Yes, governments CAN go bankrupt. And no, it’s NOT impossible…

[Editor’s Note: As we’re coming up on the end of the year, we thought it would be appropriate to republish some of our most popular articles. Today’s was originally published on March 13, 2017] In the year 1517, one of the most important innovations in financial history was invented in Amsterdam: the government bond.
It was a pretty revolutionary concept.
Governments had been borrowing money for thousands of years… quite often at the point of a sword.
Italian city-states like Venice and Florence had been famously demanding ‘forced loans’ from their wealthy citizens for centuries.

This post was published at Sovereign Man on December 26, 2017.

Frankfurt: 20 New Residential Skyscrapers Are Being Built To Meet Brexit Demand

Last month, we discussed how Frankfurt was emerging as the clear winner. When UBS staff were asked to rank which city they would prefer to be relocated to, their options were Frankfurt, Amsterdam and Madrid. Our top picks would have been Paris and Dublin, which didn’t even make the short list. On 19 October 2017, Goldman’s Chairman, Lloyd Blankfein, garnered lots of media attention after he tweeted.
“Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I’ll be spending a lot more time there. #Brexit.”
If Lloyds is thinking about buying himself a smart pied-a-terre in Frankfurt, he’s going to have plenty of options as a Brexit-driven construction boom is taking place in the city. The sharp rise in residential property prices is justifying the construction of ‘skyscrapers’, as Bloomberg explains.
The prices for new condominiums in Frankfurt have now reached such a high level that it pays off for project developers to build high-rise residential buildings and more and more such towers are being built in the German financial capital. This emerges from an assessment by consulting company Bulwiengesa AG.
In 2017 alone, asking prices rose by 15 percent compared to the previous year. A total of eight residential high-rise buildings have been completed since 2014 in the city. 20 more could be added by 2022. Five are currently under construction and another 15 are planned. These are key findings of the study.

This post was published at Zero Hedge on Nov 30, 2017.

Meotti: Europe Fights Back With Candles And Teddy Bears

Authored by Giulio Meotti via The Gatestone Institute,
Europe still has not realized that the terror which struck its metropolis was a war, and not the mistake of a few disturbed people who misunderstood the Islamic religion. We are apparently not ready to abandon our masochistic rules of engagement, which privilege the enemy’s people over our own. It appears that for Europe, Islamic terrorism is not real, but only a momentary disruption of its routine. We fight against global warming, malaria and hunger in Africa. But are we not ready to fight for our civilization? Have we already given up? This long and sad list is the human harvest of Islamic terrorism on Europe’s soil:
Madrid: 191. London: 58. Amsterdam: 1. Paris: 148. Brussels: 36. Copenhagen: 2. Nice: 86. Stockholm: 5. Berlin: 12. Manchester: 22. And it does not take into account the hundreds of Europeans butchered abroad, in Bali, in Sousse, in Dakka, in Jerusalem, in Sharm el Sheikh, in Istanbul.
But after 567 victims of terror, Europe still does not understand. Just the first half of 2017 has seen terror attacks attempted in Europeevery nine days on average. Yet, despite this Islamist offensive, Europe is fighting back with teddy bears, candles, flowers, vigils, Twitter hashtags and cartoons.

This post was published at Zero Hedge on May 31, 2017.

The US government now has less cash than Google

In the year 1517, one of the most important innovations in financial history was invented in Amsterdam: the government bond.
It was a pretty revolutionary concept.
Governments had been borrowing money for thousands of years… quite often at the point of a sword.
Italian city-states like Venice and Florence had been famously demanding ‘forced loans’ from their wealthy citizens for centuries.
But the Dutch figured out how to turn government loans into an ‘investment’.
It caught on slowly. But eventually government bonds became an extremely popular asset class.
Secondary markets developed where people who owned bonds could sell them to other investors.

This post was published at Sovereign Man on March 13, 2017.

Exposing The “Outrageous Malevolence” Of The European Leaders

Earlier this week I was talking in Athens to a guy from Holland, who incidentally with a group of friends runs a great project on Lesbos taking care of some 1000 refugees in one of the camps there. But that’s another topic for another day. I was wondering in our conversation how it is possible that, as we both painfully acknowledged, people in Holland and Germany don’t know what has really happened in the Greek debt crisis. Or, rather, don’t know how it started.
That certainly is a big ugly stain on their media. And it threatens to lead to things even uglier than what we’ve seen so far. People there in Northern Europe really think the Greeks are taking them for a ride, that the hard-working and saving Dutch and Germans pay through the teeth for Greek extravaganza. It’s all one big lie, but one that suits the local politicians just fine.
By accident(?!), I saw two different references to what really happened, both yesterday in the UK press. So let’s reiterate this one more time, and hope that perhaps this time someone in Berlin or Amsterdam picks it up and does something with it. There must be a few actual journalists left?! Or just ‘ordinary’ people curious enough, and with some intact active neurons, to go check if their politicians are not perhaps lying to them as much as their peers are all over the planet.
What I’m talking about in this instance is the first Greek bailout in 2010. While there are still discussions about the question whether the Greek deficit was artificially inflated by the country’s own statisticians, in order to force the bailout down the throats of the then government led by George Papandreou, there are far fewer doubts that the EU set up Greece for a major league fall just because it could, and because Dutch, French, German politicians could use that fall for their own benefit.

This post was published at Zero Hedge on Feb 13, 2017.

ABN Amro Slashes 60% of Senior Management After Staff Cuts

ABN Amro NV plans cut 60 of its 100 senior management jobs and reduce the number of top executives by more than half in a revamp that reflects the bank’s shrinking size.
A new management board will include the heads of retail, commercial, corporate and institutional, and private banking, the Amsterdam-based lender said in a statement on Monday. It will include Chief Executive Officer Kees van Dijkhuizen as well as the vice chairman and a chief financial officer who hasn’t yet been appointed.
‘ABN Amro has done a lot of restructuring and I think the top structure was not completely aligned with the rest of the company,’ said Bart Horsten, an Amsterdam-based analyst at Kempen & Co who rates the stock buy. ‘It will make the company a bit more lean and mean in terms of decision making.’
ABN Amro, which is 70 percent owned by the Dutch government following a state rescue, said in November it would cut 1,500 jobs as it steps up cost reductions. The bank, which employed 26,500 people last year, said its total workforce is expected to decline by 13 percent by 2020. The Dutch government has said it plans to gradually exit its holding in the bank.

This post was published at bloomberg

Dutch Central Bank To Move Its Gold From Amsterdam To A Former Military Air Base

Nearly two years after the Netherlands made waves in the gold market when it announced that it had secretly repatriated 122 tons of physical gold from the New York Fed, this morning there was another surprising announcement out of the Dutch central bank which said is was planning to move the country’s gold reserves from the centre of Amsterdam to land owned by the defence ministry near Zeist. According to a statement by the bank, the security measures necessary to guard the gold are a problem for both staff and visitors, and as a result it would transfer the assets to a safer location.
The aim is to move the gold to the new location, Camp New Amsterdam, at the beginning of 2022. The new complex, dubbed the Cash Centre, will also be used to sort and distribute bank notes and to hunt for fake cash.
According to official data, some 189 tons of gold are stored in Amsterdam but the bank has total reserves of 612 tons. In order to spread the risk, Dutch gold is also held in central banks in New York, Ottawa and London.
Camp New Amsterdam, also known as Soesterberg Air Base, was a Royal Netherlands Air Force military air base located in Soesterberg, 14 kilometres (8.7 mi) east-northeast of Utrecht. It was first established as an airfield in 1911, and in 1913, the Dutch Army bought the field and established the Army Aviation Division.

This post was published at Zero Hedge on Oct 6, 2016.

European Banks Cutting 20,000 Jobs as ING Joins Commerzbank

European banks are preparing a fresh round of bloodletting — with some 20,000 jobs set to go — as tougher rules and negative interest rates weigh on profits.
ING Groep NV will slash 5,800 positions over five years as it focuses on Internet and mobile banking and automates systems, the Amsterdam-based lender said Monday. Last week, Germany’s Commerzbank AG disclosed plans to cut 9,600 jobs, while Spain’s Banco Popular Espanol SA said it will eliminate as many as 3,000 posts after tapping investors for funds.
‘Banks are facing high regulatory costs and competition on margins and pricing due to the low-rate environment,’ said Karim Bertoni, a fund manager at Bellevue Asset Management in Switzerland, which has about 6.9 billion Swiss francs ($7 billion) under management. ‘They are trying to reduce costs and people are one of the biggest parts of that.’

This post was published at bloomberg

What to do when everything’s a bubble

Yesterday we talked about one small market in the US… but in fact there are dozens of cities across the world where property prices entering (or already in) a bubble.
San Francisco. Amsterdam. Stockholm.
Vancouver is infamous for its astonishing real estate bubble, which the government has tried to slow by slapping a nasty transfer tax on certain property transactions.
In London, prices are 15% higher than the previous real estate market peak in 2007. Yet income levels are 10% lower.
It’s the same in Hong Kong, Frankfurt, and a number of other major cities – real estate prices have surpassed their all-time highs, yet income growth is flat (or negative).
People in Denmark are particularly troubled – Danish home prices are well above their peak levels from 2006.
As a result, Danes have had to borrow extraordinary amounts of money in order to survive.
At more than three times disposable income, Danish household debt has set a new record among OECD nations.

This post was published at Sovereign Man on September 29, 2016.

Race to Displace ‘City of London’ Turns into Feeding Frenzy

As global banks begin scouting for a new European base in the wake of last month’s Brexit vote, it appears that the City of London’s glory days as the world’s most important financial center may be numbered. City-based banks and hedge funds are worried about losing their passporting rights, which grant them full access to the EU’s financial markets. They’re also concerned that the UK might lose its special authorization to clear transactions in euros.
‘In theory, extending third-country AIFMD passporting to the U. K. after Brexit should be straight-forward,’ Matt Huggett, a partner at law firm Allen & Overy in London, told Bloomberg. ‘In practice, it will be a political decision with an uncertain outcome. Many managers would like to safeguard themselves beforehand and set up offices in places like Luxembourg and Dublin.’
In true beggar-thy-neighbor fashion, many of Europe’s most prominent capitals are bending over backwards to provide global banks with the perfect enticements to lure them away from The City. As the New York Times puts it, ‘The race is on to be the new London.’
Spain’s capital, Madrid, has spent the last couple of weeks frantically ruffling its feathers in an attempt to attract the attention of not only banks but also the European Banking Authority, one of the EU’s most important (but currently London-based) financial regulatory bodies.
It’s not as absurd as it may sound. Madrid already boasts the cheapest corporate tax regime in Spain and will no doubt be prepared to drop rates even further to accommodate some of the world’s biggest banks. As JP Morgan banking analyst Kian Abouhossein notes, office space in Madrid is also more readily available and cheaper (27/sqm/month) than in the other prime locations competing to displace London as Europe’s financial capital: Paris (67/sqm/month), Dublin (52), Frankfurt (40) and Amsterdam (29).
But the price of commercial real estate is just one of many factors global banks are likely to take into consideration. The others, as New York Times points out, include:

This post was published at Wolf Street by Don Quijones ‘ July 13, 2016.

Global Stocks Rise, Europe Rebounds As Oil Halts Decline

In a quiet start to the week following last week’s surprisingly strong rebound which followed a stronger than expected jobs report (perhaps to demonstrate that good news is once again good news), Japan stocks continued to sink as the USDJPY dropped to fresh lows, while commodities declined for a fifth day as the supply glut from crude to copper weighed on prices, dragging down commodity currencies. European equities rose, rebounding from a one-month low.
Crude fell in early trading after Saudi Arabia’s deputy crown prince said last week the kingdom will only arrest production if Iran does, although it has since posted a modest rebound, while copper dropped to a one-month low. European stocks advanced after trading at their lowest valuations in more than a year relative to U. S. equities, even as France’s phone companies tumbled after a deal to consolidate the nation’s telecommunications industry fell apart.
‘Three of the major commodities oil, gold and copper have all retraced in recent days,’ said Ole Hansen, head of commodity strategy at Saxo Bank A/S told Bloomberg. ‘Saudi Arabia caused a major upset on Friday by saying that a freeze deal was conditional of Iran joining which will not happen at this stage.’ Copper and industrial metals have been hurt on concern China’s investment-led economic boom won’t be enough to avoid more cutbacks, he said.
In key macro news, Euro-area unemployment dropped to 10.3% in February down from an upwardly revised 10.4%, and the lowest level since 2011, in line with estimates. ‘I see this number as a movement sideways,’ said Aline Schuiling, senior economist at ABN Amro Bank NV in Amsterdam. ‘This is a reflection of what is happening in the economy. Growth has clearly weakened in the second half of last year and the first quarter of this year will also probably be a bit weaker.’

This post was published at Zero Hedge on 04/04/2016.

Dutch Central Bank Considers To Relocate Gold Vault And Publish Gold Bar List

According to a press release the management team of the Dutch central bank has requested to investigate relocating the banknotes and gold vault that is currently located in the basement of bank’s headquarter at the Frederiksplein in Amsterdam.
In the press release we can read the reason for the investigation to relocate the vault flows from preparations to renovate the building that dates from 1968. While planning the renovation the subject to relocate the vault was brought up as the burdens for securing the metal is currently felt by all employees and visitors at the central bank’s headquarter. Storing 189.9 tonnes of gold at the Frederiksplein encompasses high security standards for all employees working in the building while nearly none of them have anything to do with the vault. In addition, whenever large batches of banknotes are transported to or from the vault the security measures can be complex in the center of Amsterdam. From this discomfort it’s considered to relocate the vault.
In November 2014 De Nederlandsche Bank (DNB) disclosed to have repatriated 122.5 tonnes from the Federal Reserve Bank Of New York (FRBNY), which brought the total amount of gold stored in Amsterdam to 189.9 tonnes and left an equal amount (189.9 tonnes) in New York. In London at the Bank Of England DNB has stored 110.3 tonnes and in Ottawa, Canada, 122.5 tonnes are stored. In total Dutch official gold reserves stand at 612.5 tonnes.

This post was published at Bullion Star on 24 Feb 2016.

12/12/15: Irish National Accounts 3Q: Post 5: External Trade

In the first post of the series, I covered Irish National Accounts 3Q:Sectoral Growth results. The second post covered year-on-year growth rates in GDP and GNP, while the third post coveredquarterly growth rates in GDP and GNP. The fourth post coveredDomestic Demand.
Now, consider external trade side of the National Accounts.
Irish Exports of Goods & Services stood at EUR62.52 billion in 3Q 2015, a rise of 12.4% y/y, after posting growth of 13.5% y/y in 2Q 2015 and 15.5% growth in 3Q 2014. Over the last four quarters, Irish Exports of Goods & Services grew, on average, at a rate of 13.4%, implying doubling of exports by value roughly every 5.5 years. If you believe this value to be reflective of a volume of real economic activity taking place in a country with roughly 1.983 million people in employment, you have to be on Amsterdam brownies. Over the 12 months through 3Q 2015, Irish economy has managed to export EUR235.67 billion worth of stuff, or a whooping EUR27.828 billion more than over the same period a year before. That’s EUR118,845 per person working at home or at work in Ireland.
Now, moving beyond the total, Exports of Goods stood at EUR34.062 billion in 3Q 2015, up 16.07% y/y – a doubling rate of 4.5 years. Exports of goods were up 16.03% y/y in 2Q 2015 and 16.9% in 3Q 2014, so over the last 12 months, average rate of growth in Exports of Goods was 18.01%. In other words, Irish Exports of Goods (physical stuff apparently manufactured here) are running at a rate of increase consistent with doubling of exports every 4 years.

This post was published at True Economics on Saturday, December 12, 2015.

Angry Belgian Muslims and the Price of Welfare Statism

Ill-Tempered Mohammedans in the Socialist Paradise In the wake of recent revelations about the identities of the morons involved in the horrific Paris attacks (happily, most of them shuffled off the mortal coil as well, thereby improving the aggregate degree of moral clarity and intelligence in the world), a friend pointed us to an article at Unz Review that asks: ‘Why Does Belgium Have Such Angry Muslims?’
Our instinctive, immediate reaction was to argue that the bland, boring Belgian welfare state simply makes people angry by virtue of its existence. What is Belgium? It is that useless, additional stretch of flat land you are forced to cross on your way from Paris to Amsterdam. Just driving through it probably makes people angry.

This post was published at Acting-Man on November 19, 2015.

The London Bullion Market And International Gold Trade

Shortly after Ronan Manly released its epic post on 7 September 2015 about how much gold there is left in London, an email exchange started circulating among a small group of bloggers in a joint effort to figure out the apportionment between monetary and non-monetary gold in the capital of England. This investigation is no different than others conducted by the BullionStar research team, often aimed at the alleged whereabouts of physical gold around the world, in anticipation of an economic shock that will make this subject to be the primary one: how much physical gold in whose possession at what location.
UK gold trade is a key component in this analysis, hence I like to publicly clarify a few assumptions on bullion flows in and out of the UK. Though, the information discussed can be applied to other gold hubs as well. This post will cover the present rules of English Overseas Trade Statistics (OTS) and elucidate how to interpret publicly available data.
The London Bullion Market As early as 1671 Moses Mocatta moved from Amsterdam to London to establish the first member of the London gold market (now ScotiaMocatta). Two decades later in 1694 the Bank Of England (BOE) was founded, which soon had its vaults filled with bullion from the gold rush in Brazil. From that moment on London has been the epicenter of the global gold market. Many thousands of tonnes have crossed the UK’s borders over the centuries.
By approximation there are currently 6,200 tonnes of gold in the form of 400-ounce Good Delivery bars left in within the M25 London ring way. This consists of 5,100 tonnes stored at the BOE and 1,100 tonnes stored outside the BOE, predominantly in vaults from London Bullion Market Association (LBMA) members that offer custodial services forExchange Traded Funds (ETF) such as GLD. The bullion at the BOE is for at least 3,000 tonnes monetary gold owned by foreign central banks, 310 tonnes is monetary gold owned by the BOE itself and the residual float is stored at the BOE by LBMA members.

This post was published at Bullion Star on 21 Sep 2015.

Biggest Newspaper Netherlands Interviews Koos Jansen

China Conquers The World With Gold After a serious knee surgery in 2013 sound engineer Jan Nieuwenhuijs began a blog about gold. Two years later, the 33-year old from Amsterdam is an international gold expert, his analyzes are praised by investors on Wall Street. ‘China takes over US dominance,’ he concludes.
His blog about the gold market began as a hobby when he was homebound because of his knee injury. By his internet alias Koos Jansen he started researching the Chinese gold market. His unorthodox analyzes were quickly noticed. Especially when his discovery of the concealed but unprecedented gold buying program by China proved to be accurate.
What he showed was that estimates by the World Gold Council, the global trade association of jewelers and bullion dealers, reflected only half of China’s actual purchases. An authority fell. ‘Gold Guru’ Willem Middelkoop said at the time to literally have fallen out of his chair when he found out – through Nieuwenhuijs his publications – how much gold China was buying.

This post was published at Bullion Star on Thursday April 9, 2015.

Europe Has A “Severe Case Of Low-Flation”, Goldman Says

Thursday’s news that eurozone inflation came in at a brisk 0% in April was cause for some to celebrate the end of disinflationary pressures across the currency bloc. The fact that, for the first time in four months, prices didn’t fall on average is apparently proof that ECB asset purchases have rescued the region from deflation which, in a world built on debt, is an adversary that must be overcome at all costs. Here’s Bloomberg:
Euro-area consumer prices ended a four-month streak of declines after the European Central Bank started pumping billions of euros into the bloc’s economy through its quantitative-easing program… The improvement helps ECB President Mario Draghi’s case that large-scale asset purchases have already shown success in averting deflation in the 19-nation economy. Bank lending increased in March for the first time since 2012 and encouraging data from Germany to Spain point to a strengthening recovery even as the Greek crisis undermines confidence.
‘The big bad deflationary spiral lasted all of four months,’ said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. ‘We expect headline inflation to accelerate to above 1 percent by year end as the depressing impact of energy prices fades,’ while ‘core inflation will start to pick up as the effects of the past depreciation of the euro and the recovery of the economy feed through’…
Depressed by oil prices falling almost 50 percent in the second half of 2014, the euro-area inflation rate turned negative in December and fell to minus 0.6 percent at the beginning of the year, matching an historic low. Since then, signs have increased that the region’s flirt with deflation will be short-lived…

This post was published at Zero Hedge on 05/01/2015.

ECB Said to Start Buying Covered Bonds With Negative Yields

The European Central Bank started buying covered bonds with negative yields as its asset-purchase program reduces the supply of the highly rated debt, according to two people familiar with the matter.
The central bank bought the debt in the past two weeks, said the people, who asked not to be identified because the information is private. The notes were from Germany, one of the people said.
The ECB has bought €69.7 billion (US$75.5 billion) of covered bonds since October as part of its latest measures designed to stimulus growth in the euro area. The accumulation of assets is driving down yields and the central bank now holds about 15 percent of the market, according to ABN Amro Bank NV.
“The ECB has caused this situation by being a big buyer and has exacerbated the already negative net supply of covered bonds,” said Joost Beaumont, a fixed-income strategist at ABN Amro in Amsterdam. “If the ECB buys more, yields will go still lower and that’s going to affect the ECB itself.”

This post was published at bloomberg

Creating Market Depth – First Step in Creating an Economy

Exchange at Amsterdam
Some people have a difficulty rationalizing selling something they do not yet have. Of course, nobody complains when they buy contracts in the future’s market but have no intent of actually taking delivery. This entire line of thinking has been so distorted particularly by those who claim ‘paper gold’ has suppressed the price of physical. Those same ‘paper gold’ contracts are also what pushed the price up in 1980 and into 2011. Nobody complains about buyers. The first step in understanding anything is to be objective not slanted to one side.
The futures exchange is what provides DEPTH to any market and makes even the production of the commodity or farming secure KNOWING that they can sell the item into the free market. Aristotle called the brokers men who made money from money. True, they changed the villa economy into a market economy. They approached farms and told them to produce more than they need for themselves and they could sell it overseas. They transformed Athens into the financial capitol of the western world.
There has to be a common market – a place where things are exchanged. This extended into ancient times and provide the first step in creating a civilization – people coming together for a common cause. It has been this narrow thinking process that leads to authoritarianism if not communism. We see the same craziness erupts in the stock markets. Governments have often outlawed short selling and the market has fallen even more. Why? It is the short player who has the courage to buy during a panic for he is taking a profit.

This post was published at Armstrong Economics on April 27, 2015.

The Forecaster Movie – The Bankers & Russia

At the Amsterdam debut of the Forecaster, a rather high up person from Russia Attended. After watching the film, he was in shock. He said this has to be shown in Moscow. It deals with one of the most talked about topics in Russia back in the day. The film will debut in Russia. I am not exactly sure just when. I suspect in the fall.
At the time everything began, I was actually dating a Russian girl for a couple of years who I met in Tokyo. We had to communicate in Japanese at first since she did not speak English nor I Russian. She had flown back to visit her family for Christmas in January 2000. The Receiver seems to have cancelled her visa stranding her in Moscow while her possessions where here. She is still in Moscow and had finally married. So all the questions in that regard about the rumored Russian girlfriend are true, but I will not reveal her name. She and her family are entitled to their privacy. Sorry – off limits. I and my family will always remember her with a smile. When we first met perhaps back in 1997, she said to me she was Russian and we were supposed to be enemies. She taught me some Russian and a lot about her culture which I respected very much. Governments are enemies – not the people.

This post was published at Armstrong Economics on February 15, 2015.