In Greek mythology Europa was a beautiful Phoenician woman of noble birth. Depending upon which part of mythology you look at Europa was either a daughter of Oceanus and Tethys or the daughter of Tityas and Euphemus. According to most ancient legends the god Zeus took the form of a white bull and abducted and seduced Europa.

Europa is about to make a return to the continent named after her starting next year.

Currently a number of euro banknotes have pictures of windows and doors as both decorative and security features. Beginning next year a number of the banknotes will feature various images of Europa, starting with the €5 note in May. Mario Draghi, chief of the European Central Bank commented on the new images gracing the banknotes, saying:

“Portraits have long been used in banknotes around the world and research has shown that people tend to remember faces. Is there any better figure than Europa to serve as the new face of the euro?”

Read More at politicaloutcast.com . By Dave Jolly.

Sometimes “No” Means Exactly That

I was interviewed last night on BBC radio. The questions were good and the newsman was knowledgeable. The concentration was on Greece and Spain and as I detailed the real debt to GDP ratios for the two countries which included all of their liabilities and not just the ones that Europe wants to count the whoosh of breath could be heard across the Atlantic. I am afraid I startled the poor fellow as I explained that this was not my opinion nor was it a particularly complex matter past finding the data which requires some hours of digging around in Eurostat and the Bank for International Settlements data bases. Then it is just simple addition and the division by the official GDP for each country and you arrive at the conclusion. What is so eye opening then is the real number and this is why, of course, that these nations are in trouble as various liabilities turn from contingent to current as the economic crisis deepens. It should come as no surprise to the knowledgeable but to those that have long believed the official debt to GDP ratios put out by the European Union; the actual explanation and the dawning of what it means always seems to provoke a certain gasping of breath.

I do want to address one thing this morning that has been on my mind. I am not nor have I ever called for Armageddon or the end of the world. I find these kind of statements, by anyone, to be quite irresponsible and mostly self-aggrandizing. The world will pick itself up one way or the another and solutions will be found albeit quite painful ones for Europe I am afraid but there will ultimately be solutions. Over my many years on Wall Street I have seen one soothsayer after another rise and fall and then try to repeat the experience with the next Big Call. This is not what I do nor do I find any appeal in this kind of behavior at all. My commentary is certainly unique as it is almost totally directed at keeping you out of trouble and it is the rare moment when I suggest something of interest. I learned long, long ago the great and terrible secret that if you can avoid losing money that you are way ahead of the Great Game and better placed than your competitors. This is why Grant’s first ten Rules are the first one reiterated another nine times, “Preservation of Capital” which comes first and foremost and is a gift that just keeps giving if you get it right.

Difficult Times

As it dawns upon the world that Ms. Merkel means exactly what she says and is not going to back down you may expect a quite negative reaction in the equity markets and a widening of spreads for some risk assets along with a strengthening of the Dollar. I am talking about the “Trend” here and not some trading strategy for today’s business. Germany is not going to flinch and cannot both due to local politics and to the now obvious fact that Germany has just about reached the limits of what she is financially able to do with a $3.2 trillion economy. To put it quite simply; they have run out of excess cash and more European contributions are only going to weaken the balance sheet of the nation and seriously imperil Germany’s financial condition. I say, one more time, Germany is not going to roll over and all of the pan European schemes brought forward by the bureaucrats and the poorer nations are not going to go anywhere. There is one novel possibility here and that is that the Germans, like the British, may opt out. Germany, Austria, the Netherlands, Finland et al may just say, “Fine, go ahead if you wish to have Eurobonds and the like but we will not guarantee them.” All plans do not need to have an either/or solution and this may well be Germany’s position in the end which would place the periphery nations and France in quite an interesting, if unenviable, place.

“So do we pass the ghosts that haunt us later in our lives; they sit undramatically by the roadside like poor beggars, and we see them only from the corners of our eyes, if we see them at all. The idea that they have been waiting there for us rarely if ever crosses our minds. Yet they do wait, and when we have passed, they gather up their bundles of memory and fall in behind, treading in our footsteps and catching up, little by little.”

-Stephen King

Investing in Difficult Times

First you want to have a healthy position in Treasuries as the safe haven bet for the world as things begin to run askew and get worse. The Emerging Markets will get seriously hurt as the European banks funded these countries and these banks are now drawing in their horns and returning to their own home turf not just as a result of Basel III but as a result of their balance sheets, so full of fluff and tomfoolery, run up against the reality of their asset bases and cumulative loans no matter how Europe allows them to be categorized. Loans that aren’t paying and Real Estate securitizations that aren’t paying take the same bite whether you call them roses or daffodils or you claim their mark-to-market worth is some fantasy number concocted by the banks and approved by the central bank of any given nation. Many of the European banks have hit the wall now and are standing there staring at the tiles. With the few exceptions I would not want to be the holder of European bank obligations at this time. Neither do I advise to be the owner of most of the European sovereigns; first as connected to their banks which are three times the size of the sovereign countries of the EU-17 but also because their real debt to GDP ratios are so far into the red that whatever solutions are found, and printing money will not help as there is plenty of liquidity in the world and the real issue is solvency, so that any grand liquidity play will not do much good past the shortest of terms. In fact, the liquidity play has run out in my estimation and now the hard choices, the unpleasant choices, are all that remain and they will be painful; any of them.

Read More at zerohedge.com. By Tyler Durden.

Every day brings more and more evidence that Obamanomics is failing in Europe.  I wrote some “Observations on the European Farce” last week, but the news this morning is even more surreal.

The French Minister responsible for Parliamentary Relations Alain Vidalies has recently conceded that EUR10bn (USD12.7bn) is needed to balance the country’s budget this year, to be achieved notably by means of implementing a number of emergency tax measures. …The government plans to abolish the exemption from social contributions applicable to overtime hours, expected to yield a gain for the state of around EUR3.2bn, and to subject overtime hours to taxation, predicted to realize approximately EUR1.4bn in additional revenues. Other proposed measures include plans to reform the country’s solidarity tax on wealth (ISF), to cap tax breaks at EUR10,000, to impose a 3% tax on dividends and to increase inheritance tax as well as the tax on donations. …French President Hollande announced plans during his election campaign to reform ISF. Holland intends to restore the wealth tax scale of between 0.55% and 1.8%, in place before the former government’s 2011 reform, to be applied on wealth in excess of EUR1.3m. Currently a 0.25% rate is imposed on net taxable wealth in excess of EUR1.3m and 0.5% on net taxable assets above EUR3m.

France already has the highest tax burden of any non-Scandinavian nation, so why not further squeeze the productive sector. That’s bound to boost jobs and competitiveness, right? And more revenue as well!

Read more at International Liberty. By Dan Mitchell.

The following is an excerpt from my latest issue of Private Wealth Advisory. In it I outline two key developments in Europe which virtually NO ONE is talking about: the creation of border controls and capital controls. The political elite are doing this for only one reason: they know it’s GAME OVER in the EU.

The EU in its current form is finished. Done. Game Over. I’ve been saying this for months. But it’s a fact. Europe has literally run out of money. Indeed, the ECB’s interventions are now not only toxic for those participating in them (those banks taking money via the LTRO have been crushed in the credit market) but are losing their impact (LTRO bought only one month of market gains).

Again, the EU is finished. And the powers that be know this. Indeed, the following should give you an idea of how serious things are getting:

A Vote of No Confidence in Europe

Germany and France’s joint proposal to allow Schengen-zone countries to temporarily reintroduce border controls as a means of last resort might sound harmless. But doing so would damage one of the strongest symbols of European unity and perhaps even contribute to the EU’s demise.

Germany and France are serious this time. During next week’s meeting of European Union interior ministers, the two countries plan to start a discussion about reintroducing national border controls within the Schengen zone. According to the German daily Süddeutsche Zeitung, German Interior Minister Hans-Peter Friedrich and his French counterpart, Claude Guéant, have formulated a letter to their colleagues in which they call for governments to once again be allowed to control their borders as “an ultima ratio” — that is, measure of last resort — “and for a limited period of time.” They reportedly go on to recommend 30-days for the period.

 Read More at zerohedge.com. By Phoenix Capital Research.

A covert group of EU foreign ministers has drawn up plans for merging the jobs currently done by Herman Van Rompuy, president of the European Council, and Jose Manuel Barroso, president of the European Commission.

The new bureaucrat, who would not be directly elected by voters, is set to get sweeping control over the entire EU and force member countries into ever-greater political and economic union.

Tellingly, the UK has been excluded from the confidential discussions within the shady “Berlin Group” of Europhile politicians, spearheaded by German foreign minister Guido Westerwelle.

Opponents fear the plan could create a modern-day equivalent of the European emperor envisaged by Napoleon Bonaparte or a return to the Holy Roman Empire of Charlemagne that dominated Europe in the Dark Ages.

They are concerned that David Cameron’s coalition Government is doing nothing to prevent the sinister plot. The secret talks were uncovered by Independent Labour peer Lord Stoddart of Swindon.

Read More at express.co.uk. By Macer Hall.

Photo Credit: erjkprunczyk (Creative Commons)