Massive Worldwide Fallout Over the #PanamaPapers

More on the offshore tax haven revelations, at USA Today, "Worldwide fallout continues over Panama Papers":

The massive, anonymous leak Sunday of more than 11 million documents belonging to a law firm in Panama — Mossack Fonseca — that detail how powerful people hid their wealth reveals suspected cases of money laundering, sanctions evasion and tax avoidance.

Here's what you need to know:

Denials from world leaders are rolling out.

Iceland's prime minister, Sigmundur David Gunnlaugsson, faces a no-confidence vote later Monday for allegations in the documents that he deliberately hid holdings in Icelandic banks. Gunnlaugsson denies any wrongdoing and said on Icelandic television he would not resign.

News reports allege that Gunnlaughsson and his wife established a company in the British Virgin Islands with the help of Mossack Fonseca.

In Russia, the government said President Vladimir Putin has not committed a crime.

While Putin's name does not appear on any of the records published, the paper trail does show that many of his associates and close friends — including musician Sergei Roldugin, godfather to his daughter Maria and the man who introduced him to his wife, Lyudmilla — made millions from deals that would have been hard to make without Putin's knowledge.

Dmitry Peskov, Putin's spokesman, told Russian news agency Interfax that it was "obvious" the aim of the release of the documents was to undermine the president ahead of parliamentary elections expected in September...

More.

And on Twitter:

The Panama Papers: world reacts to huge offshore tax files leak - live https://t.co/it4rZOdIiG

— The Guardian (@guardian) April 4, 2016

Here are the famous politicians in ‘the Wikileaks of the mega-rich’ #PanamaPapers https://t.co/Ll2wyPj9KC pic.twitter.com/ksNfrzYfrU

— WikiLeaks (@wikileaks) April 4, 2016

Jaws Drop to 'Panama Papers' Leak

Following-up from earlier, "Iceland Prime Minister Sigmundur Davi Gunnlaugsson Pressured to Resign in #PanamaPapers Scandal (VIDEO)."

At USA Today, "Worldwide, jaws drop to 'Panama Papers' leak":

Sunday’s jaw-dropping “Panama Papers” leak, which shows a global network of offshore companies helping the wealthy hide their assets, is already being called “the Wikileaks of the mega-rich."

The hashtag #panamapapers topped Twitter on Sunday afternoon. Among those reacting through tweets: Edward Snowden, the 2013 CIA leaker, who said the “Biggest leak in the history of data journalism just went live, and it's about corruption.”

In Russia, President Vladimir Putin’s spokesman, Dmitry Peskov, told reporters that the Kremlin had already received “a series of questions in a rude manner” from an organization that he said was trying to smear Putin.

“Journalists and members of other organizations have been actively trying to discredit Putin and this country’s leadership,” Peskov said.

The Washington, D.C.-based International Consortium of Investigative Journalism (ICIJ) said the trove of 11.5 million records details the offshore holdings of a dozen current and former world leaders, as well as businessmen, criminals, celebrities and sports stars. The data span nearly 40 years, from 1977 through the end of 2015, ICIJ said, allowing “a never-before-seen view inside the offshore world — providing a day-to-day, decade-by-decade look at how dark money flows through the global financial system, breeding crime and stripping national treasuries of tax revenues.”

Jim Clarken, the CEO of Oxfam Ireland, tweeted: "As long as tax dodging continues to drain government coffers, there is a human cost."

In Australia, the country's tax office said it was investigating more than 800 wealthy clients of the Panama law firm Mossack Fonseca for possible tax evasion, Reuters reported.

The Australian Tax Office (ATO) said it had linked more than 120 of the clients "to an associate offshore service provider located in Hong Kong."  ATO Deputy Commissioner Michael Cranston said his office was working with the Australian Federal Police, the Australian Crime Commission and anti-money laundering regulator AUSTRAC.

Iceland’s prime minister, one of several major politicians with alleged links to secret “shell” companies, was expected to face calls for a snap election, Britain’s Guardian reported...

More.

Iceland Prime Minister Sigmundur Davi Gunnlaugsson Pressured to Resign in #PanamaPapers Scandal (VIDEO)

Amazing revelations coming out, and I don't even like WikiLeaks and their ilk, like Edward Snowden. But when folks nail corruption, and corrupt cronies, you gotta give it up for 'em.

At the Guardian UK, "Iceland’s PM faces calls for snap election after offshore revelations":

"Oops" #PanamaPapers pic.twitter.com/ISwm6II4Hc

— WikiLeaks (@wikileaks) April 3, 2016

Iceland’s prime minister is this week expected to face calls in parliament for a snap election after the Panama Papers revealed he is among several leading politicians around the world with links to secretive companies in offshore tax havens.

The financial affairs of Sigmundur Davíð Gunnlaugsson and his wife have come under scrutiny because of details revealed in documents from a Panamanian law firm that helps clients protect their wealth in secretive offshore tax regimes. The files from Mossack Fonseca form the biggest ever data leak to journalists.

Opposition leaders have this weekend been discussing a motion calling for a general election – in effect a confidence vote in the prime minister.

On Monday, Gunnlaugsson is expected to face allegations from opponents that he has hidden a major financial conflict of interest from voters ever since he was elected an MP seven years ago.

The former prime minister Jóhanna Sigurðardóttir said Gunnlaugsson would have to resign if he could not regain public trust quickly, calling on him to “give a straightforward account of all the facts of the matter”...

Keep reading (video at the link).

Element Capital Buys Billions of Dollars of Treasury Securities

Hmm... This is pretty interesting.

At WSJ, "An Obscure Hedge Fund Is Buying Tens of Billions of Dollars of U.S. Treasurys":

A little-known New York hedge fund run by a former Yale University math whiz has been buying tens of billions of dollars of U.S. Treasury debt at recent auctions, drawing attention from the Treasury Department and Wall Street.

Element Capital Management LLC, led by trader Jeffrey Talpins, has been the largest purchaser in dozens of government-bond auctions over the past 10 months, people familiar with the matter said. The buying is part of an apparent effort by the fund to use borrowed money to exploit small inefficiencies in the world’s most liquid securities market, a strategy that is delivering sizable profits, said people close to the matter.

Mr. Talpins is an intense and reserved trader formerly at Citigroup Inc. and Goldman Sachs Group Inc. He is known for a tenacious style that can grate on rivals and once tested the patience of former Federal Reserve Chairman Ben Bernanke.

Element has been the largest bidder in many of the 62 Treasury note and bond auctions between last November and July, these people said. At many recent auctions, some of which involved sales of more than $30 billion of debt, Element purchased about 10% of the issue, these people said. That is an unusually large figure, analysts said.

Element’s activity has raised questions because the cumulative purchases far exceed the hedge fund’s $6 billion in assets under management. Treasury officials, who frequently meet with large auction participants, have asked Element about its activity, said someone close to the matter.

“Their buying is eyebrow-raising,” said a trader who once worked for a firm that deals in government securities and witnessed Element’s bidding. These primary dealers often know the identity of other auction bidders. Element “never shared its strategy, but we often asked,” the trader said.

Treasury likes to know who is buying its bonds and why, partly because it prefers long-term holders such as pension funds, insurance companies and central banks. Treasury officials fear purchases by trading-oriented funds could result in sales that increase market swings and potentially drive up borrowing costs.

“If you’re issuing debt, your preference is those ‘sticky investors,’” said Scott Skyrm, a managing director at Wedbush Securities.

“Consistent with our policy, Treasury does not comment on individual investors in Treasury auctions or conversations with market participants,” a Treasury representative said.

Element is a “macro” fund, or one that wagers on global macroeconomic trends in bond, stock and currency markets. The firm uses a “unique probabilistic approach,” according to a presentation the firm made last year at the University of Pennsylvania’s Wharton School.

Element had been shorting, or betting against, bonds in anticipation of higher interest rates but has been exiting from that wager, according to someone close to the matter. That is one reason the fund has been a big buyer of Treasurys lately.

But people who have worked with the firm or are close to Mr. Talpins said there is another reason: Element is among the last to embrace “bond-auction strategies,” trading maneuvers that have become less popular since the financial crisis.

These trades aim to take advantage of the effects of supply and demand in the $12.8 trillion Treasury market. Demand for these bonds often fluctuates based on factors including investor perceptions of economic growth and market risk, while supply can be affected by regular auctions of different-maturity Treasury securities. A burst of new supply tends to slightly depress prices for short periods, sometimes for less than an hour...

More at the link.

This is so slick it reminds of "Bonfire of the Vanities."

China Stocks Plunge Amid Fears of Beijing Pulling Back

I just love the smell of Chinese markets crashing in the morning.

At the Wall Street Journal, "China Stocks Tumble 8.5%, Calling Into Question Beijing’s Ability to Prop Up Market":

Chinese shares suffered their biggest one-day drop in more than eight years, wiping out hundreds of billions of dollars of market value and calling into question the effectiveness of Beijing’s recent efforts to prop up the market.

The Shanghai Composite Index, which includes China’s biggest companies, fell 8.5% to 3725.56, with the losses coming mostly during a hectic last two hours of trading on Monday afternoon. More than two-thirds of the 1,114 companies included in the index fell by the 10% daily maximum allowed under local market rules.

The smaller Shenzhen market fell 7% to 2160.09, bringing its losses to 31% since it hit a record high in mid-June.

Traders and analysts listed several reasons for the sudden slide, which came amid relatively thin trading volumes. Some cited fears about the effect of an unwinding of heavy borrowing that investors have used to buy shares. Others pointed to concern that the government could soon pull back on its recent attempts to underpin the market.

A spokesman for China’s top securities regulator tried to allay some of these concerns, saying late Monday night that the government will step up its purchases of stocks. Zhang Xiaojun, spokesman at the China Securities Regulatory Commission, said the CSRC-owned company that has been buying up battered shares didn’t “exit” the market. Mr. Zhang said the company, called China Securities Finance Corp., will “increase its holdings” of stocks “at appropriate times” and will continue to fulfill its role in “stabilizing the market.”

Mr. Zhang also pledged to root out any “malicious” stock sales by individuals that authorities think could wreak havoc on the market.

Monday’s big decline shows investors have become skeptical of the market and of the government’s ability to control it. China’s stock market has a history of volatility, and government-engineered bull markets have sometimes ended with spectacular selloffs that left stocks languishing for years.

China’s top leaders, currently gathering for their annual summer talks at the northern seaside town of Beidaihe, will have on their agenda what further action they can take to bring stability back to the stock market and to prevent the market’s problems from spreading to other parts of the economy...

Keep reading.

Cyberattack Can't Be Ruled Out for New York Stock Exchange Outage, Say Analysts

No, not at all.

I mean c'mon, all these outlets went down simultaneously, WSJ, NYSE, United Airlines? Yeah, musta been a glitch (rolls eyes).

At the Epoch Times:

Trading in securities was suspended on the New York Stock Exchange on Wednesday at 11:32 a.m. “All open orders will be canceled. Additional information will follow as soon as possible,” stated a brief message on its website.

What exactly caused the shutdown is still under investigation, yet foul play could be a factor.

Two major issues have hit the global stock markets hard. Stock markets around the world fell on Monday after the “no” vote in the Greece referendum. In China, things are even more severe, where its stock bubble burst and its markets have plummeted around $3.25 trillion in value.

“I would say there is a high probability that adversarial nation-states are behind it, based on their increasingly advanced capabilities and brazenness,” said Casey Fleming, CEO of BLACKOPS Partners Corporation, which does counterintelligence and protection of trade secrets for Fortune 500 companies.

The NYSE, on its twitter account, quickly denied the possibility of a breach: “The issue we are experiencing is an internal technical issue and is not the result of a cyber breach.”

The attacks on NYSE and United Airlines are being reported as separate incidents with separate causes, but being publicly-traded companies they have to be careful about what they say. The cybersecurity community, in particular, is still not ruling out the possibility of a cyberattack.

According to cybersecurity news service, The Cyberwire, “Early indications are that there’s no sign of cyber attack, but of course this bears watching.”

Fleming noted, the Chinese stock exchange is down 25 percent this week, and “there is a possibility they are trying to manufacture a softer landing to the forecast hard landing.”

A representative from the New York Stock Exchange gave only vague details. Marissa Arnold, an NYSE spokeswoman, said in an e-mailed statement simply that, “We’re currently experiencing a technical issue that we’re working to resolve as quickly as possible,” and noting that updates will be provided “as soon as we can.”

Fleming emphasized that it could also be an unrelated error, and that hackers may have nothing to do with the system going down. “It could be someone left a soda can on top of a server in the data center, or a rat chewing on a cable.”

“But the coincidence is way too high,” he said, noting that several systems seem to have gone down around the same time. “United Airlines was down after a computer glitch, other websites are down, and now the New York Stock Exchange is down.”

PREVIOUSLY: "Cyberwarfare in Real Time," and "New York Stock Exchange Hit by Glitches or Hacked?"

Cyberwarfare in Real Time

At Zero Hedge, "Is This What the First World Cyber War Looks Like: Global Real Time Cyber Attack Map":

After a series of cyber failures involving first UAL, then this website, then the NYSE which is still halted, then the WSJ, some have suggested that this could be a concerted cyber attack (perhaps by retaliatory China unhappy its stocks are plunging) focusing on the US. So we decided to look at a real-time cyber attack map courtesy of Norsecorp which provides real time visibility into global cyber attacks.

What clearly stands out is that for some reason Chinese DDOS attacks/hackers seem to be focusing on St. Louis this morning.

Click through for the attack graphic.

PREVIOUSLY: "New York Stock Exchange Hit by Glitches or Hacked?"

New York Stock Exchange Hit by Glitches or Hacked?

You just don't get "glitches" on the NYSE. Nope, not buying it for a minute.

See BGR Media, "Do They Think We’re Idiots? Officals Say No Indication that NYSE Trading Halt is a Cyberattack":

The New York Stock Exchange has been shut down after reports from earlier this morning indicated the exchange was having technical difficulties processing orders. Despite this, the Department of Homeland Security has issued a statement saying that there are no indications that this is part of a cyberattack, although they also haven’t put out any statement about what the actual problem might be.

The reason we’re viewing this skeptically right now is that all United Airlines flights this were grounded due to computer glitches. What’s more The Wall Street Journal’s website similarly went down at around the same time that NYSE suspended its trading. What’s more, hugely popular financial blog Zero Hedge also went down this morning along with multiple Dow Jones websites.

While this isn’t definitive proof that there’s a massive hack going on, it would also be a huge coincidence to imagine that the world’s biggest financial newspaper and the New York Stock Exchange would both go down at once.

So what could be going on? Financial analyst Josh Brown speculates that China is likely involved. On his Twitter feed, Brown says that DHS officials are “lying or wrong” about there being no indication of there being a cyberattack. He speculates that China has not been happy about WSJ’s coverage of its own recent stock market woes and says it “isn’t happy with the way our financial media is reporting on its financial market woes.” China this week announced major trading restrictions that have frozen traders out of 72% of the market.

Again, this is all speculation, but this doesn’t strike us as a particularly crazy explanation...

A certain country isn’t happy with the way our financial media is reporting on its financial market woes.

— Downtown Josh Brown (@ReformedBroker) July 8, 2015

You’ve never seen me endorse a conspiracy theory before. This one is the real thing.

— Downtown Josh Brown (@ReformedBroker) July 8, 2015

Department of Homeland Security: "no signs of malicious activity at this time" re: the New York Stock Exchange

— Phil Mattingly (@Phil_Mattingly) July 8, 2015

They’re lying or wrong. https://t.co/4Dzyb5fmXe

— Downtown Josh Brown (@ReformedBroker) July 8, 2015

Seems pretty obviouis to me.

Europe's Crowning Glory Imperils Postwar Project

Monetary union is in fact the apex dream of European economic integration. It's also a leftist Utopian escape from the Hobbesian state of nature.

They've had a good run, at least.

At the Wall Street Journal, "Europe’s Great Project Faces Its Biggest Challenge in Greek Bailout Referendum":

The great project that some hoped would eventually create a European superstate faces the biggest challenge of its 65-year history on Sunday, when Greeks vote in a referendum that could decide whether they crash out of the eurozone—and shift the continent’s destiny.

The European Union, whose precursor brought the region’s nations together after World War II and later helped cement a Western trajectory for countries in the former Soviet bloc, isn’t set to break up. But it has stumbled on the path toward what supporters saw as its future: an ever-closer communion of nations.

What has largely brought this about is the instrument seen as its crowning glory: the euro. The discipline required to tie one’s national currency to that of Germany and its relentless export machine has taken a toll on political systems and politicians across the eurozone, particularly in the south. It has tested Greek democracy to the breaking point.

“The EU is in deep crisis,” Kris Peeters, Belgium’s deputy prime minister, told a conference Thursday. “For the first time in its history, it’s in danger of becoming a less-close union.”

The risk of a Greek exit appeared to grow Thursday as the pivotal vote approached. The International Monetary Fund, whose debt Athens defaulted on earlier in the week, warned that the extended conflict with its creditors had left Greece in even worse financial shape than before, needing an even bigger bailout to remain in the eurozone.

Meanwhile, Greek Prime Minister Alexis Tsipras took to the airwaves to insist that voting against the bailout and its conditions would immediately spur a better deal for the country—the opposite of what his counterparts representing the country’s creditors have consistently said.

To be sure, the European idea has been eroded elsewhere. The British have attacked the concept of “ever-closer union” enshrined in the EU treaties and have sought a renegotiation to take powers back to London. Some nationalist politicians, such as Hungarian Prime Minister Viktor Orban, have presented a challenge to the values around which the bloc has been built.

Large-scale immigration—of people inside the bloc and the growing number of desperate refugees from the chaotic regions on its borders—is raising questions about whether the fundamental tenet of freedom of movement is sustainable and is putting pressure on some national welfare systems.

Member states, including Germany and France, are suffering “enlargement fatigue” and are resistant to further outward expansion to new members.

The EU has also been a victim of a generalized backlash against globalization, as many ordinary people see their interests as having been submerged by those of a globalized superelite, of which the well-paid bureaucrats in Brussels are viewed as a prime example.

The long-term rise in unemployment—which in Western Europe in the 1960s averaged below 2%, compared with rates above 20% now in Greece and Spain—is a manifestation of an economic malaise that many voters blame on the EU.

Wolfgang Schüssel, a former federal chancellor of Austria, said the EU is often a scapegoat for more general ills. “Would the results be better without European integration? Would there be more jobs, more investment?” he said in an interview Thursday.

The euro is at once the bloc’s most ambitious project and the one that may most seriously challenge European unity...

Continue reading.

Alexis Tsipras’ Enemies Try to Use Greek Vote as Referendum Against Him

He hasn't been in office very long either.

At the New York Times, "Alexis Tsipras’s Enemies in Europe See Their Chance in Vote on Greece’s Bailout Terms":

ATHENS — Prime Minister Alexis Tsipras says the referendum in Greece on Sunday is simply about whether to agree to what he sees as a bad deal from the country’s creditors. Many of his opponents say it is actually about whether Greece wants to stay with the euro.

What neither side typically acknowledges is that the vote amounts to a referendum on Mr. Tsipras and whether he should continue to lead his country. And what is playing out now is a largely unacknowledged campaign to oust him, led as much by his critics among other European leaders and top officials as it is by his rivals in Greece.

By long-established diplomatic tradition, leaders and international institutions do not meddle in the domestic politics of other countries. But under cover of a referendum in which the rest of Europe has a clear stake, European leaders who have found Mr. Tsipras difficult to deal with have been clear about the outcome they prefer.

Many are openly opposing him on the referendum, which could very possibly make way for a new government and a new approach to finding a compromise. The situation in Greece, analysts said, is not the first time that European politics have crossed borders, but it is the most open instance and the one with the greatest potential effect so far on European unity.

“People are realizing they have more and more of a stake in each other’s domestic policies,” said Mark Leonard, the director of the European Council on Foreign Relations, “and so you see more interference.”

Martin Schulz, a German who is president of the European Parliament, offered at one point to travel to Greece to campaign for the “yes” forces, those in favor of taking a deal along the lines offered by the creditors.

On Thursday, Mr. Schulz was on television making clear that he had little regard for Mr. Tsipras and his government. “We will help the Greek people but most certainly not the government,” he said.

Even as it backed Greece’s call for a new bailout plan to include debt relief, the International Monetary Fund essentially scolded the Tsipras government on Thursday, suggesting that it had mismanaged the economy in its brief tenure in office this year.

Mr. Tsipras had all but promised to step down if Greeks voted yes. But with three days to go before the vote, he went on television on Thursday and left the issue unclear. He said that in the event of a yes vote, he would remain in his “institutional role” and see that the procedures provided for by the Constitution were followed. He complained bitterly about European interference in the vote.

Earlier in the day, Mr. Tsipras’s finance minister, Yanis Varoufakis, said unequivocally that he would resign Monday if the country voted yes.

Hopes that a yes vote will undercut Mr. Tsipras or force his resignation have been behind calls by Chancellor Angela Merkel of Germany and most of the top European officials in Brussels to let the referendum play out before engaging in any further talks, analysts say, even though the European officials were at first furious when Mr. Tsipras asked for a vote on the issue.

Nearly the entire top European leadership in Brussels is backing a yes vote...

More at that top link.

Cash Crunch Hits Everyday Life in Greece

At the Wall Street Journal, "Shutdown of Greece’s banking system cripples businesses, makes it hard for people to pay bills; just €1 billion in cash left":

ATHENS—At an automated teller machine underneath the Acropolis, Angeliki Andreaki clutched her debit card with both hands. She pays her bills in cash, and €330 in rent and €39 in telephone bills were due Wednesday.

“Tsipras has turned this country into North Korea,” the 83-year-old Ms. Andreaki said Tuesday, shaking her head about Greece’s prime minister, Alexis Tsipras. “I can’t believe at this age I have to line up to get rationed cash.”

She withdrew as much as she could—just €60 ($66)—and went straight to pay her phone bill. She said she would have to come back for five more days to get enough cash for the rent.

This is everyday life in Greece since it shut down its banking system and imposed controls to prevent money from flooding out of the country.

Greece’s ruling party continued to say it was offering new compromises to its creditors and urged a “no” vote in Sunday’s referendum. European leaders dismissed the overtures as insufficient and said they would hold off on further negotiations until the vote.

The first opinion surveys in Greece since Mr. Tsipras called for the referendum show conflicting results but suggest the outcome could be close.

The freezing of Greece’s banking system is the most dramatic moment of the country’s five-year debt crisis—and perhaps its most pivotal. Since Monday, Greeks can get only €60 a day at cash machines and can’t transfer money abroad.

How long the remaining cash lasts and how unsettled Greeks become will be big factors in Sunday’s referendum on creditors’ demands for more austerity in exchange for more bailout funds. The tighter the squeeze, the more Greeks might vote “yes” to reconcile with creditors, analysts say.

As of Wednesday, Greece’s banking system had about €1 billion in cash left, according to a person familiar with the situation. Even with the €60-a-day limit on ATM withdrawals from Greek’s closed banks, “it’s a matter of a few days” until the money runs out, this person said.

By Wednesday, many ATMs in central Athens had constant lines of people waiting to withdraw their daily limit. The crunch has suffused the economy. Merchants report lower spending. Wholesalers can’t pay for supplies. Importers’ foreign counterparts won’t trade.

Airline Ryanair Holdings PLC, which flies to Athens, Thessaloniki and other Greek cities said Tuesday it would accept cash for tickets at airports because Greek customers have had trouble paying with debit cards. Ryanair is based in Ireland, and electronic payments abroad are prohibited.

The worst nightmare as far as the business community is concerned has come true,” said Constantine Michalos, the president of the Athens Chamber of Commerce and Industry.

Mr. Michalos also has a food wholesaling business, and 65% of his product line is imported. As of this week, his foreign suppliers aren’t sending any more, leaving him with about 20 days of remaining inventory. “I have the ability and necessary funds in my bank account to import,” he said. “I am not allowed to make an electronic transfer.”

Greece’s cash crunch hit small merchants first. They are less able to get credit from their suppliers, especially those dealing in perishable products that are continually imported. Christos Georgiopoulos owns a gourmet supermarket in Plaka, a picturesque Athens neighborhood frequented by tourists. He sells Champagne and Russian crab legs.

Nobody is buying. “I haven’t had a single customer in two days,” he said Wednesday. He is shutting down his shop and says he doesn’t know when he will reopen. He gave some crab legs to his workers and is taking some home. “I haven’t paid my staff and don’t know if and when I will,” he added.

Marie Palandjian-Raxevsky, marketing director at Mini Raxevksy, a Greek children’s clothing brand, depends on Google Inc. advertisements to generate sales from consumers in Greece and elsewhere.

Late Tuesday night, she got an email saying her Greek corporate credit card, which pays for the ads, was declined. “Now our campaign has completely disappeared,” she said.

Who has cash and who doesn’t is often arbitrary. Aspasia Kourana, an 80-year-old retiree, was shopping Tuesday at one of Athens’s many open-air fruit and vegetable markets, a staple in neighborhood life here known as laiki.

She got her monthly pension of €600 last Thursday. Her daughter withdrew it all the next day.

By Monday, Ms. Kourana’s daughter and son-in-law couldn’t get more than €60 of their respective salaries out of the bank. “We’ll use my €600 pension for the next few days,” Ms. Kourana said. “I might even get some cherries for my grandson. He loves them.”...

Still more.

Germany Faces Billions in Losses If Greece Goes Bust

Well then, I can see why Angela Merkel put the kibosh on further negotiations until after the Greek referendum. Germany's looking to get hammered if Greece goes completely belly up.

At Der Spiegel, "The Bill: Germany Faces Billions in Losses If Greece Goes Bust":

Vast amounts of German money are at stake if Greece goes bankrupt -- with liabilities as high as €84 billion. Even though that figure is a large one, it would be paid over years and dangers to the Berlin budget are limited.

"So far, Germany hasn't had to spend a single euro from the federal budget on Greece." It's a line one has heard dozens of times on German talk shows in recent years. Soon, though, the claim may no longer hold true. A Greek insolvency is now within the realm of possibility and if the country does go bust, it could directly burden the German federal budget.

But how many billions of euros in German money are actually at stake? It may seem like a simple question, but there are no easy answers, because Germany's actual liability for Greek debt depends on a number of factors.

For a simple answer, just scroll to the last graphic in this article, where you will find the maximum burden for the German budget in a worst case scenario. If you're looking for a more nuanced answer, then please continue reading.

In order to determine the maximum possible liability for Germany as of the end of June 2015, you have to consider several factors, including whether …

* Greece becomes insolvent but remains in the euro zone. Then Germany would be held liable for up to €61.5 billion ($68.6 billion) in Greek loans. But these liabilities would be for payments that are planned as far into the future as 2054.
Or whether …

* Greece also withdraws from the euro zone. In the event of a Grexit, Germany's total liabilities would increase to around €84.5 billion.

But how do these numbers fit together?

The important thing here is that these figures represent the maximum conceivable damage to the German budget. They would be incurred if Greece didn't pay a single cent back on its debts over the next four decades -- an extremely unlikely scenario. It's far more likely that Greece would service certain debts, but not others.

In other words, there are varying probabilities of default for Greek loans that Germany has backed...

More.

BONUS: At Zero Hedge, "'Heartbreaking' Scene Unfolds at Greek Banks as Pensioners Clamor for Cash."

Greece Bailout Offer Falls Short of Demands

Some of the stories of people going hungry are heart-wrenching, no matter what you think of Greece's clusterf-k socialist economy.

At the Wall Street Journal, "Fresh Greek Bailout Proposal Falls Short of Creditors’ Demands":

Eurozone officials dismissed a new Greek proposal for budget cuts and policy overhauls as insufficient and said that the currency bloc’s finance chiefs wouldn’t hold any more talks on a rescue for Athens until the country holds its referendum on creditors’ conditions for aid on Sunday.

Officials in Brussels said the proposal, received Tuesday night by the representatives of Greece’s official lenders, appeared to fall short of creditors’ demands. Greece defaulted on a €1.55 billion ($1.72 billion) repayment to the International Monetary Fund on Tuesday.

German Chancellor Angela Merkel also reacted coolly to Greece’s new offer, emphasizing that Berlin would maintain its tough stance on bailout terms for Greece and was prepared for a battle. Ms. Merkel and other senior officials have said that Germany would discuss a new bailout request only after Greece’s referendum on the creditors’ conditions for aid had taken place, or if Greece called it off.

“A compromise at any cost would only be a result to get a result, only because one isn’t able to live with a conflict because one is afraid to fight the battle,” Ms. Merkel said.

The eurozone’s finance chiefs also agreed in a Wednesday teleconference to hold off on further negotiations until after the snap Greek referendum, which is set to take place Sunday.

“Given the political situation, the rejection of the previous proposals, the referendum which will take place on Sunday and the ‘no’ advice of the Greek government, we see no ground for further talks at this point,” said Dutch Finance Minister Jeroen Dijsselbloem, who presides over meetings of the currency bloc’s finance ministers.

Greece’s finance minister Yanis Varoufakis, though, said that the other finance chiefs had said that “Greece’s proposal is in the right direction, but asked for more details on its fiscal effect.”

In a televised address, Greek Prime Minister Alexis Tsipras remained defiant, vowing to push ahead with the referendum and calling Greeks who vote “yes” in Sunday’s vote accomplices to those looking to continue the painful policies of austerity in the crisis-stricken country. The premier has argued that a “no” vote would give Greece leverage in talks with its creditors, while eurozone officials have countered that it would be tantamount to a vote to leave the euro.

“A ‘no’ vote is a decisive step for a better agreement, which we aim to sign straight after the referendum,” Mr. Tsipras said. “ ‘No’ does not mean a rupture with Europe.”

Earlier in the day, Germany’s finance chief, Wolfgang Schäuble said that this week’s turmoil—including the closure of Greek banks, the expiration of the bailout program, and the decision to call a referendum—have changed the circumstances too much for bailout talks to simply be resumed from where they were when negotiations broke down on Friday.

Mr. Schäuble said that Greece’s left-wing government had to provide more clarity on its demands before negotiations about further financial aid could resume. The letter sent Tuesday hadn’t done that, he said.

“This is no basis for serious” negotiations, said Mr. Schäuble during a news conference on the government’s 2016 budget. “First of all, Greece has to declare what it wants.”

Markets were nevertheless cheered by the latest offer as a sign that a deal was still possible. The Stoxx Europe 600 opened higher and extended gains sharply. Bonds yields fell in Italy and Spain, highly indebted countries that in past years were seen as vulnerable to spillover from Greece...

Still more.

And stay with the video at the top. Holly Williams reports and it's emotional.

Greece to Default on Payment to International Monetary Fund

Frankly, I still don't see Greece leaving the European Union, but this is a major development.

At WSJ, "Greece to Default on $1.73 Billion IMF Payment":

European leaders appealed to Greeks to vote “yes” in a referendum on their country’s bailout, warning that the risk of Greece’s exit from the euro was real, as Athens confirmed it wouldn’t be able to make a loan repayment to the International Monetary Fund due on Tuesday.

The Greek government’s decision to call a vote on measures its creditors demand in return for more bailout aid has cast the country into uncharted waters. As of Tuesday, Greece will be cut loose from international rescue loans for the first time in more than five years. It will also default on the €1.55 billion ($1.73 billion) IMF payment, whose deadline is the same day.

Many economists and officials fear that without further financial support, Greece may have to abandon the euro, sparking a messy departure from the bloc. The European Union also hopes to avoid contagion from spreading to other parts of the 19-country eurozone after Greece’s decision over the weekend to shut down its banking system for at least a week to prevent money from flooding out of the country.

“You shouldn’t commit suicide because you’re afraid of dying,” Jean-Claude Juncker, the president of the European Commission, said in a speech aimed at convincing Greeks that the budget cuts and policy overhauls their government has rejected are actually good for their country.

“You should say ‘yes’ regardless of what the question is,” he said. A “no” vote, however, “will mean that Greece is saying ‘no’ to Europe.”

Stocks and bonds fell around the world on Monday, but there was little sign of outright panic. European stocks recovered slightly from early losses.

Bonds in Italy, Spain and Portugal—highly indebted countries seen as vulnerable to the Greek crisis—also pared losses after initial sharp falls, and remain far from the levels seen in 2012 or 2013, when banking problems in Spain and Cyprus raised doubts over the eurozone’s integrity.

Eurozone finance ministers refused on Saturday Athens’s request to extend the European portion of Greece’s €245 billion bailout by an extra month. That would have carried Greece past the July 5 vote, but likely still left the government without enough funding to pay the IMF.

Greek Prime Minister Alexis Tsipras spoke by phone with Mr. Juncker and European Parliament President Martin Schulz and asked for help getting an extension to the bailout, a Greek government official said.

“The Greek prime minister expressed the position that the democratic expression of the Greek people is hindered by the closure of banks, which doesn’t apply with the democratic tradition of Europe,” the official said.

Another government official said that some branches of Greek banks would reopen by Thursday for those who don't have a debit or credit cards.Greeks can withdraw as much as €60 a day.

Mr. Tsipras and his government are calling on Greeks to vote “no” to send a signal to Europe and the IMF that Greece wants a better deal for continued rescue loans. Mr. Juncker rejected the argument that such a vote would give the government a better negotiating position.

“Greek citizens who are being called to vote next Sunday need a clearer picture of what’s at stake,” Mr. Juncker said.

French President François Hollande issued a similar warning. “It’s a question of knowing whether the Greeks want to remain in the eurozone—which is where they belong in my opinion—or if they will take the risk of exiting,” Mr. Hollande said after an emergency meeting with top ministers and finance advisers.

Mr. Hollande also stressed that France and the rest of the eurozone are now in a better position to withstand a Greek departure. “Today the French economy is robust—much more so than four years ago—and it has nothing to fear from what could happen,” the French leader said...

Keep reading.

Also, "Greece Orders Banks Closed, Imposes Capital Controls to Stem Deposit Flight."

And at Memeorandum.

Whoa! Greece Consumers Withdraw €1 Billion in Banking Run as ECB Pledges New Funds to Stave Off Grexit

This is amazing.

At the Telegraph UK, "Greek debt crisis endgame: ECB agrees to pump more money into Greece's banks as Russia enters the ring."

Plus, "European authorities forced to stave off Greek banking collapse as capital controls loom":

ECB increases tap on emergency funding as prospect of capital controls and bank closures beckon before Monday's emergency summit.

Greece's banking system was saved from a weekend collapse after the European Central Bank was forced to pump emergency rescue funds and halt the immediate threat of capital controls.

The ECB took the unusual move to raise its emergency liquidity assistance (ELA) twice in the space of three days as a further €1.2bn fled the financial system on Friday. The ceiling on ELA was reportedly raised by €1.8bn according to reports, and came following a request from the Bank of Greece.

The Frankfurt-based central bank took the drastic action after its officials warned European finance ministers that Greece's banks may not be open for business on Monday. Total deposit flight has now soared to €4.2bn this week as full-blown panic over the country's eurozone future has set in.

ELA funding is one of the last critical links keeping Greece in the single currency.

Without the funds, Greece would likely find itself in the midst of a bank run, forcing the Leftist government to impose draconian capital controls to prop up the banking system. Such measures, which include deposit withdrawal limits, were last seen in the eurozone in 2013 in Cyprus after the ECB had threatened to cut the life support for Nicosia's financial system.

The drip feed of cash will now be reviewed by the ECB's governing council on Monday, when EU leaders and finance ministers will convene for a last ditch attempt to thrash out their differences with Athens.

Donald Tusk, the man chairing summit, confirmed that Athens would be delivered an ultimatum deal as the country's future reached a "critical" point.

"We are close to the point where the Greek government will have to choose to accept what I believe is a good offer for support, or to head towards default," said Mr Tusk.

"The game of chicken needs to end, and so does the blame game. There is no time for more games."

He added the meeting would not produce a final resolution to the country's five-month negotiating impasse, with any ultimate decision remaining with the eurozone's finance ministers.

"There is time, but only a few days. Let us use them wisely," said Mr Tusk...

More.

I still don't believe that European leaders will allow Greece to exit the EMU. It'd be the beginning of the end of the modern European Union, setting a precedent in other states, especially the PIIGS nations --- Portugal, Ireland, Italy, Greece, and Spain --- and create centrifugal pressures on the system.

It's going to be an interesting week next week.

American Express-Costco Divorce Shakes Up Credit-Card Industry

This is interesting, at WSJ, "Costco Cards Account for One Out of Every 10 AmEx Cards in Circulation":

American Express Co. and Costco Wholesale Corp. are ending their 16-year relationship, a surprise move that pummeled AmEx’s stock price and will trigger a major upheaval in the card industry.

The unusual partnership, in which Costco exclusively accepted AmEx cards, had driven a significant chunk of business to the New York card company. In addition, AmEx and Costco issued a credit card together that could also be used at other merchants. When the arrangement ends next year, millions of customers will be forced to use a different credit card when shopping at the wholesale store.

The failure to agree on new terms was a fresh blow to AmEx, which was already falling short of some sales targets. American Express Chief Executive Ken Chenault said the move, affecting roughly one in 10 AmEx cards in circulation, would eat into the company’s results in the next two years.

On Thursday, AmEx’s shares dropped $5.53, or 6.4%, to $80.48, its largest one-day percentage decline since August 2011.

The move sets up a race among credit-card firms to team up with the fast-expanding wholesale club, which sells everything from car tires to smoked salmon...

More.

Massive Data Hack at Anthem Health Insurance Could Expose Millions

Target, Sony, and now Anthem --- of just the most recent examples.

Digital data storage just isn't that safe, frankly.

At the Los Angeles Times, "Anthem hack raises fears about medical data."

Also at CBS This Morning, "Anthem insurance data breach could be one of largest hacks in history," and "Why hackers target health providers like Anthem Insurance."

BONUS: At the New York Times, "Protecting Yourself From the Consequences of Anthem’s Data Breach," and at USA Today, "Anthem data breach: How to protect yourself."

Bank of America Agrees to Pay Record $16.65 Billion in Obama-Holder Housing Settlement Shakedown

Look, we know what happened.

Many analysts, including Gretchen Morgenson of the New York Times, in Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon, indicated that Democrat-leftist policies pushed government-backed financial institutions, such Fannie Mae, to issue sub-prime home loans to unqualified minorities. This dates back to the Clinton years. Democrats called for "partnerships" between government and the private sector, which ultimately removed all limits on mortgage lending, feeding an unchecked real-estate bubble and ultimately the worst financial collapse since the Great Depression.

But now here comes Barack Obama's shakedown Attorney General, who strong-armed B of A into this record shakedown payout.

The announcement is at the corrupt DOJ website, "Bank of America to Pay $16.65 Billion in Historic Justice Department Settlement for Financial Fraud Leading up to and During the Financial Crisis" (via Memeorandum).

And at the Wall Street Journal, "Record Bank of America Settlement Latest in Government CrusadeBank Agrees to Pay $16.65 Billion in Cash and Consumer Aid":

On Thursday, the bank agreed to pay $16.65 billion to settle the government's accusations it sold flawed mortgage securities in the run up to the 2008 crisis, the largest settlement ever reached between the U.S. and a single company.

For the U.S. government, the deal is a chance to put an exclamation point on a string of crisis-era enforcement actions and lawsuits that have cost big U.S. banks tens of billions of dollars. The Charlotte, N.C. lender will have to pay $9.65 billion in cash to the Justice Department, six states and other government agencies. The bank also will provide $7 billion in consumer aid by modifying mortgages for borrowers who owe more than their homes are worth, demolishing derelict properties or other relief.

For Bank of America, the settlement is a bitter coda to its decision in 2008 to buy two companies, Countrywide Financial Corp. and Merrill Lynch & Co., as they teetered during the housing crisis. Bank of America Chief Executive Officer Brian Moynihan, who has spent his 41/2 years as CEO wading through litigation, has told investors this is the last of the big crisis-era problems. His next challenge: proving the bank has the mettle to make money in an era of weak loan demand and low interest rates.

In a statement, Mr. Moynihan said the settlement "is in the best interests of our shareholders, and allows us to continue to focus on the future." Giant legal charges have depressed the bank's earnings for years, frustrating some investors. The bank said the settlement will cut third-quarter pretax earnings by $5.3 billion, or 43 cents a share after tax.

Shares in the company rocketed more than 4%, to close at $16.16, as investors welcomed the resolution of a long-running legal headache.

The Justice Department's case against Bank of America provides perhaps the clearest window yet into the behavior that fueled the 2008 financial crisis: Lenders knowingly providing credit to borrowers who couldn't afford the loans and selling those mortgages to unwitting investors. Borrowers ultimately defaulted, sending them into foreclosure and saddling investors with hefty losses.

Many of the mortgage securities in question were made by Countrywide and Merrill Lynch. But the government found problems with Bank of America's own mortgage securities as well, including efforts to circumvent underwriting standards by changing applicants' financial information.

In at least one instance, an underwriter at Bank of America made more than 40 attempts to win an "accept" rating from an internal Countrywide system—known as CLUES—that would allow Bank of America to make a loan, according to a statement of facts signed by the U.S. and Bank of America.

"One underwriter characterized what she was doing as trying to 'trick' the CLUES system into giving an 'accept' rating," according to the document.

The ramifications of originating weak loans was predicted by former Countrywide CEO Angelo Mozilo, who warned in an Aug. 1, 2005 email to other executives that real-estate developers were anticipating a condo-market collapse in areas like South Florida and Las Vegas, and said the firm should avoid putting certain loans on its own balance sheet. Mr. Mozilo was worried the large increase in monthly payments required by many of the Countrywide-issued mortgages ultimately would cause borrowers to default.

"The simple reason is that when the loan resets in five years there will be enormous payment shock and the borrower is not sufficiently sophisticated to truly understand the consequences then the bank will be dealing with foreclosure in potentially a deflated real estate market. This would be both a financial and reputational catastrophe," Mr. Mozilo wrote, according to Justice Department documents.

Prosecutors in Los Angeles are preparing to file civil charges against Mr. Mozilo and other former Countrywide executives, according to a person familiar with the situation. Mr. Mozilo's lawyer, David Siegel, said, "There is no sound or fair basis, in law or in fact, to pursue any claims against Angelo Mozilo."

Countrywide, in particular, has morphed from trophy to albatross for Bank of America. The bank had a history of gobbling up competitors when it bought Countrywide in 2008 and the deal launched it to the top of the mortgage world.

The purchase, though, has brought legal headaches and regulatory scrutiny, including a multistate settlement over alleged predatory lending practices just months after Bank of America bought the lender. The bank's mortgage unit hasn't turned a profit in years.

The settlement comes on the heels of similar, but smaller, deals over precrisis mortgage-related conduct with Citigroup Inc. C +2.55%  for $7 billion and J.P. Morgan Chase JPM +1.49%  & Co for $13 billion. The Justice Department is expected to turn its attention next to other banks accused of selling flawed mortgage securities, including Goldman Sachs Group Inc. GS +0.64%  and Wells Fargo& Co., according to people familiar with the matter. Those cases are expected to be smaller than the previous three settlements.

Fierce Pushback Against Newsweek's Bombshell Bitcoin Cover Story

Here's this morning's entry, featuring the interview with Newsweek's Leah McGrath Goodman, "Satoshi Nakamoto: The Face Behind Bitcoin."

Well, there's some intense pushback against Newsweek in light of Satoshi Nakamoto's stern denials. Here's the magazine's response, "Newsweek stands behind its Satoshi Nakamoto story" (at Techmeme):

Leah McGrath Goodman’s recent cover story for Newsweek, investigating the identity of Bitcoin founder Satoshi Nakamoto, has generated an immense amount of international attention, including denials from Mr. Nakamoto, criticism of Ms. Goodman’s reporting and ad hominem attacks on her character.

Newsweek published this story because we felt it is an important one. While the virtual currency has become popular, it remains mysterious and volatile. We recognized a public interest in establishing some core facts about Bitcoin and better informing those who might invest money in it.

Ms. Goodman’s research was conducted under the same high editorial and ethical standards that have guided Newsweek for more than 80 years. Newsweek stands strongly behind Ms. Goodman and her article. Ms. Goodman’s reporting was motivated by a search for the truth surrounding a major business story, absent any other agenda. The facts as reported point toward Mr. Nakamoto’s role in the founding of Bitcoin.

And note that this cover story marks the relaunch of the magazine. Business Insider has more, "Here Are All the Reasons Why People Are Skeptical of the Newsweek Bitcoin Story."

Also from Kash Hill, at Forbes, "Deputies confirm key quote from Dorian Nakamoto about Bitcoin in Newsweek story" (at Mediagazer). See also Felix Salmon, "The Satoshi Paradox."

Satoshi Nakamoto: The Face Behind Bitcoin

An update to my earlier entry, "Bitcoin Virtual Currency Market Crashes."

It turns out the so-called creator of Bitcoin is vehemently denying he has any continuing role in the alternative (and flailing) currency. Newsweek's Leah McGrath Goodman has a big story on this, "The Face Behind Bitcoin."

And she's interviewed at CBS This Morning:



More at the Los Angeles Times, "Will the real creator of bitcoin please stand up?", and "Did the real Satoshi Nakamoto just say Newsweek has wrong guy?"