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Greece Update

Tyler Durden's picture




 

Just as expected:

  • EU'S JUNCKER SAYS `STUPID' TO TALK OF GREECE EURO EXIT
  • EU'S JUNCKER SAYS `NO WAY' GREECE WILL LEAVE EURO AREA
  • EU MINISTERS TO DISCUSS NEW `ADJUSTMENT PROGRAM' FOR GREECE

But yes, the EURUSD will open at 1.43 on Monday, not 1.45. FX ping pong game mission accomplished.

 

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Fri, 05/06/2011 - 17:48 | 1249365 Spitzer
Spitzer's picture

What is wrong with the Euro is what is right with it. Of course Greece aint leaving the fuckin Euro zone. It joined it for price stability.

And as far as deflationists are concerned, are they buying Euro's with both hands because "there is debt distruction, reverse of dilution, blah blah blah" in the Euro zone ???

 

Fri, 05/06/2011 - 18:00 | 1249423 tmosley
tmosley's picture

Faith placed in ANY fiat currency is misplaced faith.

Fri, 05/06/2011 - 18:05 | 1249454 Spitzer
Spitzer's picture

Either way, the Euro is a better currency then the dollar. Consensus is  the opposite of course which means the opposite is true.

"The dollar is the least worst fiat"....I mean, I have never seen more investors agree on one thing then that. Even Keynes and Austrians usually agree on that which means it is wrong.

Fri, 05/06/2011 - 20:02 | 1249814 Lord Welligton
Lord Welligton's picture

Either way, the Euro is a better currency then the dollar.

You are either an idiot or a lying piece of shit.

Take your pick.

Fri, 05/06/2011 - 20:34 | 1249903 Spitzer
Spitzer's picture

Thanks for proving my point, jackass.

Fri, 05/06/2011 - 22:21 | 1250191 Doña K
Doña K's picture

Both currencies are fiat. They just compete on which one is the worst on a daily basis.

MESSAGE TO GREEKS:

Get the vaseline ready and tell the banksters to....

Get your dignity back. Default, default, default.

Roll out the Drachma and flood the system. Forgive all, or most debt to people, get off the people's backs, freeze government hiring and you will thrive. Be the next Iceland 

Fri, 05/06/2011 - 22:47 | 1250250 Manthong
Manthong's picture

They use olive oil over there.

Sat, 05/07/2011 - 11:00 | 1250685 Urban Redneck
Urban Redneck's picture

Greeks have a debt addiction, so they only have three options going forward-

1) kiss,make, up and back in the middle of the ECB/IMF menage-a-trois 

2) success in quitting cold turkey- and enduring lots of shakes and vomiting for years to come

3) failure in quitting cold turkey- which results in a gangbang by a vindictive mongol horde of rampaging bankers who won't be offering vaseline or olive oil to reduce the pain

Sat, 05/07/2011 - 10:55 | 1250834 ElvisDog
ElvisDog's picture

You should run for Greek parliament. If you ran on the platform based on your last three sentences, you would win.

Sat, 05/07/2011 - 00:59 | 1250441 boiltherich
boiltherich's picture

Arg I am so tired of the fiat currency flogging I see every day at every website where goldbugs congregate to worship yellow metal.  It is a big world with a whole lot going on, and so very few people into gold have any education in finance and accounting, opinions yes, college credits?  OK.  Just saying....

Finance 101:  Money (call it anything you want, legal tender, fiat, FRN's, greenbacks, dollars, silver or gold) have to have three common traits in order to be money, they have to serve as a unit of account, a store of value, and a medium of exchange. 

The dollar and all other fiats suffer the same problem right now in that as a unit of account they all fail because the dollar is the reserve currency and as such our FASB accounting standards are the reserve accounting standards of the planet.  There are no ethical or rational accounting standards anymore, or should I say there is one for you and anything goes for those that have more money than you.

The dollar and all other fiats also suffer from medium of exchange issues because everything else that could possibly be considered money now is denominated in dollars.  Euros, gold, oil, yen, there just is nothing you could name that is not priced in the reserve currency which as I say above is no longer a universal unit of account. 

Store of value, do I even need to go there?

And the bugs all hype this the most, metals are the only true money because they have intrinsic value, but I say oh really?  Like in 1932 when by presidential order (fiat) it's value went from $20 to $35 with a stroke of a pen and by the way you go to prison if you do not sell all of it to the government at that price.  And that can't happen again because why? 

So I should trade greenbacks which are granted a horrible investment as far as store of value goes, like 1500 of them for a single ounce of gold in the hopes that I can buy an extra box of Kraft Mac & Cheese tomorrow, even though gold does not even remotely serve the other two functions of money, try going into Safeway with an ounce of gold, or silver, for your next six pack and see how far it gets you, if it is not legal tender it is a commodity investment and not money.  An investment is a bet.  I have seen so many people burned on the gold bet the only way I would hold any would be in dental fillings or recreational gold panning.

If you want to gamble with your wealth on commodities why not gamble on oil, it is a bigger market with a higher VIX, more chances to win, more opportunity to cut losses. 

All who cry about the dollar going down are doing so partly out of anger, partly political and partly angst about the future.  But, they are making dumb bets against powers bigger than they.  It is all a lot like Reno, sure you win part of the time and even have a streak, but the house stays in business year after year because the odds are fixed in their favor.  Most of the people who post here at ZH are gambling addicts, this streak is for real. 

I come because I am really angry about lying and corruption, and theft, and I do plan to act upon it, I might not be Che Guavera or Obama sin Laden or whatever, but I do have two hands and a head (two of those actually) and I am not planning to keep getting screwed so that my congressman's kids can inherit a house in Bar Harbor or Aspen.  Or in Boca, or Sun Valley, or up at Tahoe.  You yak away post after post about the shenanigans and unfairness of it all and do nothing, that is the definition of impotent.  And since I am totally sure none will ever do more than bitch and whine I will just act alone.  There comes a day when you just have to quit being a woman and do it!  (no offense to penis impaired who feel the same way please). 

Sat, 05/07/2011 - 01:58 | 1250500 cadmanjo
cadmanjo's picture

There is a lot of truth in that post, unfortunatly.

Sat, 05/07/2011 - 08:17 | 1250673 Spitzer
Spitzer's picture

Truth or not, I would rather be in Euro's when gold breaks through 10,000 an oz then dollars.

Sat, 05/07/2011 - 10:58 | 1250839 ElvisDog
ElvisDog's picture

The thing I would disagree with is the statement that gold and silver can't be used to buy day-to-day things. I would change that to "they can't buy day-to-day things yet". In my opinion, physical gold and silver are an insurance policy against a specific future course that has a non-zero chance of happening. Ideological purity is all well and good ("gold and silver will never be real money again"), but I prefer to hedge my bets.

Sat, 05/07/2011 - 02:35 | 1250518 PeterB
PeterB's picture

"Dr Phil, is that you?"

Sat, 05/07/2011 - 10:03 | 1250552 Bubbles the cat (not verified)
Bubbles the cat's picture

Hmmm.....btr you seem to me to be much the same as everyone else (well...maybe a little more thoughtful or eloquent than some). Like everyone else, you do what you can, when you can do it. Life's a gamble. Ever had a car accident?

PS To steal and distort someone else's quote (I shoulda been a politician eh?): No-one gets outta here alive.

Sat, 05/07/2011 - 08:20 | 1250674 dcb
dcb's picture

I AGREE WITH SOME NOT ALL.

the essential point is that when you have  system that thinks money printing helps, then what is the store of value.

what the gold bugs don't get is that how much of the price of gold is based on low 8interest rates and margin, just like stocks. hence margin calls, higher interst rates, will hurt gold as well. all asset classes. this is the disaster, it really isn't just money printing, it is the excesswive credit that goes into financial markets. this is the evil that needs to be destroyed.

Fri, 05/06/2011 - 19:25 | 1249690 Lord Welligton
Lord Welligton's picture

What is wrong with the Euro is what is right with it. Of course Greece aint leaving the fuckin Euro zone. It joined it for price stability.

Are you complety "fuckin" stupid.

Greece joined the "fuckin Euro zone" for the free "fuckin" money.

And here is the truth.

The Germans knew it.

Fri, 05/06/2011 - 20:01 | 1249812 Spitzer
Spitzer's picture

They still all have seperate "fuckin" bond markets. Iceland was not in the Euro zone and they got lots of "free fuckin money".

Fri, 05/06/2011 - 20:03 | 1249823 Lord Welligton
Lord Welligton's picture

Grow up.

Try for once to see.

 

Fri, 05/06/2011 - 20:36 | 1249906 Spitzer
Spitzer's picture

See what ?

That the Euro zone is a net creditor ?

Has more gold then the US ?

Biggest trading partner with China ?

loser

Sat, 05/07/2011 - 07:43 | 1250651 kaiten
kaiten's picture

Eurozone is also the biggest manufacturer and exporter in the world. There´s real economy in eurozone, not in all eurozone countries, though, and Greece is one of such "empty" countries.

Sat, 05/07/2011 - 11:03 | 1250841 ElvisDog
ElvisDog's picture

Gotta agree with Lord Wellington. There may have been other reasons to join the EU, but being able to fund their budget deficits with lower interest rate Euro bonds was a big benefit for Greece.

Fri, 05/06/2011 - 20:09 | 1249845 trav7777
trav7777's picture

Welcome to the Hotel Eurofornia

Fri, 05/06/2011 - 20:36 | 1249900 Lord Welligton
Lord Welligton's picture

There you are.

There ain't have been some clever bastards.

http://www.youtube.com/watch?v=PPvRsLWlDXw

Fri, 05/06/2011 - 21:18 | 1250003 THE DORK OF CORK
THE DORK OF CORK's picture

Absolutely explosive piece in todays Irish  Times.

Morgan Kelly is on fire

Listen to this little nugget......

Ireland’s Last Stand began less shambolic ally than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.........

Jesus Christ - where the Fuck is this mans sources ?

He is the most capable economist in Ireland and perhaps the only one to predict the ferocity of the implosion here.

He has credibility

Sat, 05/07/2011 - 01:32 | 1250471 britinbe
britinbe's picture

Do you have the link?

Sat, 05/07/2011 - 02:32 | 1250513 AbbeBrel
AbbeBrel's picture

link is from further down this thread...

http://www.irishtimes.com/newspaper/opinion/2011/0507/1224296372123.html

worth reading for this LOL snippet (read it twice, or if you are English, as many times as necessary):

The original bailout plan was that the loan portfolios of Irish banks would be sold off to repay these borrowings. However, foreign banks know that many of these loans, mortgages especially, will eventually default, and were not interested. As a result, the ECB finds itself with the Irish banks wedged uncomfortably far up its fundament, and no way of dislodging them.

Fri, 05/06/2011 - 17:44 | 1249366 MiguelitoRaton
MiguelitoRaton's picture

Apparently, Greece has engaged Hank Johnson to tow Greece out of the Euro area. Who says Greece can't leave the Euro area? http://youtu.be/zNZczIgVXjg 

Fri, 05/06/2011 - 19:47 | 1249762 Lord Welligton
Lord Welligton's picture

Don't let Hank Johnson do it.

America needs Hank Jonhson.

 

Fri, 05/06/2011 - 17:45 | 1249373 unky
unky's picture

wouldnt they have to push the euro down to 1.20 or at least 1.30 before they start QE3 ? because otherwise the dollar will be dead then

Fri, 05/06/2011 - 18:23 | 1249517 oogs66
oogs66's picture

Greece threatens to leave Euro unless they get same deal as Portugal.

Germany says they will get skinned alive back home if they do that, they need something, especially with their economy slowing dramatically.

They decide that Trichet should turn on the printing press.  Greece, Ireland, and Portugal all get great terms and don't have to renegotiate for at least a few months.  Germany bails out the rest but gets a central banker who will do their bidding which will to print money and create a strong Euro - the Timmay and Bernanke made a strong dollar - wink wink :)

 

Fri, 05/06/2011 - 17:49 | 1249376 Hephasteus
Hephasteus's picture

Do they have to do that gang thing where they get beat out?

Fri, 05/06/2011 - 17:48 | 1249381 rokakoma
rokakoma's picture

Actually I love the way EU is handling the currency war. They are not printing, bailouts cost a lot less, interest rate is higher, trade balance is zero and they can still manage with these rumors the currency to be weak and competitive.

Fri, 05/06/2011 - 17:56 | 1249414 Spitzer
Spitzer's picture

That's right. The ECB is in so much better shape then the Fed.

Fri, 05/06/2011 - 20:05 | 1249839 Canucklehead
Canucklehead's picture

I agree based on "process".

At some point, people will want "product".  When that product hits the fan, the euro is gone.

The process is to lay the garbage (or should I say King's clothes) in the street for everyone to see.  That will keep the euro from becoming too popular.  The entropy of every action results in the King having fewer clothes (The PIIGS et al are laid bare).  The counterpoint to those moves is for the US to print more USD (Does it cost anything?).

At some point along the way, the value of the fiat will be exposed for everyone to see and there will be competition for global value assets (commodities, large cap stocks, sovereign debt?).  At that point, do you want sovereign debt backed by consensus within the EU, or a robust department of defense?

Fri, 05/06/2011 - 22:14 | 1250173 Spitzer
Spitzer's picture

I would take the creditor status Euro over the Soviet Union..er sorry I mean US debt backed by the "robust debt of defence".

Sat, 05/07/2011 - 10:01 | 1250766 Canucklehead
Canucklehead's picture

... Aaron Barr, is that you?

Sat, 05/07/2011 - 04:34 | 1250576 equity_momo
equity_momo's picture

Nonsense.  

The ECB are going down exactly the same path as every other CB when the end of the road is nigh : the banks in Europe are every bit as fucked , possibly more so , than US banks. The ECB is taking toxic whalesht from these banks as collateral and granting them par value in cash.

It has been going on for well over a year. What do you think is sitting on the ECBs balance sheet when they were doing this over a year ago! : 

http://www.reuters.com/article/2010/05/03/us-ecb-collateral-idUSTRE6422F...

 

And who do you think has been making sure all those PIIGS auctions have been going so swimmingly? 

 

Hmmm? Someones going to have to print those yo-yos. Its quasi QE. 

Fri, 05/06/2011 - 17:49 | 1249391 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Carry trade unwind bichez!!

Fri, 05/06/2011 - 17:53 | 1249401 TC Collins
TC Collins's picture

Slightly off topic but:

Scottish Elections:

   The Scottish National Party won the election in a surprise victory. They have a majority. The party promises within 5 years to have a referendum for Scottish indpendence. Can't let the Greeks have all the fun threatening to leave a union!

Fri, 05/06/2011 - 23:46 | 1250348 Henry_Hill
Henry_Hill's picture

Just like Tony Bliar promised one too...

http://www.telegraph.co.uk/news/uknews/1564312/Labours-promises-on-an-EU-referendum.html

Lets not start believing what politicans say now

Sat, 05/07/2011 - 13:20 | 1251162 Hephasteus
Hephasteus's picture

Oh snap. He can help murder 3 million iraqi citizens but he's going to fold on a referendum promise.

You ever get the feeling that a fuck off storm is coming. That the wizard of oz is true story. That some people are actually going to get sucked up and blown so far away it'll be like trying to walk home from a different galaxy.

Sat, 05/07/2011 - 07:13 | 1250635 theprofromdover
theprofromdover's picture

Presidente Salmon of the Highlands wanted (desperately) to join the Euro.

And has to safeguard all the financial jobs in Edinburgh (RBS etc.) Maybe he has a new 'Iceland' plan, but I doubt it. His background was civil service and big banking. He wants to be free to join something bigger. He is being trusted this time round because he acts like an old-fashioned bank manager, and the opponents had no leadership of a color other than gray.

Small business, imaginative thinking, exporting people and ideas around the world, and freedom from religious dogma built Scotland first time round, and is it's only hope again. The Scots don't want independence, they all belong to the FO-ALMA tendency. That's what Celts are (Ireland, why do you sleep?)

 

(F* O* -and leave me alone)

Fri, 05/06/2011 - 17:56 | 1249403 godzila
godzila's picture

To be honest with so much denegations there must be something true behind those Greek rumors.

 

And we ALL know that they will default one way or another

Fri, 05/06/2011 - 18:03 | 1249438 Zero Govt
Zero Govt's picture

Greece PM "We do not need a bailout" (they got a bailout)

Irish PM "We do not need a bailout" (they got a bailout)

Portugese PM "We do not need a bailout" (they got a bailout)

EU'S JUNCKER SAYS `NO WAY' GREECE WILL LEAVE EURO AREA.... Er, let me guess????

Fri, 05/06/2011 - 18:06 | 1249462 Spitzer
Spitzer's picture

Is Calerfornia going to leave the dollar zone too ?

Fri, 05/06/2011 - 18:10 | 1249477 Zero Govt
Zero Govt's picture

California left the Dollarzone and entered outter space about 3 years ago i thought!

Fri, 05/06/2011 - 18:57 | 1249608 johnnynaps
johnnynaps's picture

IDK, I like my free dollars! As long as I don't have to work, I like them even more!

Fri, 05/06/2011 - 20:08 | 1249842 Lord Welligton
Lord Welligton's picture

Maybe Greece will leave the California zone.

Fri, 05/06/2011 - 20:12 | 1249854 Max Hunter
Max Hunter's picture

Did California recently switch from its own currency to the USD barely 10 years ago? Hardly a comparison.

Fri, 05/06/2011 - 20:47 | 1249926 Spitzer
Spitzer's picture

Doesn't matter. They started designing the Euro in 1962. Greece is in and there is no way they can reintroduce a currency. How could they issue it ? How could it hold any value ?

Fri, 05/06/2011 - 22:58 | 1250272 Manthong
Manthong's picture

Maybe the more immediate question is "Will Montana leave the Bernankebuck Zone"?

Sat, 05/07/2011 - 06:42 | 1250625 Non Passaran
Non Passaran's picture

Why would it have to hold any value? Like other paper money, it doesn't have to be backed by anything. (They do have 100t of gold and of course they'd have some foreign currency reserves).

And of course they can issue it. It takes few changes in the parliament and and that's it. How do people compare exchange rates betweeen EUR and USD back to the 80's? But answer to this question isn't needed - they can just make it up and let it float from thereon. It doesn't make sense to the old exchange rate (vs. EUR via the pre-EUR Mark-Drahma ratio) as they'd have to devalue.

Sat, 05/07/2011 - 08:16 | 1250671 Spitzer
Spitzer's picture

devaluing is not the answer to Greeces problems. Default is the answer.

Fri, 05/06/2011 - 18:08 | 1249457 NOTW777
NOTW777's picture

so does this mean sunday nite the euro bounces, dollar falls and PMs bounce hard

Fri, 05/06/2011 - 18:18 | 1249504 oogs66
oogs66's picture

So they meet for a secret meeting on a Friday night.  A meeting they wanted to keep secret and was important enough they couldn't do it over the phone, but now a couple hours later they are going their separate ways?   There have to be more meetings and this drama isn't done yet for the weekend.  Or they insulted each other so much that they couldn't look at each other anymore and this will get really ugly.  Or they just argued about who leaked the meeting.  Hmmm...that might be the most likely result.

Fri, 05/06/2011 - 18:36 | 1249541 Zero Govt
Zero Govt's picture

it matters not this meeting is Top Secret. All political meetings have the same simple process;

i. what shit are they in

ii. jawboning (200 tons of CO2 emissions) from posturing windbags

iii. what is the easiest, most politically expedient 'solution' for getting out of the shit and digging yourself deeper in the shit 3-4 years down the line (ie. kick the can)

so Greece want out of the Euro Project because they can't service their debt so want (threaten) to pull the plug on the Euro so they can trash their own currency (see UK and US policy) devaluing their unserviceable debt

Using the above 3 step process we arrive at the windbags caving in to another bailout instead of letting the Greeks a way out (Marxist Brussels would never approve of a smaller Empire) ...and 3-4 years we'll be back here at Square 1 just deeper in the dog-doo

 

Fri, 05/06/2011 - 21:59 | 1250132 Troublehoff
Troublehoff's picture

great comment mate

I've gotta congratulate you on your cynicism

Fri, 05/06/2011 - 18:37 | 1249550 DCon
DCon's picture

Greece was  not being bailed out for how long, before it was?

Same for Ireland and Portugal. These politicians could lie

to the ghost of their dead grandmother

 

 

 

Fri, 05/06/2011 - 18:41 | 1249557 Badabing
Badabing's picture

If Germany attacked France from the rear would Greece help?

Fri, 05/06/2011 - 18:58 | 1249603 Zeilschip
Zeilschip's picture

Fudgepackers.

Fri, 05/06/2011 - 18:48 | 1249579 TraderTimm
TraderTimm's picture

I'm still long olives and goat meat from 'Sudden Debt' last reco. Dang, guess I can always eat them if I need to 'convert' my investment.

Sorry, but any time I hear strong protests like what is flying across the wires, doesn't it just make you think they are scared? Doesn't come off as reasoned and logical rebuffs to me.

 

Fri, 05/06/2011 - 18:48 | 1249582 mkkby
mkkby's picture

EU'S JUNCKER SAYS `STUPID' TO TALK OF GREECE EURO EXIT

Yeah, just don't talk about it while it's being threatened behind closed doors.  Funny how the consiracy seems to later become the reality.

Fri, 05/06/2011 - 18:59 | 1249605 walküre
walküre's picture

The Greeks and the Albanians should get a room.

Time those two get to know each other a little better.

Euro will survive a Greek exit.

Greece will not survive in its current form when it becomes a drecksloch like Albania.

Greece leaves, Croatia will join. Balance sheets fixed.

Fri, 05/06/2011 - 21:14 | 1250002 PeterB
PeterB's picture

Zivila Hrvatska!

Fri, 05/06/2011 - 19:09 | 1249643 Mr Sir
Mr Sir's picture

Worthless drachmas bitchez!

Fri, 05/06/2011 - 19:37 | 1249726 tom a taxpayer
tom a taxpayer's picture

Are you'all pinball wizards?

"FX ping pong game mission accomplished."

The next coin in the machine is going to take "ping pong" to a whole 'nother level - going ballistic to full-tilt pinball.

http://www.youtube.com/watch?v=aOUqRZkR8dE

Fri, 05/06/2011 - 20:20 | 1249793 Atomizer
Atomizer's picture

My take on this event.

Greece: Don't come any closer or I'll jump from this bridge

IMF-EU: Now settle down, we can help you through this crisis.

Greece: Fuck you! We read your proposal. It'll be cheaper for us to put all the debt on a Capital One credit card.

IMF-EU: Hmmm. Just give us a day or so to match their interest rate payment plan. Just stay here & don't jump from this bridge.

Europe and IMF Agree €110 Billion Financing Plan With Greece

http://www.imf.org/external/pubs/ft/survey/so/2010/car050210a.htm

Bank of International Settlements

http://www.bis.org/search/?q=Greece&mp=any&_st=false&c=10&sb=1

It's a Wonderful Life: IMF-EU Guardian Angel version.

http://www.youtube.com/watch?v=vfPn1kDQxuI

Fri, 05/06/2011 - 19:56 | 1249800 Id fight Gandhi
Id fight Gandhi's picture

They have zero creditability with these denials. Every since country that denied bailouts got them.

What does Greece produce really? How are their exports, especially with a euro that was close to 1.50 when every one said last summer it would be at parity?

People are being fuckered here. I says theyre testing the waters with the rumors.

Sat, 05/07/2011 - 11:08 | 1250853 ElvisDog
ElvisDog's picture

Greece wants to keep the cost (to foreigners) of Greek vacations low so the tourists will keep coming. They want either a cheap Euro or a cheap Drachma.

Fri, 05/06/2011 - 20:18 | 1249864 Withdrawn Sanction
Withdrawn Sanction's picture

EU'S JUNCKER SAYS `STUPID' TO TALK OF GREECE EURO EXIT

Stupid it may be, but stupid and wrong are not synonyms.  Which bring us, logically enough to:

EU'S JUNCKER SAYS `NO WAY' GREECE WILL LEAVE EURO AREA

As the old saw goes, nothing is confirmed in politics until it is officially denied.  Thus, Greece's departure is imminent.

Fri, 05/06/2011 - 20:44 | 1249893 M.B. Drapier
M.B. Drapier's picture

In other PIIGS news: economist Morgan Kelly has another bomb-throwing opinion piece on the Irish crisis/bailout/future default, his first public statement since his November article attracted international attention. The piece is somewhat newsworthy in itself - high-profile and abrasive enough that it's going to stir the shit in Ireland. It also has a fair bit of international interest, as Kelly's clearly been talking to people, and he has some new information about what happened:

Ireland’s Last Stand began less shambolically than you might expect. The IMF, which believes that lenders should pay for their stupidity before it has to reach into its pocket, presented the Irish with a plan to haircut €30 billion of unguaranteed bonds by two-thirds on average. Lenihan was overjoyed, according to a source who was there, telling the IMF team: “You are Ireland’s salvation.”

The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are.

The negotiations went downhill from there. On one side was the European Central Bank, unabashedly representing Ireland’s creditors and insisting on full repayment of bank bonds. On the other was the IMF, arguing that Irish taxpayers would be doing well to balance their government’s books, let alone repay the losses of private banks. And the Irish? On the side of the ECB, naturally.

[...]

The bailout represents almost as much of a scandal for the IMF as it does for Ireland. The IMF found itself outmanoeuvred by ECB negotiators, their low opinion of whom they are not at pains to conceal. More importantly, the IMF was forced by the obduracy of Geithner and the spinelessness, or worse, of the Irish to lend their imprimatur, and €30 billion of their capital, to a deal that its negotiators privately admit will end in Irish bankruptcy. Lending to an insolvent state, which has no hope of reducing its debt enough to borrow in markets again, breaches the most fundamental rule of the IMF, and a heated debate continues there over the legality of the Irish deal.

PS.: The blog Kelly praised is Nama Wine Lake

Fri, 05/06/2011 - 20:45 | 1249929 Kina
Kina's picture

Ireland should have said to Timmy approve the deal or we go default. Which do you prefer?

Fri, 05/06/2011 - 20:50 | 1249940 tom a taxpayer
tom a taxpayer's picture

Wow! This could be like another Big Shoe to drop. Especially with shining the light on that weasel rat Geithner's scurrying about in dark corners, stealing cheese for bankers. 

Fri, 05/06/2011 - 23:45 | 1250335 M.B. Drapier
M.B. Drapier's picture

The big joke is that Obama's visiting Ireland this month, and so the Irish population is about to ecstatically abase itself before Geithner's political rock and #1 best bud.

Fri, 05/06/2011 - 20:41 | 1249914 Kina
Kina's picture

Well if 'they' are so desperate to keep the Euro together it sends a great message to all the PIIGS that they can ask for any deal that they want or threaten Euro exit.

The PIIGS should act as a cartel and put these guys over a barrel and bring out the lube.

 

 

Fri, 05/06/2011 - 21:16 | 1249995 magpie
magpie's picture

So the interest rate hike was crap - how do the Eurocrats shave some digits of the Euro when industrial orders in Germany are falling ?

The sky is going to fall, and Greece's haircut will be "better than expected", relative to anything else.

Doesn't really matter, the Ponzi will go on.

There are only two big events which will blow it apart: Austerity in the USA and economic implosion in China.

Fri, 05/06/2011 - 21:46 | 1250088 Atomizer
Atomizer's picture

This is how they will jumpstart a SDR monetary system with Basel protocol's.

breathe! breathe, you fucker!

http://www.youtube.com/watch?v=Qn-KZPXsB7Y&feature=related

Fri, 05/06/2011 - 21:53 | 1250109 willien1derland
willien1derland's picture

Ok so Trichet needs to get creative...ECB can FRANCHISE certain aspects of the Euro Zone Periphery  - 1.) Greek Diners are the best in the world & no one works harder - set up Diners all over the world & add a small surcharge to offset the Greek Debt - 2.) Irish Pubs - C'mon lads WHO DOESN'T like an Irish Pub - same model - 3.) Portugal - Cristiano Ronaldo 'Escort' Service - EVERY WOMAN in the WORLD wants this guy - EBAY his a$$ out for the good of his country - AND here is the cherry on the cake - after a year or so have Goldman Sachs or Deutche Bank take each one of these 'Franchises' public but maintaining a class of Preferred Stock to be converted to the Sovereign Debt holders - The only issue I foresee is the need to clone Cristiano Ronaldo but with some 'marketing' help from the talented Mr. Banzai & a few recommendations from Leo, RoboTrader & notwithstanding a few TD posts on the amazing returns such investments can offer & we are talking SOLVENCY people!

Fri, 05/06/2011 - 22:01 | 1250143 Atomizer
Atomizer's picture

Actually, the real money is made by selling new franchise packages.

Fri, 05/06/2011 - 21:55 | 1250125 oblom
oblom's picture

"1.43 on Monday", shit yeah. Take it for a ride back up to 1.45 and short it again. Same with silver -- short-term bouncy time (43?), then reverse. Take it for a ride.

Sat, 05/07/2011 - 08:53 | 1250702 The Alarmist
The Alarmist's picture

Only becuase every time the ECB gets the euro back to a reasonable level, the Fed and UST say and or do stupid things to get the dollar back to an unreasonably weak position. The Chinese can hardly be amused at all this beggaring or the royal buggering the are getting from it.

 

Sat, 05/07/2011 - 00:35 | 1250418 What_Me_Worry
What_Me_Worry's picture

The Euro had such promise.  In the end, political will always triumphs.

History repeats.

Life goes on.

Sat, 05/07/2011 - 03:01 | 1250537 Tic tock
Tic tock's picture

It makes perfect sense, the bailout countries will never be able to attract investment witha Euro at such strong levels; essentially, the PIIGS need a currency pegged to the dollar. otherwise, there's no way they can grow - and if Greece moves to Drachma, they can print their way out of Austerity. There is no downside, other thhan getting bombed back to the stone-age.

If this is just noise, then it's a telling test of residual dollar strength.

Sat, 05/07/2011 - 03:01 | 1250538 Tic tock
Tic tock's picture

It makes perfect sense, the bailout countries will never be able to attract investment witha Euro at such strong levels; essentially, the PIIGS need a currency pegged to the dollar. otherwise, there's no way they can grow - and if Greece moves to Drachma, they can print their way out of Austerity. There is no downside, other thhan getting bombed back to the stone-age.

If this is just noise, then it's a telling test of residual dollar strength.

Sat, 05/07/2011 - 03:09 | 1250543 nauagos020
nauagos020's picture

hello i am Greek.

I am a real estate developer and even now in the so called greek-crisis i am building 5 apartment buildings, 1 office building and 2 holiday-residence complexes.

PLEASE listen carefully what i have to say about Greece.

Greece is one of the poorest countries but the Greeks (as an average) are very wealthy.

I am not talking about wealth being happy, healthy and so on.

Greeks (as an average) own more real estate that any other,

They do not rely on lending as much as other eauropeans or americans

They have gold (especially english gold pounds) that no average european or american has

I am not saying they are good people or that they have a lot of exports i am just saying they are wealthy.

However the wealth they have you cannot find it anywhere because it is no declared anywhere.

My friend that works for 850 euros per month has 4 acres of land outside the city near the sea, 24 gold coins (worth 6000 euros) he got as a gift from his family on the day he was born 25 years ago, and his own apartment he bought with no loan for 230000 euros (i am not talking about what his family owns but what he owns). How can this happen? he gets his 850 euros, he has a second job (as a plumber-not declared) that gets him another 850 euros (where he pays no taxes-poor Greece), he has a farm in the 4 acres that gets him minimum 1000 euros (from selling produce) also not declared anywhere (so he pays no taxes-poor Greece) and some times (3 or 4 times per year) he earns another 2000 to 2500 euros doing part time jobs  (like waiting or plumbing in hotels in summer-not declared and tax-free ofcourse). So he gets 10200 from his day job thatbecause in Greece until 12000 income you pay no tax he is tax free and 25000 euros from the rest that are tax free. so with a clean income of 35000 spending less that 9000 per year (no rent or mortgage) say 10000 with his vacations (health insurance and so on have been discounted from his 1050 euros pay giving him 850 euros) he gets 25000 euros in his bank each year.

That is why greek people are rich but Greece as a country is poor. The example i gave you can happen in smaller numbers (however not vry often) but at the most of time can be really magnified in case we talk about doctors, lawyers and so on that make  with the same method (these are real - calculated numbers) 200000 euros at least but they declare 12000 geting away tax free.

sure there are poor people and rich people like any country, sure there are people loosing their homes to the banks like every country.

 

But as an average believe me

Greeks are wealthy.

 

So whether Greece leaves Eurozone or not, whether drachma comes back it doesnt really matter.

All that matters is that the Banksters (Rothchilds and the gang -imf fed central bank of Greece...all properties of the same families...Rothchilds and the gang) come and get Greece for a  fraction of what it really costs. It is happening and it will continue to happen and the Greeks will beg for it to happen so that they continue to have theur 25000 at their bank accounts each year because they do not care what happens to the railway stations, the ports, the energy/water companies. They may even give them free like we did with Meganisi Island that the Rothcilds bought to build homes for the super rich just a cople of months ago(they bought land with value 60 mil euros for 6 mil euros).

 

To sum up...

do not worry about the Greeks just worry about Greece (but why should you-Greeks don't) and wahtever you do always remember it does not matter what you feel or what you do you are not in control no one except a few, very very few people are and what they want will happen and you DO NOT  know what will hapen NOONE does. You just guess.

 

Sat, 05/07/2011 - 09:35 | 1250731 disabledvet
disabledvet's picture

Ich bin ein Berliner.  Waffen SS.

Sat, 05/07/2011 - 11:12 | 1250856 AbbeBrel
AbbeBrel's picture

Thank you (ευχαριστ?) for your story about just who is impacted by the crisis in Greece!

Sat, 05/07/2011 - 13:07 | 1251115 edotabin
edotabin's picture

Yes and no.  Everything you write is correct but there is another side to that.  Over the years, the government has encouraged almost everyone to work in a government job. Jobs were handed out for votes etc.  Over a long enough timeline...... everyone gets used to sucking the government boob. That leaves many vulnerable and many fortunes will be destroyed in this takedown. That land and those apartments will be sold at 1/2 or even 1/4 price in order to live. Now they have added property taxes and wealth taxes. You can't hide behind inherited fortunes.  They are out to get it.

It is only a matter of time until your friend is declared an enemy of the state because he works tax free.  It is only a matter of time before the side jobs income is chased down violently.  It doesn't feed the machine.

Just a giant wealth transfer.

Sat, 05/07/2011 - 03:52 | 1250559 nathan1234
nathan1234's picture

Juncker's remarks are plain Junk.

Watch them (PIIGS) go down one by one.

Sat, 05/07/2011 - 08:42 | 1250695 The Alarmist
The Alarmist's picture

I'm not sure which old saw applies:

1) I fear the Greeks, even when they bear gifts (i.e. staying in the Euro); or

2) Greece, where men are men and sheep (i.e. the capital-supplying parts of Europe) are scared.

 

Sat, 05/07/2011 - 08:47 | 1250696 The Alarmist
The Alarmist's picture

In reply to  nauagos020 above, maybe the poor greeks should worry about what happens to Greece.  Europe could take over Greece as a debtor in possession and then sell it back to Turkey to recover some of their losses.  That would be justice.

Sat, 05/07/2011 - 08:50 | 1250701 goldm3mb3r
goldm3mb3r's picture

The EU is a socialist cockfest.

Sat, 05/07/2011 - 10:32 | 1250804 DCon
DCon's picture

Ireland are getting a rate cut on their pay back

the banks money.

 

http://www.bbc.co.uk/news/business-13321551

Sat, 05/07/2011 - 10:45 | 1250824 DCon
DCon's picture
EU Said to Consider Requiring Collateral for Extra Greek Aid

 

http://www.bloomberg.com/news/2011-05-07/eu-said-to-consider-requiring-m...

 

 

Sat, 05/07/2011 - 15:12 | 1251285 Tic tock
Tic tock's picture

Oh! But the bankers very much do care what happens to Greece, even if the Greeks don't. What will they do with a useless financial system? Who wants to be saddled with a high proportion of non-performing loans, who wants an environment of poor credit expansion? -the bankers don't want to get saddled with Greece - what for, they have Italy and Germany. What the Bankers want is the power to enforce real debt collection - they want to drag Greece up by the shoestrings. ...at least the shooting of OsamaBl is believable.

 

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