Trading olives and feta cheese for submarines is a losing proposition
Greek 10-year government bond yields, after having
graced 8.73% merely a good week ago, are back with a vengeance (9.67%).
Where is the insatiable demand for Greek bonds from China?
On October 22, Eurostat published revised Euro zone government
deficit and debt figures for 2009. One country was missing – Greece:
“Eurostat is not publishing Greek data in this News Release. Eurostat
(…) is now undertaking a process of quality assessment of statistical
source data from public accounts, in cooperation with the Greek
Statistical Office and the Greek Court of Auditors. (…) Greek fiscal
data will be published by Eurostat by mid November 2010.”
Last October (2009), the former Greek government estimated its budget
deficit at 3.7% of GDP. Two weeks later the new government revised the
number to 12.5%. By April 2010, the figure had been upped to 13.8%. Now,
rumors of 15% are being thrown around. Yesterday, Bank of Greece threw
oil into the fire by stating that Greek GDP will shrink 4% in 2010, and
continue to shrink in 2011. Furthermore, the country had run out of
“room for further tax increases”. To top it off, “delay in the
collection of taxes may cause a shortfall of EUR 900m in 2010″.
Just when you thought it couldn’t get any worse, the CEO of the
world’s largest bond fund manager PIMCO, Dr. Mohamed Abdulla El-Erian,
says “Greece will default in three years” (10/25, 16:17 EST).
It took mere 17 minutes for some politician to call up the President
of rating agency Standard & Poor’s and forcing him to state that
“Greece will NOT default” (10/25, 16:33 EST).
Once European politicians had read their papers the next morning they
felt compelled to try to extinguish the fire with words (EU’s Rehn:
“Current debt problems of Euro-zone will be solved without debt
restructuring”, ECB’s Quaden: “Restructuring of Greek debt is not on the
table”, both 10/26).
Sources: Ransquawk.com
Meanwhile, the always upbeat Greek PM Papandreou sounds a bit less
enthusiastic, stating he is “concerned about Greece going forward”.
The Germans are suspiciously quiet. Could it be that Germany
officially condemns the worst offender of the “stability treaty” of
Maastricht, while at the same time still booking fat defense orders from
the Greek army and navy? According to “Die Welt” (8/7/2010 – Sparen?
Griechenland kauft lieber Waffen) Greece has spent some EUR 50bn over
the last decade on defense. Per capita, it features Europe’s largest
army. During the last five years, Greece has been among the top five
purchasers of conventional weapons world-wide. No prize for guessing who
builds those frigates and submarines (HDW, Blohm & Voss,
Thyssen-Krupp Marine Systems).
Finally the question of “why” all this nonsense for a population of 6
million? You have 6,000 islands to defend, have been humiliated in
Cyprus by Turkish invasion in 1974 and are paranoid about your
NATO-partner. This makes you spend your last shirt on defense assets.
And that is the main reason why Greece has not defaulted and exited the
Euro yet – a weak new Drachma could afford even less Euro-priced
military equipment and eventually lead to a decline in maritime power.
Unfortunately, a soon-to-be 150% debt-to-GDP ratio combined with 10%
interest rates (or even 5% via EFSF – European Financial Stability Fund)
makes a default virtually unavoidable. The interest payments alone
would siphon 7.5% to 15% of GDP out of the economy – annually (of which
three quarters will be leaving the country due to foreign ownership of
Greek debt). There is no other solution. Trading olives and feta cheese
for submarines is a losing proposition.
As written in previous posts, Greek default means Greek exit from the
Euro zone (as punishment is the same, and only devaluation heals
uncompetitive unit labor costs). Greek default and Euro exit means
contagion. Contagion means mayhem in the Euro zone. Banks will lose
money. The banks know it will happen. They just would like to dance a
little bit longer.
According to “Die Welt” Greece has spent some EUR 50bn over the last decade on defense. Per capita, it features Europe’s largest army.
Well Turkey (not exactly Greece's best friend) has Europe's largest standing army period. By far. Hope TS doesn't HTF.
Large army+ bad economy = war
The military-industrial complex has officially morphed to the financial-millitary-industrial complex.
Yes but these days the industrial leg of that triumvirate is closer to a collection of boutiques than a "complex."
Doesn't sound nearly as bad-ass.
Don't kid yourself-the 'financial' has always been part of the 'industrial'.
To think otherwise is silly.
The notion of Greece as a maritime power. That took me by surprise.
The used to build ships to a much greater extent but they still excel at buying them low and selling them high.
I can only agree with this post and add to it the figures I have read on notayesmanseconomics blog for volume in the Greek government bond market and the way it has collapsed---which of course makes manipulation easier...
"So volume is only 3.5% of what it was a year ago and I think that it speaks for itself."
http://t.co/0WbFFgh
At least Ireland has negligible spending commitments although if Ireland declared they were printing zero interest rate punts to replace Euros we could expect RAF fast jets streaking over the skies of Dublin and Cork leveling all buildings except Bank of Ireland and Ulster Bank premises
Maybe we need to increase our defence spending.......... Angela we need a favour again and it better be more then a few Mausers.
www.military.ie/aircorps/index.htm
Not much of a "fleet" there. I would run and hide when the RAF comes if I were you. :>)
http://www.military.ie/aircorps/fleet/fleet.htm
The math seems incontestable. However, nothing happens except a duel of words from various "experts" and politicians. It is certain that politicians lie (it is what they do) but do investment firms "talk their book?" (Answer: yes, definitely--but they may still be correct)
It seems that the entire world is living the "horse may learn to sing" story. Maybe that is the best we can do.
Yes, this tale holds great water, and the Chinese who examined this, are teaching all their friends the same secret. Thus, the perpetual lie continues. But the music stops shortly.
Portugal Update.
If you don't know what I'm talking about, read my earlier comments (note to TD: I've posted in the comments section what I believe is original and accurate analysis on a less covered topic. You may use it as you wish.)
As promised on the Portugal saga, I'm bringing you breaking news.
Here's the latest. The PSD party (largest opposition party) has just announced the breakdown of negotiations with the Socialist government to approve the budget. The leader of the opposition has scheduled a press conference for 2000 GMT today. Expectations are that he will announce the PSD will abstain in the vote in the name of national interests. I'm not so sure the consensus is right. He may very well announce his party will vote against the budget, which would mean Portugal's CDS will widen considerably, the government would fall and the IMF/EFSF would be on the next flight to Lisbon.
Stay tuned. It seems things are getting interesting in the EU again.
Man, Greece is in such bad shape that if Turkey conquered them, it'd be Fraudulent Conveyance.
As I've predicted and will do so again Greece will probably default next spring after Easter. Opa! Until then live well and don't worry. Christmas is just around the corner.
"Greek default means Greek exit from the Euro zone (as punishment is the same, and only devaluation heals uncompetitive unit labor costs). Greek default and Euro exit means contagion. Contagion means mayhem in the Euro zone. Banks will lose money. The banks know it will happen. They just would like to dance a little bit longer." -ZH
Exactly why the leaders and gov't officials prefer to spew lies to the public- If the public knew the truth about what was going on behind the scenes, the world's population would riot and topple the corrupt gov'ts, bankers and politicians. "We can't have any of that, now, can we?"
And the fine line, copied and executed military style, is drawn- Tell the truth and face the consequences or cover up the problems and hope in time, everything will heal? Need-to-know basis: A full license to spew lies.
Like my Mom used to say, "isn't there someone we can call?"!
Tyler- BTW, their 10yr is at 10.27% and rising rapidly. Imminent systematic collpase...
Laughed as I read this, because prior to becoming a US darling for defense sales, India was a Russki shop. Everything "defense" was soviet.
And we traded them Hawaiian slippers and bananas (Not kidding, long and deep defense background here). Not no more.
Funny thing was , because it was a barter, they refused to translate the manuals or change the dials, so anyone on a russian built ship had to learn to read and write russian to make it work.
But this:
" Per capita, it features Europe’s largest army. During the last five years, Greece has been among the top five purchasers of conventional weapons world-wide. No prize for guessing who builds those frigates and submarines (HDW, Blohm & Voss, Thyssen-Krupp Marine Systems)."
Shocker.
ORI
http://aadivaahan.wordpress.com
So the next hinterwalder that complains about subsidizing the fat lazy Greeks shut the f up. You are subsidizing the German armament industry!
And that is what the Eurozone is afraid of, the domino of Greece falling into Ireland and Portugal and Italy and Spain and then the rest (especially the UK, they are in big trouble). They don't want the European Union to implode.
still no LEO w/ his stupid comments..
Leo,pal are you still long ???????? :)
alx
"Per capita, it features Europe’s largest army."
==============================
In that case, hostile nations might like to carry out a cost comparison between a conventional military invasion of Greece, and simply buying up the whole damn country.
Perhaps the US could also export to Greece its MBS and robosigning expertise. That should soften 'em up.
and who gets free subs (and torpedoes that masquerade as north korean) from germany via 'war reparations'?
greeks will never have a sweet deal like that.
We have all cheap uggs for sale in our website http://www.salesuggs.org ! You can meet all your needs for UGG hot sale here and will certainly be satisfied with the top quality at low price. All UGGs on sale are made with the 100% genuine sheepskin from Australia and are hand-made in our own factory completely. So you need no to worry about the quality and the cheap UGGs for sale are all to be delivered in free shipping. Enjoy the large discount!
1.
UGG Amberlee
|UGG Kensington
|UGG Elsey
|UGG Langley
|UGG Roxy Short
|UGG Roseberry
|UGG Oliviya
|UGG Raya
UGG Brookfield Short
Find ugg and Australian sheepskinAuthentic Ugg boots, learn the history behind the Cheap ugg boots, and when and what to wear with Ugg boot, as well as cleaning and caring for ....we sell new style Ugg boots on sale,You can find the wholesale discount Ugg boots here.
I love zerohedge policy.
windows vps
cheap hosting
forex vps