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EU’s Dijsselbloem warns Greece of a Cyprus haircut scenario, “It’s been explored what should happen if a country gets into deep trouble”

And their it is. The EU’s nuclear option for Greece is now been placed on the table by the architect of the original Cyprus deposit haircut. The EU see’s problems in the union as nails waiting for a hammer to smash them down.

Alex Christoforou

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Post originally appeared on Zerohedge.

While the trading algos are blissfully honing their headline-scanning skills (it should take no longer than a few nanoseconds to find whether “patient” and “international” are in the FOMC statement) ahead of tomorrow’s Fed announcement and avoiding any macro developments from around the globe, the biggest international news hit earlier today when Greece came one step closer to if not a Grexit, then a full blown bank run and capital controls when none other than the chair of the Eurogroup Jeroen Dijsselbloem became the first European Union official to suggest the possibility of capital controls to prevent Greece leaving the euro, which in turn drew a furious reaction from Athens, which accused him of “blackmail.”

Quoted by Bloomberg, Dijsselbloem  said that “It’s been explored what should happen if a country gets into deep trouble — that doesn’t immediately have to be an exit scenario,” he said. For Cyprus, “we had to take radical measures, banks were closed for a while and capital flows within and out of the country were tied to all kinds of conditions, but you can think of all kinds of scenarios.”

In Athens, the insolvent but proud government issued an angry reply: cited by Kathimerini, spokesman Gavriil Sakellaridis said “It would be useful for everyone and for Mr Dijsselbloem to respect his institutional role in the eurozone. We cannot easily understand the reasons that pushed him to make statements that are not fitting to the role he has been entrusted with. Everything else is a fantasy scenario. We find it superfluous to remind him that Greece will not be blackmailed.”

Considering Greece has been blackmailed from day one of the new Syriza government with the only motive that matters money, thus forcing the government to not only give up on all of its pre-election promises, but to soon implement even more “austerity” than the much hated Samaras regime, that statement in itself is superfluous.

But is Greece truly on the verge of capital controls, especially the kind that has the blessing of the very man who created the Cyprus “blueprint”? For the answer we go to ISI, which discussed just that in a flash note issued earlier today:

Greece Capital Controls?

Dangerous talk today about the possibility that capital controls may be needed in Greece from Dutch Finance Minister Dijsselbloem who heads the Eurogroup of finance ministers. We have repeatedly highlighted this risk. But for a senior eurozone official to do so is striking as it could easily become a self-fulfilling prophecy. Small wonder there was sharp push-back from the Greeks.

The risk of capital controls is indeed elevated for a simple reason: in the absence of substantive progress by Athens in implementing measures that will lead its creditors to release additional bail-out funds, the ECB cannot plausibly provide fully elastic lender of last resort support for Greek banks facing runs through ELA.

In the absence of a credibly elastic lender of last resort, it would be rational – in the sense of the classic Diamond / Dybvig model of a rational bank run – for Greek depositors to pull out their deposits rather than risk being the last to do so. In the event of such a run the imposition of capital controls may be viewed as the least bad available option to stabilize the financial sector.

In the real world deposits can be surprisingly sticky, particularly when as in the Greek case depositors with easy access to overseas banks and alternative financial products left a long time ago. And, the bank stabilization fund remains in place with substantial committed funds to support bank solvency.

The Eurogroup cannot impose capital controls on Greece. Our understanding is that only the Greek government can impose capital controls (restrictions on bank withdrawals, cross-border transfers) and this would require the consent of the European Commission, as guardians of the single market.

Tsipras knows how unpopular this move would be and has no desire to be driven into it. The ECB could force Greece by making capital controls a condition for continued ELA, but is trying hard to avoid becoming an active player in the Greek drama.

Still, a resumption of accelerated deposit drain as the conflict between Greece and its creditors continues seems quite plausible. And if this happens the list of options is very thin.

The fact that Dijsselbloem has highlighted the possibility of capital controls makes this outcome more likely. Depositors may now withdraw funds to avoid restrictions on their bank accounts and end up forcing the very imposition of capital controls their individual actions were intended to preempt.

What is going on? One possibility is that Dijsselbloem made a rookie mistake at a time when he is deeply frustrated with Athens. Another is that he fully intended to ramp up pressure on the Greek government to move forward with program implementation by raising the specter of Greek citizens being unable to access their bank accounts. Neither is particularly encouraging.

We continue to worry a) about the capacity of the Greek government to implement at home without a rupture in the ruling coalition and b) that the eurozone authorities are complacent about the degree to which they can retain control of the situation while allowing stress to mount in Greece as much as needed to ensure the domestic politics yields to program implementation.

Loose talk about how capital controls worked in Cyprus understates major differences in the political and economic context. Capital controls would be much more damaging and difficult to implement in Greece, which has an economy much larger and more complex than that of Cyprus with vastly greater payments and settlements needs.

Moreover if capital controls were imposed as a product of a stand-off between Greece and its creditors rather than in the context of agreement as to the way forward (as ultimately in Cyprus), Greek politics could lurch towards the need for a parallel / substitute currency rather than as hoped towards commitment to the euro at all costs.

Raising the prospect of capital controls does pile the pressure on Greece and may ultimately be part of the forcing mechanism that delivers implementation and funding. But this is playing with fire.

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Is this man the puppet master of Ukraine’s new president or an overhyped bogeyman?

Smiling to himself, Kolomoisky would be within his rights to think that he has never had it so good.

RT

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Via RT…


It doesn’t actually matter if Ukrainian-Israeli billionaire Igor Kolomoisky is the real power behind Volodymyr Zelensky – the president elect has to get rid of the oligarch if he is to make a break with the country’s corrupt past.

The plots, deceits and conflicts of interest in Ukrainian politics are so transparent and hyperbolic, that to say that novice politician Zelensky was a protégé of his long-time employer was not something that required months of local investigative journalism – it was just out there.

Zelensky’s comedy troupe has been on Kolomoisky’s top-rated channel for the past eight years, and his media asset spent every possible resource promoting the contender against incumbent Petro Poroshenko, a personal enemy of the tycoon, who hasn’t even risked entering Ukraine in the past months.

Similarly, the millions and the nous needed to run a presidential campaign in a country of nearly 50 million people had to come from somewhere, and Kolomoisky’s lieutenants were said to be in all key posts. The two issued half-hearted denials that one was a frontman for the other, insisting that they were business partners with a cordial working relationship, but voters had to take their word for it.

Now that the supposed scheme has paid off with Zelensky’s spectacular victory in Sunday’s run-off, Ukrainian voters are asking: what does Kolomoisky want now, and will he be allowed to run the show?

‘One-of-a-kind chancer’

Born in 1963, in a family of two Jewish engineers, Kolomoisky is the type of businessman that was once the staple of the post-Soviet public sphere, but represents a dying breed.

That is, he is not an entrepreneur in the established Western sense at all – he did not go from a Soviet bloc apartment to Lake Geneva villas by inventing a new product, or even setting up an efficient business structure in an existing field.

Rather he is an opportunist who got wealthy by skilfully reading trends as the Soviet economy opened up – selling Western-made computers in the late 1980s – and later when independent Ukraine transitioned to a market economy and Kolomoisky managed to get his hands on a large amount of privatisation vouchers that put many of the juiciest local metals and energy concerns into his hands, which he then modernised.

What he possesses is a chutzpah and unscrupulousness that is rare even among his peers. Vladimir Putin once called him a “one-of-a-kind chancer” who managed to “swindle [Chelsea owner] Roman Abramovich himself.” In the perma-chaos of Ukrainian law and politics, where all moves are always on the table, his tactical acumen has got him ahead.

Kolomoisky’s lifeblood is connections and power rather than any pure profit on the balance sheet, though no one actually knows how that would read, as the Privat Group he part-owns is reported to own over 100 businesses in dozens of Ukrainian spheres through a complex network of offshore companies and obscure intermediaries (“There is no Privat Group, it is a media confection,” the oligarch himself says, straight-faced.)

Unsurprisingly, he has been dabbling in politics for decades, particularly following the first Orange Revolution in 2004. Though the vehicles for his support have not been noted for a particular ideological consistency – in reportedly backing Viktor Yushchenko, then Yulia Tymoshenko, he was merely putting his millions on what he thought would be a winning horse.

Grasp exceeds reach

But at some point in the post-Maidan euphoria, Kolomoisky’s narcissism got the better of him, and he accepted a post as the governor of his home region of Dnepropetrovsk, in 2014.

The qualities that might have made him a tolerable rogue on TV, began to grate in a more official role. From his penchant for using the political arena to settle his business disputes, to creating his own paramilitary force by sponsoring anti-Russian battalions out of his own pocket, to his somewhat charmless habit of grilling and threatening to put in prison those less powerful than him in fits of pique (“You wait for me out here like a wife for a cheating husband,” begins a viral expletive-strewn rant against an overwhelmed Radio Free Europe reporter).

There is a temptation here for a comparison with a Donald Trump given a developing country to play with, but for all of the shenanigans, his ideological views have always been relatively straightforward. Despite his Russia-loathing patriotism, not even his fans know what Kolomoisky stands for.

The oligarch fell out with fellow billionaire Poroshenko in early 2015, following a battle over the control of a large oil transport company between the state and the governor. The following year, his Privat Bank, which at one point handled one in four financial transactions in the country was nationalized, though the government said that Kolomoisky had turned it into a mere shell by giving $5 billion of its savings to Privat Group companies.

Other significant assets were seized, the government took to London to launch a case against his international companies, and though never banished, Kolomoisky himself decided it would be safer if he spent as long as necessary jetting between his adopted homes in Switzerland and Tel Aviv, with the occasional trip to London for the foreseeable future.

But the adventurer falls – and rises again. The London case has been dropped due to lack of jurisdiction, and only last week a ruling came shockingly overturning the three-year-old nationalization of Privat Bank.

Smiling to himself, Kolomoisky would be within his rights to think that he has never had it so good.

Own man

Zelensky must disabuse him of that notion.

It doesn’t matter that they are friends. Or what handshake agreements they made beforehand. Or that he travelled to Geneva and Tel-Aviv 13 times in the past two years. Or what kompromat Kolomoisky may or may not have on him. It doesn’t matter that his head of security is the man who, for years, guarded the oligarch, and that he may quite genuinely fear for his own safety (it’s not like nothing bad has ever happened to Ukrainian presidents).

Volodymyr Zelensky is now the leader of a large country, with the backing of 13.5 million voters. It is to them that he promised a break with past bribery, graft and cronyism. Even by tolerating one man – and one who makes Poroshenko look wholesome – next to him, he discredits all of that. He will have the support of the people if he pits himself against the puppet master – no one would have elected Kolomoisky in his stead.

Whether the oligarch is told to stay away, whether Ukraine enables the financial fraud investigation into him that has been opened by the FBI, or if he is just treated to the letter of the law, all will be good enough. This is the first and main test, and millions who were prepared to accept the legal fiction of the independent candidate two months ago, will now want to see reality to match. Zelensky’s TV president protagonist in Servant of the People – also broadcast by Kolomoisky’s channel, obviously, would never have compromised like that.

What hinges on this is not just the fate of Zelensky’s presidency, but the chance for Ukraine to restore battered faith in its democracy shaken by a succession of compromised failures at the helm.

Igor Ogorodnev

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Roger Waters – The People’s Champion for Freedom

In February 2019, Waters showed his support for the Venezuelan Maduro government and continues to be totally against US regime change plans there.

Richard Galustian

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Submitted by Richard Galustian 

Roger Waters is one of Britain’s most successful and talented musicians and composers but more importantly is an outstanding champion for freedom in the world, beyond compare to any other artist turned political activist.

By way of background, he co-founded the rock band Pink Floyd in 1965.

A landmark turning point of his political activism occurred in 1990, when Waters staged probably the largest rock concert in history, ‘The Wall – Live in Berlin’, with an attendance of nearly half a million people.

In more recent years Waters famously narrated the 2016 documentary ‘The Occupation of the American Mind: Israel’s Public Relations War in the United States’ about the insidious influence of Zionist Israel to shape American public opinion.

Waters has been an outspoken critic of America’s Neocons and particularly Donald Trump and his policies.

In 2017, Waters condemned Trump’s plan to build a wall separating the United States and Mexico, saying that his band’s iconic famous song, ‘The Wall’ is as he put it “very relevant now with Mr. Trump and all of this talk of building walls and creating as much enmity as possible between races and religions.”

In February 2019, Waters showed his support for the Venezuelan Maduro government and continues to be totally against US regime change plans there, or any place else for that matter.

Here below is a must see recent Roger Waters interview, via satellite from New York, where he speaks brilliantly, succinctly and honestly, unlike no other celebrity, about FREEDOM and the related issues of the day.

The only other artist turned activist, but purely for human rights reasons, as she is apolitical, is the incredible Carla Ortiz.

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ISIS Says Behind Sri Lanka Bombings; Was ‘Retaliation’ For New Zealand Mosque Massacre

ISIS’s claim couldn’t be confirmed and the group has been  known to make “opportunistic” claims in the past, according to WaPo. 

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Via Zerohedge…


Shortly after the death toll from Sunday’s Easter bombings in Sri Lanka climbed above the 300 mark, ISIS validated the Sri Lankan government’s suspicions that a domestic jihadi organization had help from an international terror network while planning the bombings were validated when ISIS took credit for the attacks.

The claim was made via a report from ISIS’s Amaq news agency. Though the group has lost almost all of the territory that was once part of its transnational caliphate, ISIS now boasts cells across the Muslim world, including in North Africa and elsewhere. Before ISIS took credit for the attack, a Sri Lankan official revealed that Sunday’s attacks were intended as retaliation for the killing of 50 Muslims during last month’s mass shooting in Christchurch, New Zealand.

However, the Sri Lankan government didn’t offer any evidence for that claim, or the claim that Sunday’s attacks were planned by two Islamic groups (though that now appears to have been substantiated by ISIS’s claim of responsibility). The group is believed to have worked with the National Tawheed Jamaath, according to the NYT.

“The preliminary investigations have revealed that what happened in Sri Lanka was in retaliation for the attack against Muslims in Christchurch,” State Minister of Defense Ruwan Wijewardene told the Parliament.

Meanwhile, the number of suspects arrested in connection with the attacks had increased to 40 from 24 as of Tuesday. The government had declared a national emergency that allowed it sweeping powers to interrogate and detain suspects.

On Monday, the FBI pledged to send agents to Sri Lanka and provide laboratory support for the investigation.

As the death toll in Sri Lanka climbs, the attack is cementing its position as the deadliest terror attack in the region.

  • 321 (as of now): Sri Lanka bombings, 2019
  • 257 Mumbai attacks, 1993
  • 189 Mumbai train blasts, 2006 166 Mumbai attacks, 2008
  • 151 APS/Peshawar school attack, 2014
  • 149 Mastung/Balochistan election rally attack, 2018

Meanwhile, funeral services for some of the bombing victims began on Tuesday.

Even before ISIS took credit for the attack, analysts told the Washington Post that its unprecedented violence suggested that a well-financed international organization was likely involved.

The bombings on Sunday, however, came with little precedent. Sri Lanka may have endured a ghastly civil war and suicide bombings in the past – some credit the Tamil Tigers with pioneering the tactic – but nothing of this scale. Analysts were stunned by the apparent level of coordination behind the strikes, which occurred around the same time on both sides of the country, and suggested the attacks carried the hallmarks of a more international plot.

“Sri Lanka has never seen this sort of attack – coordinated, multiple, high-casualty – ever before, even with the Tamil Tigers during the course of a brutal civil war,” Alan Keenan, a Sri Lanka expert at the International Crisis Group, told the Financial Times. “I’m not really convinced this is a Sri Lankan thing. I think the dynamics are global, not driven by some indigenous debate. It seems to me to be a different kind of ballgame.”

Hinting at possible ISIS involvement, US Secretary of State Mike Pompeo said during a Monday press conference that “radical Islamic terror” remained a threat even after ISIS’s defeats in Syria.

Of course, ISIS’s claim couldn’t be confirmed and the group has been  known to make “opportunistic” claims in the past, according to WaPo. The extremist group said the attacks were targeting Christians and “coalition countries” and were carried out by fighters from its organization.

Speculation that the government had advanced warning of the attacks, but failed to act amid a power struggle between the country’s president and prime minister, unnerved citizens and contributed to a brewing backlash. Following the bombings, schools and mass had been canceled until at least Monday, with masses called off “until further notice.”

 

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