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Greece and the Greek Banks Get the Word "First" Etched on the Side of Their Domino
The Greek Tragedy is unfolding pretty much as I expected. Readers, at
least (if not Greek citizens) should be comforted to hear that things
are going as anticipated. From CNBC: Greek Bank Shares
Fall on EU Support Worries
Greek bank shares fell more than 4.0 percent on Thursday,
underperforming the broader Greek market, on worries Greece may be
forced to turn to the IMF to deal with its debt crisis for want of EU
aid."There are concerns over the lack of concrete EU support and because
Greece seems to be dragged towards the last resort, which is the
International Monetary Fund," Cyclos Securities analyst Constantinos
Vergos said.Shares in National Bank, which reports full-year results after the
market's close, were down 3.8 percent to 15.03 euros, withAlpha
Bank shedding 4.1 percent.
"The IMF scenario was off the table but now seems to be coming back,
raising question marks as to what this would entail," said analyst Nikos
Koskoletos at EFG Eurobank Securiries.
For those subscribers who didn't get to act on my Greek bank warning a
while back (see Banks
exposed to Central and Eastern Europe and Greek
Banking Fundamental Tear Sheet), don't fret. If I continue to be
correct, this is but the tip of the iceberg, subscribers see Greece
Public Finances Projections). The Greek PM is implicitly backing my
analysis: Papandreou Urges EU Emergency Plan After German Officials Suggest IMF Aid
March 18 (Bloomberg) -- Greek Prime Minister George
Papandreou set a one-week deadline for the European Union to craft a
financial aid mechanism for Greece, challenging Germany to give up its
doubts about a rescue package.Papandreou said he may turn to the International
Monetary Fund to overcome the debt crisis unless leaders agree to set
up
a lending facility at a summit March 25-26. The IMF option has already
been dismissed by European Central Bank President Jean-Claude Trichet and French President Nicolas
Sarkozy, who say it would show the EU can’t solve its own crises.
He's throwing the gauntlet down, and the gauntlet is made
out of US forged IMF metal. Greece is willing to diss the EU in order to
offer an ultimatum. Whose going to be the first to flinch?
“It’s an opportunity to make a decision next week
at the summit,” Papandreou told reporters in Brussels today. “This is
an
opportunity we should not miss. When you have that instrument in place,
that could be enough to tell the markets hands off, no speculation, let
this country do what it’s doing.”
After reviewing your austerity plan, it appears that you
are doing more speculation than the market!
Greece pinned its hopes on the Brussels summit as
German officials voiced qualms about an EU-led rescue, potentially
backtracking on a commitment hammered out by finance ministers just
three days ago. Greek bonds and the euro fell.Greece, which was brought to a standstill on March
11 by the second general strike this year, needs to raise about 10
billion euros ($14 billion) to refinance bonds that come due on April
20
and May 19. Papandreou said current markets rates are unsustainable.Brinkmanship
The yield on Greece’s 10-year government bond rose
12 basis points to 6.21 percent. The euro fell for a second day againstthe dollar, slipping as much as 0.7 percent to $1.3648. Credit- default
swaps on Greek sovereign debt rose 7 basis points to 295, the highest
in
a week, according to CMA DataVision prices.“There’s a good deal of brinkmanship involved to
get the EU and euro group members to come up with a more concrete
plan,”
said KlausBaader, co-chief European economist at Societe Generale in London.
“It’s also directed at capital Markets, to reassure markets that Greeceis not about to go into default.”
German Chancellor Angela
Merkel yesterday ruled out “overly hasty” aid pledges, shifting the
pressure back to Greece to fix Europe’s biggest budget deficit. Signs
of a split in the German government emerged after Finance Minister WolfgangSchaeuble endorsed the use of European channels at an EU meeting on
March 15....
The risk
premium on Greek 10-year bonds has more than doubled since the
beginning of November on concern about the country’s ability to bring
down last year’s deficit of gross domestic product, the largest in the
euro’s 11-year history.Papandreou’s government has passed three packages
of deficit reduction measures this year to try to convince the EU and
investors it is serious about bringing the deficit downto 8.7 percent of GDP.
I doubt this!
Soaring Greek borrowing costs threaten to erode the
fiscal gains made from forcing the country to make sacrifices including
wage and benefit cuts for public workers, Papandreou said.“We are under a basically IMF program, whether it’s
called that or not,” he told a European Parliament committee earlier.
“We don’t have on the other hand facilities that the IMF would give. Wedon’t want to be in a situation where we have the worst of the IMF if
you like and none of the advantages of the euro.”
Valid and honest point! For those of you who don't
subscribe, read up on my take on the Pan-European Sovereign Debt Crisis:
- The
Coming Pan-European Sovereign Debt Crisis
- introduces the crisis
and identified it as a pan-European problem, not a localized one. - What
Country is Next in the Coming Pan-European Sovereign Debt Crisis?
-
illustrates the potential for the domino effect - The
Pan-European Sovereign Debt Crisis: If I Were to Short Any Country,
- attempts to illustrate the highly
What Country Would That Be..
interdependent weaknesses in Europe's sovereign nations can effect eventhe perceived "stronger" nations.
- The
Coming Pan-European Soverign Debt Crisis, Pt 4: The Spread to Western
European Countries -
Depression is Already Here for Some Members of Europe, and It Just
Might Be Contagious! -
Beginning of the Endgame is Coming???
-
I
Think It's Confirmed, Greece Will Be the First Domino to Fall - Smoking
Swap Guns Are Beginning to Litter EuroLand, Sovereign Debt Buyer
Beware! - Financial
Contagion vs. Economic Contagion: Does the Market Underestimate the
Effects of the Latter? - "Greek
Crisis Is Over, Region Safe", Prodi Says - I say Liar, Liar, Pants on
Fire! - Germany
Finally Comes Out and Says, "We're Not Touching Greece" - Well, Sort
of...
- advertisements -
i am 100% german. And i can tell you that we are a STUBBORN bunch.
Germans arent going to bail them out. NEIN. I am proud of Merkel for having more balls than Bernanke.
Mark my words Reggie, Greece will get bailed out, and there will be no domino sovereign debt defaults in Europe, al least not in 2010. It is not in the interest of the US or Europe.
"there will be no domino sovereign debt defaults in Europe, at least not in 2010"
quite the caveat
Regarding your other posts on this thread, don't take this personally. I have mostly insitutional subscribers to my site, and we have pow wows to discuss the state of the world.
I have a failry unique viewpoint since I am totally objective and pretty much far removed. I explained in one such discussion that, as the research shows - this is not about Greece. This is about excessive spending globally, and in the Eurozone where the vast majority of countries don't have control over the mechanisms to counter the effects of the overspending, the results are bound to be disastrous.
Whether Greece gets bailed out or not, and by who is not nearly as important as the aftermath. Capital is missing! A bailout simply shifts remaining capital from one point to the other, it doesn't add capital to the system.
Germany and France are highly reliant on the PIIGS for export dollars so they don't wan them going down the tubes, but political resistance combined with the fact that they can't plug all of the capital holes in all of the leaky states poses a problem that won't be solved by a bailout. If they do attempt to bailout those states, they will need a bailout.
If the states don't get bailed out, then Germany and France will suffer from lower exports and banking contagion.
If the IMF comes in, you will get external capital injected (from the US), but 3 pounds of flesh will probably be extracted for every pound and a half of bailout Drachma cum Euro!
So, you see, it's just not as easy as "they will be bailed out, mark my word". The capital hole must be filled, not just covered with dirt from another hole next to it.
Exactly Reggie.
If one is bailed out then you have a line of
countries with the alm bowl. Is there enough
capital to throw at the alm-bowl contries
The other capital is political capital. Is there
even a slim chance that citizens of one country
will tighten the belts for the sake of an other
profligate country. I would say it is next to nothing.
Given the above the chances of greece being a
done deal is pipe dreaming for now..
Reggie,
Capital is missing but the Fed is going to try to reflate the bubble. They will do whatever it takes, even buy Greek bonds if they have to. I do agree that the IMF solution is the kiss of death for Greece. Here is a crazy idea: why doesn't Greece join Italy, Portugal, and Spain and develop solar farms with the assistance of the Chinese? It's better than bending over and getting Greeked by the IMF.
Leo,
Does the Fed printing more $US actually create any new capital or simply dilute the value of that which already exists?
Perhaps the Fed would be more successful if first the holes in the bubble were repaired, then the reflation efforts begun.
Solar Farms do not a Coupon Payment Make.
Renewable Finance, My Ass.
That would make more sense then the Desertec project; even if I am not sure about the Chinese.
http://en.wikipedia.org/wiki/Desertec
Exactly!
And widespread sovereign defaults is part of the grand plan. Sooner or later.
Yes, it is exactly the opposite: a Greek bailout will exacerbate the problems, and eliminate any real chance of responsible behavior by the UPiigs. No bailout and throwing Greece out of the EU monetary union would be far better for everyone except those Greeks who have been partying at the expense of other EU (German) workers.
Buddy, wake up, biggest PIG of all = USA!!!
"wake up, biggest PIG of all = USA!!!"
It is correct. The US time will be over very shortly. Using gimmicks & delays will do nothing for the USA, as long as the fundamental issues leading to and responsible for the present economic &political crisis are not addressed and solved.
It is absolutely incredible how incompetent and corrupt the US political elite and WallStreet oligarchy are. This time, the US propaganda machine will not be able to do any good for anybody.