Gold is slightly lower in U.S. trading a.m. Tuesday as European stock markets drop over news that Greece and its EU creditors remain at an impasse. Greek bond yields have pushed higher and are now trading above 29% for the two-year note compared with the safe-haven German bund that is now seeing the 10-year issue trading at 0.78%. Gold last reported a.m. is $1178.60 and silver is $15.98.
German daily Suddeutsche Zeitung reports Eurozone countries have agreed on a contingency plan if no deal between Greece and its lenders is struck by this coming weekend. If this weeks Eurogroup meeting fails to yield an agreement, Eurozone leaders would hold an emergency summit, possibly as early as Friday evening. The contingency plan would involve imposing capital controls on Greek banks over the weekend.
Yanis Varoufakis, Greece’s Finance Minister said the country has no plans to present new proposals at the finance ministers meeting signaling the country won’t make further concessions to unlock bailout funds needed to avoid default. Speaking to Germany’s Bild newspaper, he said the eurogroup is not a forum for presenting positions and plans that have not previously been discussed and negotiated at a lower negotiating level.
“The next and hopefully decisive step is the eurogroup on Thursday, said spokesman Preben Aamann, including any further steps will be decided in light of the eurogroup outcome. There should be no illusions that an agreement becomes easier or more advantageous over time.” The game of chicken will continue until someone blinks and the EU may very well come to Greece’s rescue momentarily but this would only forestall the inevitable.
Greece cannot pay its debt without borrowing more money to do so. The EU is terrified at what may happen should Greece default as trillions of dollars in derivatives may be at stake.
Russia is warning Washington that it will not sit idle if Washington goes ahead with plans to station military equipment along the border with eastern Europe.
Vladimir Putin announced Tuesday that Russia would add more than 40 ICBM’s to its nuclear arsenal this year. “The emergence of such information confirms that the U.S., in cooperation with its allies, apparently has serious sights on ultimately undermining key provisions in the ‘NATO Russia Founding Act’ of 1997, in which the alliance pledged not to deploy substantial combat forces on the territory of the countries mentioned in the permanent basis,” the ministry said in a statement on its website.
“We hope, however, that reason will prevail and that the situation in Europe will be able to keep from sliding to a new military confrontation that could have dangerous consequences.”
The Russian Foreign Ministry said the proposed move by the U.S. to station military equipment along the border was part of a propaganda plot to turn Europe against Moscow. “Washington says the planned measures are needed to ‘increase the confidence’ of European allies in the face of the ‘Russian threat,'” the ministry said. “In fact, capitals in both Washington and in Europe are aware that the ‘Russian threat’ is nothing more than a myth.”
China continues threatening Washington, telling it to “back off” as it builds islands in the disputed South China Sea. On Monday, the Chinese government openly mocked the G-7 meeting by calling its members, “the group of debtor nations.” Unfortunately, China is correct in its assessment as the G-7 nations are indeed laden in debt beyond comprehension.
As nations prepare for another possible world war, let’s hope that cooler heads prevail.
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