Sunday, March 6, 2016

Brazil On The Brink, N. Korea Ready For 'Pre-Emptive' Nuclear Strike On S. Korea, U.S., Grexit And Brexit Ramifications

Brazil is heading straight into the arms of the International Monetary Fund. The sooner this grim reality is recognised by the country's leaders, the safer it will be for the world.
The interwoven political and economic crisis has gone beyond the point of no return. The government is frozen. The finance ministry has lost the trust of Brazilian investors and global markets in equal measure. 
Almost nothing credible is being done to stop the debt trajectory spinning into orbit. Few believe that the ruling Workers Party is either capable or willing to take the drastic austerity measures needed to break out of the policy trap, or that it would suffice at this late stage even if they tried.
"There is an enormous fiscal crisis and we're flirting with a return to hyperinflation. All the debt variables are going in the wrong direction," said Raul Velloso, the former state secretary of planning.
"There is a loss of confidence in the ability of the government to manage its debts. We face the risk of default," he said. Three quarters of the budget is effectively untouchable, locked in by a web of welfare payments and regional transfers.

President Dilma Rousseff is battling impeachment. Whether she wins or loses over coming months, the congress is too fractured and enflamed to do much about a budget deficit running at over 10pc of GDP. 
"I have the feeling that nobody wants to take any bold steps, or make any sacrifices," said Arminio Fraga, the former central bank governor.
"Brazil ended up in this situation by doubling down on credit and fiscal expansion. It woke up with the nightmare of a paralyzed country and a ruined model that is not being corrected. It is an economic tragedy," he told O Estado de Sao Paulo.
"The IMF is the central bank and lender of last resort for emerging markets since they can't print their own dollars. It needs to do for Brazil what the European Central Bank did in buying time for Spain and Portugal," he said.   
Just how close Brazil now is to an inflexion is hotly debated, but it is surely getting closer. Five research institutes in Brazil have warned over the last two weeks that the debt is on dangerous trajectory. 
Moody's, Standard & Poor's, and Fitch have all cut Brazil's credit rating to junk, with knock-on effects through the parastatal companies like Petrobras, Banco do Brasil and Caixa, and collateral damage through a nexus of companies with dollar debt. 

 North Korea announced it would be ready for a preemptive strike on the United States and South Korea in case of a threat to security over the two nations’ joint military exercises, state media reported Monday.

According to the statement of the Korean National Defense Commission on the official Korean Central News Agency (KCNA), Pyongang believed the military exercises were a pretext for war.

"A preventive nuclear strike of justice will be carried out in accordance with the order by the Korean People's Army leadership," the statement said, adding that any military action "bringing down North Korea" will be responded with a "a sacred war of justice."

According to the statement, Pyongyang has a military operation plan to liberate south Korea and strike the United States.

" Offensive means have been deployed to put major strike targets in the operation theaters of South Korea within the firing range and the powerful nuclear strike means targeting the US imperialist aggressor forces bases in the Asia-Pacific region and the US mainland are always ready to fire," the statement read.

On Monday, the US military will start regular exercises in South Korea. Held every two years, the exercise involves US and South Korean troops. The United States stepped up efforts at deploying strategic weaponry in South Korea in response to the North Korean violations of UN resolutions.

A meeting is scheduled on Monday where finance ministers of the Eurozone will determine if it is time to complete a review of Greek economic plans, which has been delayed multiple times because of disagreement regarding how much money Athens needs to cut from public spending.

According to the former finance minister of Greece Gikas Hordouvelis, the situation is "now more dangerous than it was last summer."

"Then it [reforms] was a question of the political will of a few people, now it's a question of implementing reforms and working hard, and if a government doesn't believe in them and implements them begrudgingly, progress becomes very difficult,"he said, according to The Guardian.

Measures in question become more and more explosive as time passes. As Greek ministers expect the IMF to ‘become more reasonable', the IMF itself expects Greece to implement measures worth €9 billion(£6.96 billion), or 4.5 percent  of GDP, if it is to meet an agreed budget surplus of 3.5 percent in the years ahead. To put long story short, Greece won't be able to do that, unless its debts are relieved or the pensions are cut. While the former outcome is deemed unthinkable for the IMF, pension cuts are out of the question for the Greek government.

So Greece's exit of the eurozone (the ‘Grexit') is seen by bankers and businessmen as a way to solve problems and is being discussed more and more openly. The probable effect of Grexit remains largely undetermined, ranging from an extreme boost of exports, tourism and internal economic encouragement to a dramatic fall in living standards of Greek citizens. The important part is that, mixed with Brexit, Grexit will most likely cause catastrophic and mostly unpredictable consequences to the whole European Union, which could possibly go as far as to the ceasing of the EU's existence as a whole.


Anonymous said...

I can't believe the local news are all silent on these headlines we r reading here. If these sites get cut off we will only have and rely on the holy spirit 200%

Scott said...

Carol - thats actually a good point - sooner or later they are going to have control the alternative media - it should be interesting to see how they go about this, but they certainly will

Peter said...

People don't even attention to the real news stories now, controlling it and shutting it down isn't even necessary.

Scott said...

Sad but so true Peter

Dee mac said...

Tv sports & social media has everyone too busy to be concerned about the latter days! Im in my 20s and people twice my age dont even blink when I share your story's. Keep up the good work scott!

Anonymous said...

Life is still very comfortable for some people to realise the danger that is surrounding and approaching