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50 Shades of Greece
50 Shades of Greece
When it comes to the ongoing Greek question, I see a lot of people eagerly jump to conclusions, after the ‘debt deal’, that I don’t think are justified; certainly not yet. The overall conviction in the press seems to be that Syriza has given in on just about all fronts, and Germany and Dijsselbloem are the big winners.
But since that may well be the exact position Syriza wants ‘the other side’ to be in, where they think they have prevailed, one will have to try and think a few steps ahead before judging the situation. There’s far more grey area here than many pundits seem to assume, easily 50 shades of it.
If Greece wouldn’t have given Germany the idea that it was winning, Athens would have already come very close to an exit from the eurozone. The problem with that is that it is not part of the mandate Syriza has been given by Greek voters. Who have spoken out for an end to austerity, but within the existing euro framework.
Varoufakis et al. may long have concluded that such a set-up is simply not realistic, but they would still have to work up to a situation where, at some point, they can present this to the people. And that can only be done after they can convincingly show that Germany and Holland refuse to honor the democratically decided mandate Syriza brings to the table.
They would have to make absolutely sure that the other side gets the blame for the failed negotiations. They have to do that anyway, even if a Grexit is not their preferred outcome. They need to be able to prove that they bent over backwards and Germany still wouldn’t play ball.
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YANIS VAROUFAKIS: THE STRAW THAT BREAKS THE PONZI’S BACK?
YANIS VAROUFAKIS: THE STRAW THAT BREAKS THE PONZI’S BACK?
What do you do when your opponent won’t play by the rules? Worse, what do you do when your loan ‘partner’ (aka ‘debtor’) declares Calvinball, where the only rule is there are no rules, and proceeds to go off the deep end? The result, to put it mildly, is utter chaos, at least for those who expect the (self serving) rules to be adhered to. After all, the central bankers’ henchmen admonish, we’re all civilized here. So come back to the table and play nice. “Do it for the kids,” they plead – the epitome of hypocrisy since their stacked deck and tilted playing field does precisely the opposite.
There is an old and familiar saying in the financial world, no doubt a product of game theory brinkmanship, which speaks to the role reversal of power and leverage once the monster debtor owes such an astronomical amount they can no longer pay to service the note, let alone chip away at the principal. The supposedly weak suddenly inherit the Earth, or at least they wield a very long lever along with a fulcrum with which to move the central banker’s world.
It is most likely a safe bet to say those reading this article clearly see the unsustainability of the present day economic system. The vicious cycle of debt requiring ever more debt just to tread water leads nowhere else but into the abyss of inexorable socioeconomic crumble, if not all out chaos and collapse. At the very least we are facing war; the only real question is will it be worldwide and involve a nuclear exchange.
…click on the above link to read the rest of the article…
Memo To Obama: Butt Out Of The Greek Crisis—-You’ve Dispensed Enough Keynesian Poison At Home
Memo To Obama: Butt Out Of The Greek Crisis—-You’ve Dispensed Enough Keynesian Poison At Home
At the moment, Europe is struggling to pass an inflamed financial gallstone. The sooner that Greece is permitted to escape the debt clogged financial ducts fashioned by its Brussels paymasters, the sooner the entirety of Europe can begin the cure of debt liquidation and return to honest finance.
In their wooden-headed insistence that Greece remains obligated to 100% of its crushing $350 billion debt load, the Germans are, ironically, doing the work of the financial gods. By making it literally impossible for the new Greek government to abide by its voter mandate, Berlin is paving the way for “grexit” and is thereby setting-up the catalyst for the Euro’s demise. And with it, of course, the obliteration of the EU’s rotten regime of bank bailouts, central bank money printing and fiscal policy anesthesia.
Hallelujah! Europe and the world desperately need a big, bloody sovereign default, and there is no more worthy case than Greece. As Finance Minister Varoufakis so inconveniently stated last week, Greece is a “bankrupt state” and has been since the crisis first erupted back in 2010.
Accordingly, the Brussels bailout transfer of that impaired debt from the banks and investors, which had so richly earned the right to experience deep losses owing to their lack of prudence, to EU taxpayers was a stupendous act of economic and political folly. It paved the way for the very evil that the fiscally resolute Germans profess to fear the most. Namely, central bank financing of state deficits and the unleashing of politicians to thereby ultimately bankrupt it.
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UK Begins Preparations For Grexit
UK Begins Preparations For Grexit
As recently as two years ago, even the merest hint that any entity was preparing for what then was unthinkable, namely the Greek exit from the Eurozone, was enough to get one burned at the stake. After all, recall what happened when none other than the head of the ECB lied on the record to Zero Hedge, saying there is no Plan B for an ex-Greece Eurozone (even if he was technically right: Europe defined it as “Plan Z”).
Now, supposedly just because the ECB started monetizing about 100% of German gross Bund issuance two weeks ago (and monetizing debt all across the Eurozone for as long as said Eurozone exists: at this rate it may not be too long) “things are different“, and no longer is it taboo to either incite bank runs in Greece (in fact it is encouraged as both the ECB, Germany and S&P have tried to do in the past week), but outright discussions about preparation for a Grexit are a daily occurrence.
The U.K. government is stepping up contingency planning to prepare for a possible Greek exit from the eurozone and the market instability such a move would create, U.K. Treasury chief George Osborne said on Sunday.A spokeswoman for the Treasury declined comment on the details of the contingency planning.
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Greece: Greenspan predicts exit from euro inevitable
Greece: Greenspan predicts exit from euro inevitable
The former head of the US central bank, Alan Greenspan, has predicted that Greece will have to leave the eurozone.
He told the BBC he could not see who would be willing to put up more loans to bolster Greece’s struggling economy.
Greece wants to re-negotiate its bailout, but Mr Greenspan said “I don’t think it will be resolved without Greece leaving the eurozone”.
Earlier, UK Chancellor George Osborne said a Greek exit would cause “deep ructions” for Britain.
Mr Greenspan, chairman of the Federal Reserve from 1987 to 2006, said: “I believe [Greece] will eventually leave. I don’t think it helps them or the rest of the eurozone – it is just a matter of time before everyone recognises that parting is the best strategy.
“The problem is that there there is no way that I can conceive of the euro of continuing, unless and until all of the members of eurozone become politically integrated – actually even just fiscally integrated won’t do it.”
Following the election in Greece of the anti-austerity Syriza party, Greek ministers have been touring European capitals trying to drum up support for a re-negotiation of its bailout terms.
However, there appears little willingness in Berlin, or at the European Central Bank, to alter the terms of its €240bn (£182bn) bailout.
Historically speaking, Germany a bigger deadbeat than Greece
Germany’s debt defaults after the two world wars dwarfs anything Greece has done, economists say
That warning from German Chancellor Angela Merkel and others is overwhelmingly backed by a German public outraged by the contrast between Greece’s spendthrift ways, with its penchant for treating tax bills as junk mail, and their own obsession with a tight hold on the purse strings, both personal and as a country.
What the Germans are conveniently ignoring is their own record as one of history’s biggest deadbeats.
In the 1920s, according to a prominent German economic historian, Germany was “like Greece on steroids.” Albrecht Ritschl, a professor at the London School of economics and an adviser to the German ministry of economics, says that Germany’s current prosperity was built on borrowed — mostly American — money, much of it written off.
It all started in 1918 when Germany lost the First World War. In the peace settlement that followed, the victors exacted payment of 269 billion marks or 96,000 tonnes of gold.
…click on the above link to read the rest of the article…
The Lesson of Greece: Only Collapse Makes Real Change Possible
The Lesson of Greece: Only Collapse Makes Real Change Possible
When the illusion that the Status Quo can fulfill all its promises to everybody dies, the Status Quo starts the terminal slide to effective collapse.
Of the many lessons we can learn from Greece’s difficult path to rejection of debt-serfdom, the most important is perhaps the most obvious: no real change is possible until the Status Quo can no longer fulfill its promises, i.e. it effectively collapses.
The collapse of the Status Quo has two distinct features: the process is highly variable, and the process affects the social classes in different ways.
The process of collapse is neither sudden nor smooth. Things do not necessarily cease to function overnight; rather, the decline to effective collapseoperates much like energy states in physics: systems decay and then drop to a lower energy level, where they are stable until further decay causes the next drop to an even lower level.
Pension payments provide a ready example. The pension payment is reduced, and the recipient tightens his/her belt and gets by. The next reduction (either outright or via inflation) forces drastic changes in consumption, and subsequent reductions reduce the pension to a supplement that cannot possibly support a retiree, much less their family.
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Have A Little Faith In Blotto
Have A Little Faith In Blotto
What, Greece again? Sorry!! But I see a lot of things flash by that make me want to say something. Today it’s the alleged 180 that Syriza made on debt reduction, before that it was their alleged kow-towing to Brussels on Russia sanctions, and tomorrow it’ll be something else again. It’s all media formatted bite-size and pre-chewed chunks, but the Greece-Troika stand-off is anything but.
I have a ton and a half of respect for David Stockman, who earlier this week wrote: ‘Greek Finance Minister Yanis Varoufakis has the weight of history on his shoulders’, but I’m sorry, I can’t agree with that, Dave. Yanis, who I only know through the occasional recent email exchange, if he has any weight on his shoulders, it’s that of the Greek people. And it’s the weight of their future, not their history.
Stockman also hints that Greece should leave the euro, and perhaps that is true, I would certainly tend to agree, but that doesn’t mean, even if Syriza agrees too, that today is the day they should go public with it. A Grexit may even be their endgame, but focusing on it now could well backfire. After all, a Grexit could come in many different shapes.
I have confidence that Varoufakis and his people have thought this through, and thoroughly, and that they have a – longer term – strategy that not many people will be able to comprehend. A quality all good strategies have. And the other side has no such strategy: they have never entertained the idea that they could lose, so why strategize? Goliath never figured he needed one either.
…click on the above link to read the rest of the article…
ECB Threatens Athens With Bank Funding Cutoff If No Deal In One Month: February 28 Is Now D-Day For Greece
ECB Threatens Athens With Bank Funding Cutoff If No Deal In One Month: February 28 Is Now D-Day For Greece
As Deutsche Bank’s George Saravelos politely puts it, “Developments since the Greek election on Sunday have moved very fast.” And indeed, so far the new Tsipras cabinet, and here we focus on the words and deeds of the new finance minister Yanis Varoufakis, has shown that the market’s greatest hope – that the status quo in Greece will continue – has been crushed into a pulp (and so have Greek stock and bond prices) especially following yesterday’s most recent comments by the finmin in which he said that Greece “does not want the $7 billion” from the Troika agreement and that it wants to “rethink the whole program”, culminating with an epic exchange with Eurogroup chief Jeroen Dijsselbloem in which Greece made it clear that the “constructive talks” are over.
And suddenly the Eurozone is stunned, because what had until now been its greatest carrot when it comes to dealing with Greece, has become completely useless when the impoverished, insolvent nation itself says it no longer needs a bailout, seemingly blissfully unaware of the consequences.
So earlier today the ECB’s Erikki Liikanen, tired of pleasantries and dealing with what to Europe is a completely incomprehensible and illogical stance, one which is essentially a massive defection by Greece in the European “prisoner’s dilemma”, and which while leading to a Greek financial collapse and Grexit – both prerequisites to a subsequent Greek economic recovery unburdened by the shackles of the Euro – would also unleash a European depression, came out and directly threatened Greece that it now has 1 month until the end of February to reach a deal with the Troika, or else the ECB would cut off lending to Greek banks, in the process destroying the otherwise insolvent Greek banking sector.
…click on the above link to read the rest of the article…
Citi, Goldman, ICAP And Others Preparing For Grexit, Again
Citi, Goldman, ICAP And Others Preparing For Grexit, Again
Every couple of years the same identical European drill repeats itself: 1) Greece makes loud noises as it approaches an election, 2) Europe says it couldn’t care what the outcome is and that Greece should stay in the Euro but if it exits it won’t be a disaster, 3) the ECB reminds everyone of the lie that it is not preparing for Plan B (it is) despite holding on to over €100 billion in “credibility-crushing” Greek bonds, 4) panicking Greek banks say the deposit outflow situation is completely under control (adding that “The Bank of Greece along with the European Central Bank are monitoring closely the developments and intervene whenever this is necessary,” which is code word for far more familiar, five-letter word), and meanwhile 5) all non-Greek banks quietly start preparing for the worst case scenario.
So far this time around, we had everything but step “5”. We do now.
According to the WSJ, “banks and other financial institutions in Europe are stress-testing their internal systems and dusting off two-year-old contingency plans for the possibility Greece could leave the region’s monetary union after a key election later this month. Among the firms running through drills are Citigroup Inc., Goldman Sachs Group Inc. and brokerage ICAP PLC, according to people familiar with the matter.”
And soon enough Bloomberg, because who can possibly forget the mysterious appearance of the “XGD Crncy” in June of 2012, only to disappear moments later after a few hurried phone calls from Frankfurt…
…click on the above link to read the rest of the article…
