain as Greek crisis provides nice cover for failed state

The US State Department’s Ukrainian Finance Minister, Natalie Jaresko, has the country all set up to default in what will undoubtedly be another western US/EU neoliberal, regime change success story.

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With all on eyes on Greece, Ukraine continues to crater under the weight of an incompetent neo-nazi government and an American master that only cares about using the country as a Russian regime change mechanism.

Greece is providing a welcome distraction to what will soon become another EU financial project gone terribly wrong.

Ben Aris at Business New Europe break the situation in Ukraine down in a post entitled, “Ukraine’s default ducks are all in a row.

Ukraine has lined up all the ducks it needs to successfully default on its privately held bonds. Ukrainian Finance Minister Natalie Jaresko indicated she wanted to meet with both the International Monetary Fund (IMF) and the ad hoc committee of private creditors in Washington before or on June 30. But alas, a statement issued by her ministry admits that no talks with the committee had ever actually been started. Jaresko herself then appeared to put the icing on the default-cake scenario, signalling that no decisive meeting was likely, tweeting: “I have repeatedly stated my desire to meet with the Creditors Committee & enter into direct negotiations.”

And so it come down to the wire of a self-imposed June 30 deadline that Kyiv set itself to cut a deal to reduce the size of the outstanding principle, and absolutely nothing has happened. A default now looks inevitable after the creditors said they see no need for the 40% ‘haircut’ on the bonds Kyiv has been pushing, with the IMF behind it.

Most of the “negotiations” between the two sides so far have been conducted through reports in the press and a flurry of letters, periodic recriminations, and no indication that either camp will back down.

Hedging big bets

Five international hedge funds on the committee hold about $10bn of Ukraine’s debt from a total of $17.3bn in sovereign Eurobonds and $31.4bn in domestic debt. US fund Franklin Templeton owns the largest single chunk of about $6.5bn and chairs the committee.

A key part of the IMF demand for a haircut is for Ukraine to reduce its debt/GDP ratio to 71% in 2020 – considered to be a sustainable level that would allow the economy to recover. In absolute terms, that means paring the country’s debt to $56.1bn from about $74.9bn as of the end of March, of which some $5bn needs to be cut off the debt coming due this year. “Since it’s impossible to extract $18.8bn from the servicing of these two types of debt (the average coupon income is 7.1%), principle reductions are a must,” Concorde Capital said in a note earlier this month.

The bondholders are obviously unhappy with this. Franklin Templeton has countered that a maturity extension and a deferral of interest payments would be a better option. It has also suggested that Ukraine use part of its IMF loans to pay off part of the debt. The committee maintains that the proposed haircut demanded by Kyiv would result in the country losing access to international capital markets for years and rule out a quick return to financial health, which could well be true.

The time has almost run out and the sides seem as far apart as at the start of the process. “In addition, and despite previous statements to the contrary, the proposals by the ad hoc Creditors Committee do not meet the three criteria agreed with the IMF,” the Finance Ministry statement said. “That proposal includes utilizing $8bn from the international reserves of the National Bank of Ukraine for no consideration. This measure has been strongly rejected by the IMF in their statement of 12 June 2015.”

Can’t pay, won’t pay

Without the haircut (or a default) there is no way that Jaresko can finance budget spending or reduce the debt/GDP ratio to 71%. “Ukraine is unable to service debts generated over past three years. The total amount required to service the external debt, in fact, is equal to our military spending which makes up 5% of the country’s GDP,” Ukrainian Prime Minister Arseny Yatsenyuk said on June 25.

Ukraine went into the Euromaidan protests at the start of 2014 with a very healthy debt/GDP ratio on the order of a bit more than 30%. However, the level of debt has soared in the subsequent 18 months. Ukraine state debt inched up again by 0.5% in May to hit 87.9% of GDP and is on course to reach over 90% by the end of this year.

The Maastricht criteria for joining the euro limits debt/GDP levels to 60%, which is considered a comfortable level. In the meantime, many Eurozone countries have seen their debt balloon to at least 90%, which is considered to be already in the flashing red light zone on the edge of sustainable, and several are well beyond even this level.

Already up to its neck in hock, Ukraine plans to borrow even more, as with only two months of import cover of hard currency in reserves it simply doesn’t have enough money to function and start the process of recovery. “We anticipate [Ukraine will borrow another] $5bn from the IMF, €1.2bn from the EU and UAH1.8bn from the World Bank by the end of 2015,” Alexander Paraschiy, head of research at Concorde Capital, said in a note on June 28. “At the same time, we will have to pay back $0.8bn to the IMF and nearly $4.3bn on Eurobonds (which are subject to maturity extension). All in all, assuming no debt restructuring in 2015, we expect the state debt to approach the UAH1.7 trillion level, which is 91.7% of GDP, by the year end.”

If it looks like a duck…

The clock has been running down for months and given that Jaresko has had no talks with the creditors at all, it must have been increasingly clear that default was coming. Both Kyiv and IMF have been actively preparing for it – just in case.

In June, the Ukrainian parliament, the Verkhovna Rada, passed a set of laws that would allow the Finance Ministry to halt interest payments on bonds, unilaterally giving itself the ability to impose a “technical default” – ie. Kyiv would take the same route as Russia did on its Eurobonds and ruble-denominated GKO bonds in 1998, where the government doesn’t refuse to pay back the money, just suspends payments for several years.

Another piece in the puzzle was the IMF’s admission that the $3bn bond owed to Russia’s sovereign wealth fund was an “official” debt rather than a “private” debt on June 23. The distinction is important, as under the IMF’s own rules it can lend to countries that default on private debt but can’t to a country that defaults on official debt, or money lent to them by international financial institutions (IFIs) or other governments.

There has been a lot of discussion over the status of the Russian debt, as clearly Kyiv didn’t want to pay it off. It has even been suggested that this bond, issued by the former Ukrainian president Viktor Yanukovych’s government in December 2014, is “odious debt” – ie. a debt imposed specifically to cause harm to a borrower or exert control over the debtor, which under international law doesn’t have to be repaid, something that still could happen. However, Kyiv dodged the bullet for the meantime by paying off a $75mn coupon on the Russian bond earlier in June as scheduled. It seems that the IMF was afraid of a nasty legal battle with the Kremlin if it repudiated the official status of the Russian-held bond – a fight it was unlikely to win.

Finally, the IMF bought some extra insurance by saying earlier this month that even if Ukraine does default and even if legal battles are started, the Fund can continue to lend to Ukraine under its “lending into arrears” policy that was first adopted in 1989.

Lending into arrears was introduced precisely so debt holders couldn’t use the IMF’s ability to provide assistance as leverage against debtor countries. So Ukrainian bondholders, especially the funds managed by Franklin Templeton’s Michael Hasenstab, should be more malleable if the IMF keeps pumping money into that country, even if it makes good on its threat to declare a moratorium on private debt payments. There would be no deadline for a debt deal and Ukraine has an official sanction to default at will.

Everything now seems to depend on the meetings or absence of meetings in Washington around June 30, Ukraine’s emerging ‘D-Day’, which may yet decipher either as deliverance or default day for the country’s finances. Jaresko is reportedly being represented at some consultations with both creditors and IMF by the Ukrainian government’s Commissioner for Public Debt Management Vitaliy Lisovenko.

A last-minute deal is not out of the question after so much prolonged brinkmanship. The June 30 date was Kyiv’s own, after all, and some are saying that if the creditors suddenly want to thrash out a solution in person, Jaresko can still hop on a plane to Washington. But given the “we tried” statements and tweets fanning out across the spectrum, the bets are increasingly on Kyiv putting the ‘D’ in default.

References:

http://www.bne.eu/content/story/kyiv-blog-ukraines-default-ducks-are-all-row

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Liberal Hollywood caught in sexual feeding frenzy

Asia Argento called out by a man SHE sexually abused, revealing the true nature of Hollywood’s “moral cause”.

Seraphim Hanisch

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The #MeToo phenomenon looked to the first glance a bit like a “moral snapback” in Hollywood, as it appeared that the years of hidden sexual perversity and predatory behavior was being revealed so that it might be stopped.

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However, a slightly more serious look at this began to reveal that it was far less upstanding than Hollywood’s elite wanted the adoring public to believe. Swiftly, the movement became the feminist movement’s latest salvo against men, because it provided women accusers with virtually unlimited power to defame any man – all that was needed was for her to say that man X made an unwanted advance and that man’s life would be mired in the mud of slander.

In some cases, of course the presence of sexual abuse was real, and tragic. However, as with many attacks from the dark side, a little truth mixed with the lie makes the lie much stronger, and this recipe proved a huge success for the #MeToo movement. The viral spread of this hashtag and the social “outrage” associated with it turned the lives of many people completely upside down.

However, now the truth begins to show. And what’s more, it begins to show how utterly rotten and, honestly, evil this group of people can be.

Asia Argento is an actress who was one of the early accusers of the producing mogul Harvey Weinstein, arguably the “Wanted” poster child of #MeToo. This woman is physically very beautiful, which makes her someone easy to believe by the elite and by the foolish who take her appearance as somehow proof that she is good. So, her accusations against Mr. Weinstein held, despite the fact that she continued having sexual relations with him for years afterward. She blamed Weinstein for this situation saying about this, “after the rape, he won.”

But late Sunday night on August 19th, news began to surface that Argento had herself seduced and forcibly had sexual relations with a 17 year old actor, Jimmy Bennett, when she was 37 herself. After Argento had gone public with her accusation against Weinstein, Mr. Bennett’s lawyer notified Argento of his intention to sue her for US $3.5 million for emotional distress, lost wages and assault and battery.

Asia Argento agreed to pay him off to the tune of $380,000. This was reported by The New York Times.

This is not the only damaged person in contact with Ms. Argento. Just two months ago on 7 June, her lover Anthony Bourdain was found dead in his hotel room at only 61. Mr. Bourdain reportedly suffered from severe alcoholism and its accompanying depression and suicidal tendencies.

The #MeToo movement went extremely viral in its early months, and commentator Rush Limbaugh characterized it as the latest onslaught against men by feminists:

I’m going to tell you, if you’re in politics and you’ve ever looked at a woman the wrong way, you can expect a woman at some point to go public and say so. In fact, because of the success they had with this, it’s entirely possible that men who haven’t done a single thing in terms of mistreating a woman, abusing her, or harassing her, are still, nevertheless, going to be accused of it. It has become a political tactic. We have now had — this is a point that I made yesterday — we have now had something that is a genuinely serious thing in its own right and its own contained universe. Sexual harassment, the use of sexual harassment, the treatment of women, or others, in the workplace, that’s a legitimate thing. But it’s now just been corrupted and weaponized and made to look like a political opposition research weapon, and that’s exactly what’s happened. 

And so, anybody can see, and you can see that when one of these allegations is made, the women are believed, and the men who are accused are not. Which means the men have to prove a negative and the accusers don’t have to prove anything. That is a powerful weapon the Democrats have decided to use. And believe me, as we speak, they are behind closed doors creating further strategems using this, and they are picking their targets. And you’re going to see more of it, I predict.

This present issue though with Mr. Bennett’s situation shows that this is actually much worse than just the latest outbreak of feminism.

The elite in the United States comprises the actors and musicians that have made their names everyday references in popular culture for almost the entire country. These “beautiful people” are tracked by paparazzi and now, apparently, newspapers of national and international significance. Further, the revelation of impropriety among Hollywood elite was mistakenly presented (perhaps deliberately so) as an attempt to make Hollywood look as though it were beyond reproach. The reasons for this are not clear, but speculation exists that it was a setup for an ego te absolvo moment for the Left so they could attack Trump from a “moral high ground.”

But the very prominent expression of “moral outrage” among such “leaders” in this group falls apart when one sees that this group is not at all guided by anything that is truly good. Jimmy Bennett’s case speaks most powerfully about this, because he was raped, essentially, by a woman who he had come to associate in his mind as a “mother figure.” He got a payout, but there is no outrage to speak of against Asia Argento. She made the news because of this revelation but all it appears to show is that the Hollywood elite are eating each other. This woman has some very dark liaisons, too, and the aura of death and decay surrounds her. Yet, she is still a “star.”

Perhaps a good aspect of this report is that we see it a bit more clearly for what it is.

But, that is what many of us said when Harvey Weinstein’s escapades were revealed.

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Doug Casey on Social Media: “Facebook enshrines stupidity”

“Just as Myspace was displaced by Facebook, I predict Facebook 2.0 will come along and replace Facebook.”

The Duran

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Authored by Joel Bowman via InternationalMan.com:


Joel Bowman: G’day, Doug. Thanks for speaking with us today.

Doug Casey: No problem, Joel. It’s a pleasure to hear your Australian accent come across the ether from Mexico.

Joel: Let’s dive right in. A week or two ago, Facebook registered the largest single day loss for any one company in stock market history – roughly $122 billion. CEO Mark Zuckerberg lost around $15 billion himself, as much as the annual GDP of several resource-rich, West African nations.

Looking back to 2000, during the go-go days of the dot.com boom, Intel and Microsoft both registered staggering single-day losses, too… $90 billion and $80 billion, respectively. And we know what happened next in that case…

So, investors want to know… is past prologue? What’s next for Silicon Valley’s tech darlings?

Doug: Talking about losing multiple billions in a single day, it’s really a sign of the times. I remember when the only billionaires in the world were Howard Hughes, John Paul Getty and John Beresford Tipton– the mythical billionaire on a 1950’s-era show called “The Millionaire.”

These days, however, it seems everyone’s a billionaire. In fact, there are several thousand billionaires roaming the planet today, with new ones being minted almost every day.

Of course, much of this so-called wealth is just paper. It’s not real. In fact, it’s pretty clear to me that we’re in a stock market bubble. Which is being driven by the bond market hyper-bubble. And that, in turn, is fueling a real estate bubble, which I believe is just now beginning to deflate in major cities around the world.

None of this augurs well for the stock market. You’ve got bubbles all over the place. Except in the resource market. That’s the one place that hasn’t inflated. In fact, it’s been going down since it’s last peak in 2011.

Getting back to Facebook, I hope it goes bankrupt. I hate it as an institution. I hate what it does. I don’t like its policies. I don’t like its management. I don’t like the fact that it’s causing people to destroy whatever privacy they have left. While turning their brains to mush sending out selfies all day.

Joel: You’ve put a lot on the table there, Doug. Let’s unpack a bit of that, starting with the general tendency toward cerebral rot…

Many younger readers may not remember this, but there actually existed a time before everybody knew everything, when people had to read books and discuss them, engage in healthy debate and rigorous dialectic in order to learn and develop intellectually.

Now that everyone apparently has plenty of time to Instagram their kale salads and “like” one and other’s cat pictures, are we to assume mankind has finally reached the End of Learning…some new Age of Enlightenment?

Or might Facebook and its (anti)social media cousins represent – in addition to the potential fallout for investors – another, hidden cost to society?

Doug: Perhaps humanity is bifurcating into the Morlocks and the Eloi at this point. It’s true that people used to go to libraries. But even the Library of Congress has only a tiny fraction the world’s data available; libraries are quaint and delightful, but they’re dinosaurs.

All the knowledge in the world is now at our fingertips on the Internet. The Internet is one of the greatest inventions in history, on a par with moveable type and the Gutenburg printing press. A few people are using it to educate and better themselves—but relatively few.

Most people just use it for trivial amusement, as you mentioned. Facebook adds very little value to the equation. In fact, I can’t see that it does much that’s productive. It’s basically a vehicle for gossip and watching cat videos.

Joel: And it’s less than that. Aside from the general degradation of public discourse, social media also represents a kind of unalterable historical record of bad jokes and regrettable moments, accessible to anyone who may wish to besmirch one’s character or skittle one’s reputation.

We’ve all said things we wish we hadn’t. To err is to be human, after all. What do you make of a world in which everyone’s worst moments are readily available to everyone else – including potential enemies – at the click of a mouse?

Doug: Facebook enshrines stupidity. A heavy Facebook user is, in effect, saying: “Look at me! I’m a thoughtless person who doesn’t have anything better to do with his time”. That’s on top of the fact that users are exposing their thoughts, actions, and whereabouts to the NSA, the FBI, the CIA and any of a hundred other nefarious agencies. In fact, there are credible allegations that Facebook, along with Google and Amazon, are willing tools of these intelligence agencies. No good can come of being a Facebookista.

But that’s about whether you should use Facebook. Whether you should own Facebook stock is a different question. Even after the recent selloff, Facebook still has a market cap of about $500 billion, which impresses me as a lot for a chat site cum advertising vehicle. Especially one where most of its growth is behind it. A lot of users are getting hip to the fact they’re not customers, they’re the product.

Facebook was a clever innovation ten years ago. But you know, there’s an old saying in the stock market: High Tech, Big Wreck!

Just as Myspace was displaced by Facebook, I predict Facebook 2.0 will come along and replace Facebook. My understanding is that kids now see Facebook as something used by old people– people over 21 years of age. So if it’s going nowhere with the younger generation, where’s it’s future? Maybe it picks up a billion new users in the Third World. Ultimately, what’s that worth?

Facebook may not be a terminal short sale, but I certainly won’t be putting any of my own money into the stock.

Joel: Assuming you’re correct and Facebook 2.0 does displace the current market leader, are you hopeful that such a platform may serve to promote a heightened level of discourse? Perhaps people might find their way into “phyles,” that is, subgroups based on commonly shared values that actually have real world meaning?

Doug: I hope that, in a year or two, International Man itself grows into a community of likeminded people with above average I.Q.s, libertarian values, and real world experience. IM might, itself, even branch off to become its own kind of Facebook. A private version.

I know there’s a lot of talk about regulating FB, or breaking it up. That’s a bad idea; the government should have zero to do with business in general—and areas related to free speech in particular. I’m disgusted by the fact FB has kicked Alex Jones and others off their platform. But they have a right to do so, as a private company. Although, on the other hand, they’re almost a creature of the State.

But that’s not an excuse for the government to “step in”. What will happen is that a newer, better Facebook lookalike—or a dozen of them—will replace them. FB will self-destruct. It’s a non-problem.

To be frank, you and I don’t really have that much in common with most of the 7.3 billion people on this planet. In fact, while I like many individual humans, I despise humanity in general. The more people you put together in a group, the more they act like chimpanzees. Big groups force down the lowest common denominator.

There’s some cause for optimism, but only on a person-to-person basis. I prefer the company of people who value free minds and free markets—and I suspect most people who are reading this now feel the same way.

Joel: That’s probably a very good note to end this conversation on, Doug. Thanks, as always, for taking the time.

Doug: Meanwhile, we’ll look for something with the potential of Facebook in 2008… and stay away from Facebook today.

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Can America Ever Come Together Again?

The people who cheer Trump believe the country they inherited from their fathers was a great, good and glorious country, and that the media who detest Trump also despise them.

Patrick J. Buchanan

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Authored by Patrick Buchanan via Buchanan.org:


If ex-CIA Director John Brennan did to Andrew Jackson what he did to Donald Trump, he would have lost a lot more than his security clearance.

He would have been challenged to a duel and shot.

“Trump’s … performance in Helsinki,” Brennan had said, “exceeds the threshold of ‘high crimes & misdemeanors.’ It was … treasonous.”

Why should the president not strip from a CIA director who calls him a traitor the honor and privilege of a security clearance? Or is a top-secret clearance an entitlement like Social Security?

CIA directors retain clearances because they are seen as national assets, individuals whose unique experience, knowledge and judgment may be called upon to assist a president in a national crisis.

Not so long ago, this was a bipartisan tradition.

Who trashed this tradition?

Was it not the former heads of the security agencies — CIA, FBI, director of national intelligence — who have been leveling the kind of savage attacks on the chief of state one might expect from antifa?

Are ex-security officials entitled to retain the high privileges of the offices they held, if they descend into cable-TV hatred and hostility?

Former CIA chief Mike Hayden, in attacking Trump for separating families of detained illegal immigrants at the border, tweeted a photo of the train tracks leading into Auschwitz.

“Other governments have separated mothers and children” was Hayden’s caption.

Is that fair criticism from an ex-CIA director?

Thursday, The New York Times decried Trump’s accusation that the media are “the enemy of the people.”

“Insisting that truths you don’t like are ‘fake news’ is dangerous to the lifeblood of democracy. And calling journalists ‘the enemy of the people’ is dangerous, period,” said the Times.

Fair enough, but is it not dangerous for a free press to be using First Amendment rights to endlessly bash a president as a racist, fascist, sexist, neo-Nazi, liar, tyrant and traitor?

The message of journalists who use such terms may be to convey their detestation of Trump. But what is the message received in the sick minds of people like that leftist who tried to massacre Republican congressmen practicing for their annual softball game with Democrats?

And does Trump not have a point when he says the Boston Globe-organized national attack on him, joined in by the Times and 300 other newspapers, was journalistic “collusion” against him?

If Trump believes that CNN, MSNBC, The New York Times and The Washington Post are mortal enemies who want to see him ousted or impeached, is he wrong?

We are an irreconcilable us-against-them nation today, and given the rancor across the ideological, social and cultural chasm that divides us, it is hard to see how, even post-Trump, we can ever come together again.

Speaking at a New York LGBT gala in 2016, Hillary Clinton said: “You could put half of Trump’s supporters into what I call the basket of deplorables … racist, sexist, homophobic, xenophobic, Islamophobic … Some of those folks … are irredeemable, but … they are not America.”

When Clinton’s reflections on Middle America made it into print, she amended her remarks. Just as Gov. Andrew Cuomo rushed to amend his comments yesterday when he blurted at a bill-signing ceremony:

“We’re not going to make America great again. It was never that great.” America was “never that great”?

Cuomo’s press secretary hastened to explain, “When the president speaks about making America great again … he ignores the pain so many endured and that we suffered from slavery, discrimination, segregation, sexism and marginalized women’s contributions.”

Clinton and Cuomo committed gaffes of the kind Michael Kinsley described as the blurting out of truths the speaker believes but desperately does not want a wider audience to know.

In San Francisco in 2008, Barack Obama committed such a gaffe.

Asked why blue-collar workers in industrial towns decimated by job losses were not responding to his message, Obama trashed these folks as the unhappy losers of our emerging brave new world:

“They get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”

These clingers to their Bibles, bigotries and guns are the people the mainstream media, 10 years later, deride and dismiss as “Trump’s base.”

What Clinton, Cuomo and Obama spilled out reveals what is really behind the cultural and ideological wars of America today.

Most media elites accept the historic indictment — that before the Progressives came, this country was mired in racism, sexism, homophobia and xenophobia, and that its history had been a long catalog of crimes against indigenous peoples, Africans brought here in bondage, Mexicans whose lands we stole, migrants, and women and gays who were denied equality.

The people who cheer Trump believe the country they inherited from their fathers was a great, good and glorious country, and that the media who detest Trump also despise them.

For such as these, Trump cannot scourge the media often enough.

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