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Bundesbank Tells Germany Greece Will Need More Aid
Just like the Hekla eruption caused the Dow to surge in complete disregard of cause and event, or, heaven forbid, logic, so this next news should finally force us to start selling the Dow 36,000 hats. Bloomberg reports that Bundesbank President Axel Weber has told German lawmakers that the €30 billion rescue package promised by the EU and the IMF will not be enough. Just how big will the shortfall be? Well, the recent expansion in the IMF's $50 billion rescue facility to $560 billion should provide some color on the matter. It gets worse: according to Bloomberg, "Weber, citing television footage of Greek demonstrators, expressed concern that sections of the Greek population either don’t care or fail to appreciate the seriousness of the situation their debt-laden country faces, the two people said on condition of anonymity because the briefing in Berlin today was held in private." How quaint - did anyone tell the Greek bureaucrats to look up the definition of the term "austerity" in this whole spectacle? As always, look for the American taxpayers to end up footing an ever greater portion of the Greek bailout bill. That's fine - they won't care: they have the brand new double double KFC burger, a new never to be read book downloaded on the iPad, and the GS witchhunt to keep them distracted, even as their taxes prevent the firesale of Santorini.
The presentation to lawmakers from the Free Democratic Party, a partner in Chancellor Angela Merkel’s coalition, underscores concern over the likely cost of a bailout to euro- area members. Bundesbank spokeswoman Susanne Kreutzer declined to comment on Weber’s presentation.
“We want as much restraint as possible on this issue” of aid for Greece “because these decisions lie with the Greeks and the Greeks have to take on their responsibility,” Birgit Homburger, the FDP’s parliamentary head, told reporters in Berlin today after the meeting. Greek government commitments “made as part of this deficit procedure have to be implemented.”
Greek bonds fell today, pushing yields to the highest relative to German bunds since 1998, as debt-crisis talks with the European Central Bank, European Commission and International Monetary Fund were delayed. Greek 10-year bonds yielded 7.64 percent, 456 basis points more than 10-year bunds. The benchmark stock index in Athens slumped 2.6 percent.
The circus is now complete. At this point free fall is essentially guaranteed. We strongly urge anyone booking trips to Greece this summer to reconsider.
Papandreou’s decision to call for talks this week with officials from the EU and IMF, which has promised another 15 billion euros, prompted a reaction of “rage” among 48 percent of Greeks polled for yesterday’s Eleftheros Typos newspaper. Nine of 10 people surveyed said they expected the IMF to insist on more austerity, while unions threatened new strikes over the prospect of more budget cuts.
“If public opposition to further austerity measures hardens, the Greek government could find it even tougher to put the public finances back on a sustainable footing,” Colin Ellis, an economist at Daiwa Capital Markets Europe Ltd. in London, wrote in an e-mail to investors.
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Jeeez. Original numbers are close enough for Government Work. Picky picky.
BTW, has the Bundesbank told Greece about this yet?
That's a remarkable statement. "They don't care or fail to appreciate the seriousness of the situtation".
I guess the demonstrators were holding up signs that said "DOW 12,000".
That's because Greece has a fairly large shadow economy (no one trusts the government) and there is a pretty huge disconnect between the people and the state. Theoretically, the Greek Gov could default and life would go on Greece without that much change.
"....even as their taxes prevent the firesale of Santorini."
Is it not, by now, abundantly clear that the US taxpayer will not, because quite bluntly they cannot, be required to pay off the debt being run up by Ben and Timmay? If any money is to go to Greece via the IMF, it'll come out of the same Heidelberg that most of the rest of this year's Federal spending is coming from. When Print'n'spend doesn't work any more, the system will fall and the whole thing will be reset.
As always, look for the American taxpayers to end up footing an ever greater portion of the Greek bailout bill…
GEORGE WILL: Value-added tax a dandy option, if it replaces income taxes | Apr 19, 2010
… A VAT will be rationalized as necessary to restore fiscal equilibrium. But without ending the income tax, a VAT would be just a gargantuan instrument for further subjugating Americans to government.
Believing a crisis to be a useful thing, the Obama administration — which understands that, for liberalism, worse is better — deliberately aggravated the fiscal shambles that the Great Recession accelerated. During the downturn, federal revenues plunged and spending soared. And as will happen for two decades, 10,000 more baby boomers a day join the recipients of Medicare and Social Security, two programs with unfunded liabilities of nearly $107 trillion.
In the context of this concatenation of troubles, the administration’s highest priority was to put an enormous new health care entitlement on the welfare state’s rickety scaffolding. Why? Because the liberals’ lunge to maximize government’s growth depends on quickly creating a crisis that can be called a threat to the entitlement menu, and to the currency as a store of value. Then the public can be panicked into adding a VAT to the existing menu of taxes.
A VAT is collected on value added at stages during the process of production, but most of its burden is borne by consumers. They file no VAT returns, so its stealthiness delights the political class, which can increase it in small, barely noticed increments, with every percentage point yielding another $100 billion. …
Corporations do not pay taxes; they collect them, passing the burden to consumers as a cost of production. …
Because the income tax is not broadly based, it radiates moral hazard: Its incentives are for perverse behavior. The top 1 percent of earners provide 40 percent of that tax’s receipts; the top 5 percent provide 61 percent; the bottom 50 percent provide 3 percent. So the tax makes a substantial majority complacent about government’s growth. …
Because a VAT potentially taxes everything, it would be riddled with exemptions. That is because it maximizes the political class’s opportunities for showing favoritism — by, for example, exempting certain “green” goods. …
Money is time made tangible — the time invested in the earning of it. Taxation is the confiscation of the earner’s time. Although some taxation is necessary, all taxation diminishes freedom. Adding a VAT without subtracting the income tax would constrict Americans’ freedom much more than the health care legislation does.
Because the 16th Amendment will not be repealed, adoption of a VAT would proclaim the impossibility of serious spending reductions, and hence would be the obituary for the Founding Fathers’ vision of limited government. (emphasis mine)
http://www.registerguard.com/csp/cms/sites/web/opinion/24694560-47/vat-t...
Just put a do not resuscitate sign at the border and go home. Leave the patient to pass in peace. No more endotracheal intubation and defibrillation. The Greeks do not want GrandPa alive any longer. Eat your losses and go home.
A view from Europe: To add that prior to the
'Brussels-agreements' the Bundesbank had been
'secretly'at work on a contingency plan with those numbers:
50 billion euros, which will be received with
great warmth in Germany, already expected to
fork up 8,1 billion in the first estimates.
Also to keep in mind, the group of German
economits has thrown in the complaint with the
German Constitutional Court in Karlsruhe, another
obstacle to the bail-out, if ruled unconstitutional
and in break of the rules of the Maastricht and Lisbon
treaties..The European telenovela runs its course...
Shorting Dow Jones @ 11.000 point. It will break down bad.
http://midasfinancialmarkets.blogspot.com/2010/04/dow-jones-on-verge-of-...
Have to disagree. It's been holding 11,000 support through some rough media/GS reporting, etc. I think it runs from here. Too many people looking for a correction tells me it won't happen for some time.
Every other post on ZH is about Goldman scheming, but you refer to the SEC's investigation as a "witch hunt".
Make up your mind.
Even if Goldman is scheming it could not be the cause for all this financial mess. They sold iffy CDO's, OK charge'm, but someone issued the failed mortgage papers to start with...
No argument from me. There's corruption up and down the chain, but that doesn't mean it's a "witch hunt" to focus on one criminal link at a time.
In this case GS is a small criminal [as much as it pains me to say it].
They did a cocaine-talcum mix and got caught selling it in a low lit street, so to speak, and everybody goes "Yes, we busted'm! It's not pure!"... Doesn't mean they will catch the bigger ones or, maybe, this was sponsored by the bigger ones as to reduce competition.
Greek government saves €42 million a day when civil servants go on strike.
So a Greek austerity measure is when everybody heads for the beach?
Greek air traffic controllers are planning to do their part on Thursday.
The French and Italians forced Germany into the EU bailout deal. Now Germany is serving the political football back into their court. Who said the EU wasn't a political union? I assume the Netherlands et al are the line judges and field umpires on this matter.
The Greeks really need to get their heads screwed on straight. They are losing friends fast. France and Italy will be forced to step away from supporting Greece if they keep this up.
France and Portugal CDS spreads up the roof again ... fireworks in the making
Don't for one minute think that VAT will replace income tax. It will be in addition to income tax.
That's the way it is done in Canada. We get to pay a tax on tax.
Brooklynlou, I love this line:
That's because Greece has a fairly large shadow economy (no one trusts the government) and there is a pretty huge disconnect between the people and the state.
Could we replace "Greece" with the "USA" within five years? Especially when crippling taxes force people into a shadow economy.
Fortunately for the people of Greece, the shadow economies (plural) are its main moneymakers, i.e. tourism and olive oil. As long as people visit Greece, drop a few bucks in the cafes and hotels, the people will make a living. The only way the EU could ever hurt / threaten Greece is to blockade the place. So unless the French park their fleet in the Aegean, the Greeks couldn't care less.
Let me give you a story so you understand how things work in Greece. This is how most families get their cooking oil.
Now the way olive oil works is anything above .7 acidity is considered extra virgin. So the olive oil companies mix a little bit of good oil with a lot of crap oil to hit that magic number.
If you grow olives and want to sell the oil, a merchant will give you 1.1 euro a liter for extra virgin, 1 euro for virgin and .9 euro for anything else. Thats what the big Italian companies are paying. Because there so little difference in price offered between good and bad oil, there is no incentive for small farmers to sell the good olive oil to the olive oil companies (and then be taxed on the sale). So they'll usually just sell their crap to the merchants.
So in Greece, if you want olive oil, you call up somebody in the village your family came from and put an order in. Let say 70 liters which should last you a year. You'll pay 2 to 3 euro a liter and next time some cabbie or trucker from the village is heading your way, they'll drop it off or you can go pick it up. You don't buy oil from a store unless you really have to.
The farmer is happy because he made two or three times what the merchants would offer him. Plus the less he sells on the books, the more EU subsidies he makes. The buyer is happy because they got much better olive oil than what they could buy at the store for about the same price. The cabbie is happy because he made a few bucks acting as a delivery service.
Welcome to Greece anything you want is a phone call away, delivered to your door, from your family and social network
Sounds like the Greek people are running their lives better than their government is running the country.
(Or than ours is running this one.)
Hmm, if only we could prevent that shadow economy defunding our beloved government with a cashless society based on implantable microchips, without which one can't buy or sell.
http://www.youtube.com/watch?v=iyAVm5G1Cso
Tax Reform card:
"In other words, 'tax increase.' "
http://cid-9f33f6e14912f497.skydrive.live.com/self.aspx/Illuminati%20NWO%20card%20game/taxreform.png
Don't try to pay those taxes, or for anything else, in gold/silver; or else.
That's a key issue with not just America, but around the globe (in particular, younger gens) ... when I speak to others (even people within the finance industry) about current events, they labelled me as a doomsayer or "you are too negative" ... shit
In today's hive mentality group think world, anyone speaking contrary to the hive mind is simply wrong, wrong, wrong.
We need to understand that within the deeply conditioned mind, when ever that mind speaks, hears or even thinks information that is consistent with the group consensus, powerful pain killing and mood elevating chemicals are released into the body, which act as a positive reinforcement to remain within the group think meme.
The hive is chemically addicted to the hive meme. This is why the reaction to you is often very emotional and visceral and why any information you may present is rejected outright and without review or even a glance. If it doesn't give them a fix, it ain't getting into the mind. It's that simple.
The withdrawal from this addiction is more difficult than a conventional withdrawal from drugs or alcohol because the chemicals created by the body are far more powerful than anything man made or man refined. These people are hooked on the good shit and they control the injections. Any wonder their finger doesn't leave the button?
i'll take santorini. oh wait, i just bought .00000000001% via my taxes. who do i talk to about taking the rest?