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Goldman's Erik Nielsen Filters Out The Greek Background Noise

Tyler Durden's picture




 

Goldman's Chief European strategist is starting to sound less and less confident that all shall be well. The same can not be said for his ebullient (and still employed) colleague Jim O'Neill, whose answer to everything is "BRIC." Anyway, here are Erik Nielsen's latest (and increasingly more skeptical) summary views on the Greek bailout. By the way, the IMF shotgun approach to "helping" any and every member country is to peg its currency to something and establishing a currency board. The IMF simply does not know how to do anything else. So how the hell can the IMF operate in the context of a monetary union?

You’ll hear a lot more about this during the next week or so:

Following the news that Germany, the Netherlands and Finland have put the IMF back on the table as a possible source of financing for Greece – and PM Papandreou’s statement yesterday that the European summit on Thursday-Friday is the deadline for Europe to come up with help that will immediately reduce Greece’s borrowing costs, otherwise he’ll go to the IMF – has significantly raised the temperature inside the Euro-zone.  France and others remain adamantly against involving the IMF, and the IMF themselves said yesterday that they have not been approached by Greece, but that they stand ready to help, if asked (as they have to say about any member country.)

My take continues to be that the Europeans will not come up with concrete help next week, but will try once more the trick of telling the market that they stand behind Greece while telling their own taxpayers that they are not on the line.  And I doubt that it’ll help a lot, but maybe a little.  Greece may then be able to borrow a tad more, but its going to be tough to get the entire EUR10bn or so that they need before May.  If they don’t fill the hole, then I continue to think that Europe will help.  But the probability of the IMF coming in has clearly increased.  Incidentally, the IMF charges about 1.25% on its loans these days!  (and my view is that that’s where Greece should go.)

Stay tuned, I’ll keep you posted, but noise, conflicting statements and a dismal display of lack of unity will be the overriding picture out of the Euro-zone at least for the next week.

 

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Fri, 03/19/2010 - 17:46 | 270557 Careless Whisper
Careless Whisper's picture

we. don't. care.

Sat, 03/20/2010 - 01:22 | 270769 sporb
sporb's picture

Foolish, that.

Fri, 03/19/2010 - 17:54 | 270561 SilverIsKing
SilverIsKing's picture

Now back to the stability of the U.S.A.

3 more banks KO'ed - Cost to DIF

Advanta Bank Corp, Draper, UT - $635.6 million

Century Security Bank, Duluth, GA - $29.9 million

American National Bank, Parma, OH - $17.1 million

Today's total (so far) - $682.6 million

Fri, 03/19/2010 - 18:25 | 270586 aus_punter
aus_punter's picture

Don't you think you could have found a more appropriate place for your post - it isn't overly relevant.  

Fri, 03/19/2010 - 20:50 | 270659 SilverIsKing
SilverIsKing's picture

You're right. I found the perfect place. Now drop your pants and bend over.

Fri, 03/19/2010 - 22:08 | 270703 Paladin en passant
Paladin en passant's picture

That was I who flagged you.  The rest of us are adults here.  Why don't you find another playground to display your embarrassing immaturity in.

Fri, 03/19/2010 - 23:17 | 270728 SilverIsKing
SilverIsKing's picture

Screw you, you little pissant.  What I posted is relevant and since there's no specific thread regarding bank failures, it was more than appropriate to post in a current thread.  Who the fuck made him (and you) judge and jury as to what is appropriate?  What he should have done is STFU and ignored it if he didn't think it was relevant.  There are many posts that stray from the subject matter and no one complains.  Your lover went out of his way to bitch about my post regarding bank failures?  Something wrong with him...and you.

Have a nice weekend.

xoxo

Sat, 03/20/2010 - 03:07 | 270796 Hephasteus
Hephasteus's picture

Wow you got mega junked. I guess things aren't going so well back at somebodies ranch. LOL

Sat, 03/20/2010 - 12:25 | 270910 SilverIsKing
SilverIsKing's picture

Question for you Heph.  Did my post about the bank failures warrant any criticism?

Sun, 03/21/2010 - 15:45 | 271537 defender
defender's picture

I am not Heph, but I would say no.  An OT at the beginning of the post might have mollified them, but I doubt it.  It seems that there are quite a few people on this site that are getting pissy these days, and it isn't helping anyone.  If we don't have different views displayed here, then we will only be another group think experiment, just like slashdot has become.

Your post shows that every person in america just got taxed $2 (cost to DIF / 330M people).  Thanks for keeping us updated.

Sat, 03/20/2010 - 16:00 | 270981 Paladin en passant
Paladin en passant's picture

I appreciate you proving my point about your embarrassing lack of maturity. 

Fri, 03/19/2010 - 18:22 | 270582 Hephasteus
Hephasteus's picture

"The IMF simply does not know how to do anything else. So how the hell can the IMF operate in the context of a monetary union?"

Same way the fed operates on the states but without the taxation. Simply print money and give it to the government and make the states pay for it by inflation. Oh and keep a monopoly on money laundering drug money and currency counterfeiting. They'll give greece money as soon as they figure out if the government can be cruel enough to rip the money out of it's citizens hides.

Fri, 03/19/2010 - 18:54 | 270608 Fritz
Fritz's picture

Another example of how bailouts have become the norm. The US has exported moral hazard to the world.

Somebody please show Greece how to download the "Sovereign Default For Dummies" book to their Kindle.

 

Fri, 03/19/2010 - 19:26 | 270632 jedwards
jedwards's picture

Did the Euro hit GS's stop of 1.35 yet?  I wonder how pissy their clients are?

Sat, 03/20/2010 - 20:33 | 271063 tenaciousj
tenaciousj's picture

The low was 1.3505 :)

Fri, 03/19/2010 - 19:27 | 270633 Rainman
Rainman's picture

EuroZone doesn't want Greece running down the credit available line at the IMF. Plenty of others will be anxious to get in the cheap money line. It's not unlike the US States....if Uncle Slam does a low interest backstop deal for one State, they'll all be rushing the door.

That said, it will be the IMF to the rescue for sure. A Greek default would be the first dominoe to tip over into a bunch of other sovereign defaults. TBTF Euro-style......coming right up.

Fri, 03/19/2010 - 22:06 | 270706 yabs
yabs's picture

so is anyone allowed to default these days?
I likie that, the IMF stands by ready to help
hmm I'm sure they are as I am sure that is the "plan" all along to have most of the world on an IMF loan
quite easy to get a world government then

Fri, 03/19/2010 - 22:08 | 270708 deadhead
deadhead's picture

i think the governors of Cali, Illinois, New York, Michigan (along with Detroit's mayor) and _______________________ (add your own favorite state or municipality) should be hitting up the IMF before they give all the scootch to greece, the other pigs, eastern europe........

Sat, 03/20/2010 - 01:24 | 270770 sporb
sporb's picture

Nice. The International Fund will bail out USA jursidictions.

 

Where did you go to school?

Sat, 03/20/2010 - 03:25 | 270800 M.G. in Progress
M.G. in Progress's picture

Let Greece default and German banks take a haircut and let market rules to play. Then of course if nobody wants to help Greece, it should ask help to IMF where EU is a big contributor.

Sat, 03/20/2010 - 07:42 | 270833 Grand Supercycle
Grand Supercycle's picture

EURO has now resumed it's downtrend on the daily chart. Weekly chart remains bearish.

Opposite for USD index of course.

Equity markets can't ignore this for long.

Weekly DOW / SP500 charts have been giving bearish warnings for months now.

http://www.zerohedge.com/forum/latest-market-outlook-0

Sat, 03/20/2010 - 12:48 | 270915 omi
omi's picture

Traditionally, equities moving higher are correlated with increase in USD strength, and it makes sense. You need USD to buy equities denominated in USD. EUR/USD strength leading to market melting up is rather an anomaly.

Sat, 03/20/2010 - 12:58 | 270920 Mercury
Mercury's picture

Traditionally.

Now more and more S&P 500 earnings come from international sales/services. Those sales/services that are denominated in Euros are worth more to those S&P 500 companies when the dollar is weaker vs. The Euro.

Sat, 03/20/2010 - 12:46 | 270913 37FullHedge
37FullHedge's picture

For me the Euro is very over valued and needs to go to par with the US$ Regarding this IMF proposal its political, Clearly the German tax payers dont want to backstop Greece and others and rightly so, The IMF option isnt good but political wise its easier. Maybe a bit of both EU IMF joint bailout may come to pass.

Whatever happens it needs sorting and more importantly correctly, The good news is the ECB isnt rushing into anything it may regret later.  

Sat, 03/20/2010 - 14:21 | 270951 ignorant
ignorant's picture
Last couple days G-Pap changed course also media supporting him. IMF no longer on the table although lot of people  wud like such a situation - an excuse for earth and fire be mixed and see some corrupted politicians get hanged . Probably G-Pap realized is getting into people trouble waters. IMF,GS,Wall str racketeers write off.
Sat, 03/20/2010 - 18:37 | 271035 Yardfarmer
Yardfarmer's picture

The role of the SDR as "supplementary reserve asset" in the context of the increasingly volatile and unstable currency exchange rates assumes a growing and more significant importance in the internal affairs of nations via the preponderance of sovereign debt. The IMF, in like manner, will grow to assume its long expected and intended status as the ultimate arbiter and repository of world currencies in the establishment of the new world reserve currency. The inevitable addition of the Chinese yuan to the present baskets of currencies will signify the attainment of the long held IMF aim of supplanting the US$ as the ultimate unit of account.

A polar shift in the world economic paradigm has been underway since the inception of the IMF at the watershed Bretton-Woods Agreement which paved the way for the establishment of Keynesian economic modalities in the emerging trilateral sphere of post war "economic cooperation". The creation of the SDR in 1969, anticipating the establishment of free floating rates of exchange, and the final abandonment of the gold standard, itself laid the groundwork for the supplanting of the provisional aims of Bretton-Woods in favor of the emerging petro-dollar economies based on relative consumption of oil resources.

The successive exogenous shocks, attendant upon the new oil economy, to global national economies and particularly newly emerging and oil importing third world nations necessitated the establishment of a successive adaptation of IMF lending instruments to accommodate increasing borrowing from commercial banks at increasing rates of interest. For this purpose, SDR allocated holdings involving loans paid and charged to IMF member nations on a portion of requisite quota subscriptions have been enabled. 

In the context of of the potential claim by the IMF via the SDR on "freely usable currencies" of its members, the competition for export markets by means of devaluation of national currencies, and the raising of barriers to foreign trade are in the final stages of elimination in favor of the global entity envisioned by IMF world governance. The suggestion that Greece, or for that matter any other IMF member nation would petition the fund for stand by arrangements and other forms of financial support incumbent upon structural and enhanced structural adjustments is and has been a given for the past several decades. 

 

Sat, 03/20/2010 - 19:53 | 271053 knukles
knukles's picture

Interesting about IMF and Greece...

Typical solution; peg currency and appoint a monetary board.

Essentially already done that..."Drachma" pegged to Euro...that's why the problem, and have a currency board, the ECB.

Oh well, two muddles are better than one, I guess.

Most interesting of all this mess will be the resolution of power within EU of Germany and France 

Sun, 03/21/2010 - 00:57 | 271182 chindit13
chindit13's picture

SilverisKing, who got jammed for posting about US bank failures on this thread, may have actually been spot on.

We let Ask Me if I Care Banks fail every Friday in the US, while banks whose balance sheets are not any better (BAC, WFC, HBAN) get bailed out.

In the end, this is the analogous approach Europe will take to its failed members.  Greece is the equivalent of a rural State of Georgia bank, overly represented on the weekly lists of the dearly departed, who now pass almost unnoticed into Valhalla, save for a one-line FDIC eulogy.  Spain, on the other hand, is at least STI, so they can expect help.  Italy is BAC; help is guaranteed.  Portugal is on the cusp, kind of like a Downey Savings and Loan.

Greece will be let go, the foreign banks exposed to them covered (so as to curry favor for the upcoming Spain bailout), and the market will eventually ho hum Greece's demise and move on, just as we now barely note Friday Night Massacres in America.  Germans will still go topless on the beaches of Santorini.

Dust off those drachmas and coin of the realm from Alexander.  Herodotus...tell us again about the Phoenix!  The drach is bach.

Wed, 04/14/2010 - 08:10 | 299715 mark456
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