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A Hitchhiker's Guide To The Greek Crisis, On This, The Day Of The Vote Of (No) Confidence

Tyler Durden's picture


Reuters has compiled a useful summary for everyone confused why the S&P may be trading with the volatility of a 3-page Hank Paulson blank check TARP proposal day, based on what a few MPs in Greece decide to vote, or not, for, in just under 10 hours.


The cabinet of
Greek Prime Minister George Papandreou faces a confidence vote late on
Tuesday, the first of three tests the Greek government must survive to
avert the euro zone's first sovereign debt default.

The vote
follows a euro zone ultimatum that the debt-choked Mediterranean state
must enact a new five-year package of painful economic reforms within
two weeks or miss out on a 12-billion-euro aid tranche that it needs to
avert bankruptcy.

Parliament will debate the confidence vote
against a backdrop of deep public anger over the pain of the austerity
measures. IMF and European inspectors have arrived in Athens to discuss
changes requested by Greece to the reform package.

Unions and
grassroots activists will protest at parliament ahead of the vote,
building on more than three weeks of demonstrations that erupted into
violence last week and split the ruling PASOK party.

insurer Allianz has warned against a "haircut" for
holders of Greek sovereign debt, saying it could trigger a dangerous
chain reaction.


  • Confidence vote in Greek parliament at 2100 GMT
  • Representatives from "troika" of EU, IMF and European Central Bank in Athens for talks through June 22
  • European Union summit meeting in Brussels on June 23-24
  • Parliamentary vote on more austerity steps tentatively set for June 28
  • Main labour unions to launch 48-hour strike on day of austerity vote



Greece has a sovereign debt pile of 340 billion euros ($481.5 billion),
more than 30,000 euros per person in a population of 11.3 million. The
110-billion-euro bailout Greece accepted last year from the European
Union and International Monetary Fund has proved insufficient and a
second package worth 120 billion euros is now under discussion. With its
debt equivalent to 150 percent of annual output, Greece holds two
unwanted world records: the lowest credit rating for a sovereign state,
and the most expensive debt to insure. Its people have lost patience
with an ever-deepening austerity drive that has slashed public sector
wages by a fifth and pensions by a tenth.

Around 53 billion of
the original 110 billion euro package has been paid out so far. The
government estimates that Greek debt will reach about 350 billion euros
at the end of this year, taking in EU/IMF aid tranches including the 12
billion euro emergency loan earmarked for July.

About 70 percent
of Greece's debt is held abroad and the remainder at home. Greece is
paying an average 4.2 percent interest rate on EU/IMF bailout loans.



longer the crisis drags on, the greater the risk that contagion will
spread to other troubled euro zone economies like Ireland and Portugal,
which have also been bailed out before, and Spain, which is much bigger
and would be far more expensive -- perhaps too expensive -- to rescue.

A default by Greece would hammer the banks that hold its debt,
including the European Central Bank and big French and German lenders.
It could also prompt credit markets to freeze up, as happened after
Lehman's demise when banks virtually stopped lending to each other.

The White House said on June 16 the Greek crisis was acting as a
headwind to the U.S. economy but opinions vary as to the level of
exposure of U.S. banks.

A Greek default would be a catastrophe
and a humiliation for the European Union, which launched the euro in
1999 as its most ambitious project and a symbol of the continent's
unity. It has prompted some commentators to think the unthinkable: that
the euro zone might break up, either by the expulsion of Greece or the
departure of Germany, the EU's paymaster, which might be tempted to
return to its own currency.


The EU's big players -- notably Germany, France and the European
Central Bank -- have struggled to work out a rescue mechanism. European
governments are keen to avoid a "hard default" because this could
threaten banks throughout the euro zone and further afield.

are therefore discussing a "soft landing" in the form of a debt
extension or voluntary rollover by creditors, but some of the proposals
have been criticised as a default by another name.


Greek Prime Minister George Papandreou last week reshuffled his
government to quell dissent in his ruling Socialist party and gave the
finance portfolio to Evangelos Venizelos, a party rival. Venizelos is a
political heavyweight who ran the preparations for the 2004 Athens
Olympics, but has no economic track record.

At the European
level, the single most influential figure is German Chancellor Angela
Merkel, as head of the EU's biggest economy. Merkel, who is losing
popularity and has suffered a string of 1defeats in state elections, is
under intense pressure from a German public that resents footing the
bill for what is widely seen as Greek profligacy -- hence her insistence
that banks should share some of the pain. Merkel has been accused of
holding up the second Greek aid package, further eroding investor
confidence which could make the bailout more expensive.


Public disgruntlement over austerity -- including curbs on widespread
early retirement, tax rises and cuts in benefits and wages -- has
erupted into frequent strikes and protests, some of them violent.
Unemployment is rising. In a poll last month, 80 percent of people said
they refused to make any more sacrifices to get more EU/IMF aid. Bank
and utility workers, public sector contractors and even doctors have
taken to the streets. Private sector workers blame the bloated public
sector, civil servants blame tax cheats and many Greeks blame corrupt
politicians for the country's problems.

"The big problem of Greek
society is the tendency to consider somebody else is responsible for
everything that goes wrong," said analyst Theodore Couloumbis.


Greece, whose economy had grown strongly but suffered problems with
corruption and bureaucracy, joined the euro zone a decade ago, linking
its economy to other European countries.

It went into recession
in 2009 after 15 years of growth and its budget deficit hit 15.4 percent
of GDP after a series of revisions by the government which revealed the
country's economy was in far worse shape than it had previously

Chronic problems include rampant tax evasion -- the labour minister has estimated a quarter of the economy pays nothing.

More broadly, the Greek crisis reflects an inherent weakness in the
euro's structure -- a currency zone with a "one size fits all" interest
rate for a set of widely divergent economies, and 17 different countries
running their own fiscal policies.

How the crisis plays out will determine the failure or survival of the project.


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Tue, 06/21/2011 - 07:17 | 1388297 Ethics Gradient
Ethics Gradient's picture

Anyone have any idea what the ration of no to yes will likely be?

Tue, 06/21/2011 - 07:18 | 1388299 qussl3
qussl3's picture

Apparently 155 PASOK will be yes.

Tue, 06/21/2011 - 07:20 | 1388300 Ethics Gradient
Ethics Gradient's picture

I do apologise. I should have said:

What will the ratio of no to yes be, bitchez?

Tue, 06/21/2011 - 07:31 | 1388310 topcallingtroll
topcallingtroll's picture

the ratio won't matter.

It is scary as hell going long now, but I still think germany and greece will gloss over their differences for one more round of bailout roulette.

News should be positive today?

Tue, 06/21/2011 - 07:47 | 1388350 ViewfromUnderth...
ViewfromUndertheBridge's picture

ha 2100 GMT which I think is when NO markets are open.

Long night for longs tonight, rottsaruk trol

Tue, 06/21/2011 - 09:07 | 1388542 Ethics Gradient
Ethics Gradient's picture

No vote has ever set back the EU agenda.

This will only end when only Germany is left to backstop everbody and it realizes it can't afford to.

There's years to go yet.

Tue, 06/21/2011 - 09:23 | 1388609 Rynak
Rynak's picture

If my calculations are right, then yes - it will be about one hour after market close.

Tue, 06/21/2011 - 07:58 | 1388378 Bugman82
Bugman82's picture

Newswires are saying it is much more likely that he'll remain in power than be thrown out.  Basically, all the political parties are in bed with the idea of austerity and the people who are rioting have no representation.

Tue, 06/21/2011 - 08:27 | 1388437 Ethics Gradient
Ethics Gradient's picture

I do think anyone has ever rioted because they agree with their representatives...

Tue, 06/21/2011 - 07:46 | 1388341 Pool Shark
Pool Shark's picture


"Anyone have any idea what the ratio of no to yes will likely be?"

How about 42?

[Don't panic; it's mostly harmless...]


Tue, 06/21/2011 - 08:16 | 1388423 qussl3
qussl3's picture

Like the Vogon construction crew overhead?

Tue, 06/21/2011 - 07:21 | 1388298 qussl3
qussl3's picture

This is bear, handle it the same way you guarantee a lehmann.


Tue, 06/21/2011 - 07:23 | 1388301 Ivanovich
Ivanovich's picture

"Chronic problems include rampant tax evasion -- the labour minister has estimated a quarter of the economy pays nothing."


Hey, where did I read something like that before?  Oh yeah, here!  Except it's closer to 50%.

Tue, 06/21/2011 - 07:48 | 1388353 JustACitizen
JustACitizen's picture

Perhaps that is the case here in the US?

However - I'll bet they can't beat us for huge multinational corporations that not only do not pay income taxes - but - also receive  truckloads of cash from the gubmint... We are the epicenter for big corporate malfeasance - just follow the money.

The situation here is especially galling since we also get involved in so many foreign adventures in the name of truth, profit and the American way....


Tue, 06/21/2011 - 08:14 | 1388302 Paralympic Equity
Paralympic Equity's picture

If they vote confidence stop them, people of Greece stop this crooks

Tue, 06/21/2011 - 07:30 | 1388308 hugovanderbubble
hugovanderbubble's picture

Greece Exit EURO

Vote No

-Say hello to neo drachmas

Massive devaluation in Eurozone

Two Euro´s Floating A and B

Tue, 06/21/2011 - 07:30 | 1388309 Rynak
Rynak's picture

In a poll last month, 80 percent of people said they refused to make any more sacrifices to get more EU/IMF aid.

What is there left to vote on? Oh wait..... 'mockracy.

Tue, 06/21/2011 - 07:31 | 1388314 topcallingtroll
topcallingtroll's picture

Rynak the greeks are silly.  They remind me of a king who commanded that the tide turn around.

It doesn't matter what they "refuse" to do.  They are going to make more sacrifices one way or another. 

It is interesting how they and most countries will "refuse" to make sacrifices, but by their actions make the sacrifices worse.

Tue, 06/21/2011 - 07:41 | 1388327 Rynak
Rynak's picture

Which will ultimately make a breakdown unavoidable, unless they totally sell out to the lenders.... who will then fuck them over even more. How the fuck do the banksters imagine this to work out anyways? Does anyone even have any working idea at all how this could work?

As i see it, the only question on the table is how much suffering everyone wants. FFS, the entire economic structure of the EMU is unworkable..... accept it and start working on something that does work, instead of wasting everyones time, blood and money on denial.

Tue, 06/21/2011 - 08:15 | 1388416 msamour
msamour's picture

I suppose a good answer to that would be to eliminate all bankers, all lawyers, and all politicians. The oceans are big and deep you know.

Tue, 06/21/2011 - 12:31 | 1389263 el Gallinazo
el Gallinazo's picture

How the fuck do the banksters imagine this to work out anyways?


As David Rockefeller announced semi-publically two decades ago, one of the primary agendas of the world banking cartel is the destruction of the sovereign nation state, so that the world could then be run by enlightened bankers, the equivalent of Plato's philospher kings.  Society would revert politically to a semi feudal state with some central control through the IMF as the central bank and NATO as the primary repressive force to counter revolution.  In this respect, the crushing of Greece into a failed state is even more important than the banksters not taking a loss on their debt.


As many have pointed out, the Euro cannot survive without political union.  This is the next step by the banksters.  They have failed in the past because it has been rejected repeatedly by national referendums.  So now they are on a Naomi Klein course of producing a disaster that would necessitate it.


So the end game is a world government composed of bankster feudal fiefdoms. Serfdom bitchez.

Tue, 06/21/2011 - 08:13 | 1388413 JustACitizen
JustACitizen's picture

Canute - a Danish King of England - had a coterie of flatterers who supposed that he was such a great king that even the tides would turn upon his command. He went through the exercise that is usually referred to in legend to demonstrate that the power of any man - even a king was limited... By the way - he was a believer in "sound money".

Some of the PTB could learn something from him...

Tue, 06/21/2011 - 07:27 | 1388311 John Law Lives
John Law Lives's picture

Greece's debt has continued to grow.  The austerity measures being discussed will result in tens of thousands of jobs in Greece being eliminated.  If Greece can not repay its debt now, how can the loss of tens of thousands of more jobs lead anyone to believe Greece will be able to pay an even larger debt.


Kicking the can down the road... and the can is getting bigger.

Tue, 06/21/2011 - 07:37 | 1388319 Rynak
Rynak's picture


Actually, no. The EU is not necessarily fubar (though, i strongly dislike it's increasingly centralized politics - i don't want an EU gov.... i just want an efficient way for european countries to cooperate with mutual consent, while fully and with no compromises everyone keeping full sovereignty).

The EMU/Eurozone/Euro on the other hand is a stupidity that never ever should even have been introduced.

Tue, 06/21/2011 - 07:58 | 1388362 Rynak
Rynak's picture

What does this have to do with the EU? You know that there is a difference between EU and EMU, right? (To oversimplify it: EU = mainly political union, EMU = the economic union)

Tue, 06/21/2011 - 08:00 | 1388382 John Law Lives
John Law Lives's picture

<<<  What does this have to do with the EU?  >>>

Ask Tyler.

Tue, 06/21/2011 - 08:07 | 1388391 Rynak
Rynak's picture

That article, as the title implies, was written by socgen, not tyler.

Tue, 06/21/2011 - 08:09 | 1388397 John Law Lives
John Law Lives's picture

That article was published on this site which is moderated by Tyler.

Spare this thread your petty semantics.

Tue, 06/21/2011 - 08:17 | 1388409 Rynak
Rynak's picture

My "petty semantics" are:

- differentiating between a political alliance, and an economic alliance. Comparison: The NATO is not a currency. I.e. the end of the dollar does not necessarily mean the end of NATO, doh.

- differentiating between the author of an article, and the one who publishes it (i.e., if one finds a good article, which however in one sentence uses a wrong term, then one may publish it anyways)

So, you know.... spare this site with your dumbness.

Tue, 06/21/2011 - 08:24 | 1388433 John Law Lives
John Law Lives's picture

- Save the lecture, professor.  The EU is formally defined as a political and economic union.  The EU is FUBAR.  That is exactly what I said and it is exactly what I meant.

  - I never said Tyler wrote that article, brainiac.  You falsely asserted that I did.  I said "ask Tyler".  I referenced an article he saw fit to publish on this site.

Spare this site from your equivocation.

Zzzzzzzzzzzzzzz.... (this is the sound of snoring as a direct result of your putting the thread to sleep with your drivel)...

Tue, 06/21/2011 - 08:40 | 1388458 Rynak
Rynak's picture

What are you... 12? This is so lol..... all this wiggling and crap, just to defend yourself from using ONE wrong WORD? You go into defensive "need to be right to save my ego"-mode just for being corrected on the use of a word?!?

If wrong use of a term already shakes your selfconfidence, then what do more significant flaws do? Oh well..... poor being.

Tue, 06/21/2011 - 08:44 | 1388481 John Law Lives
John Law Lives's picture

I did not use a wrong word.  I said the EU is FUBAR.  That is exactly what I said, and it is exactly what I meant.  I also never said Tyler wrote the article.

Zzzzzzzzzzzzzzz...  You are putting me back to sleep.


Tue, 06/21/2011 - 08:54 | 1388510 Rynak
Rynak's picture

*leaves john 8 natos for sweets and then goes to do something more productive*

Tue, 06/21/2011 - 09:01 | 1388521 John Law Lives
John Law Lives's picture

You simply can't admit that you were wrong on both counts, simpleton.


Tue, 06/21/2011 - 07:37 | 1388316 Hedge Jobs
Hedge Jobs's picture

"A Greek default would be a catastrophe" Here we go agian with the threats. Like the current situation is really going well.

they will get this through, look at the markets its a done deal. The only unknown is how the people of greece, and waddel and reed, respond.

Tue, 06/21/2011 - 08:04 | 1388381 Rynak
Rynak's picture

"The world will end if you do not do what i say!"

Tue, 06/21/2011 - 09:35 | 1388665 Withdrawn Sanction
Withdrawn Sanction's picture

It's true of course....the world WILL end...for the bankstas and their pet politicians.

Tue, 06/21/2011 - 07:37 | 1388318 rootProbiscus
rootProbiscus's picture

What about a mention that the Greek government(s), in collaboration with some (all) major banks, hid the fact that they borrowed some of the money. This fact was hidden from the Greek people and from the other Euro member states.
These borrowing were revealed like a rabbit from a hat two years ago and the Greek people are quite rightly asking well we didn't know about it, and did we really get the benefit from it. The loans were purposefully hid, so why should we repay. This is especially so given the corruption rampant in Greece.
Remove these dodgy loans from the books, with repayment of $0 in the dollar, and I am sure that an agreement with the Greek people could be reached.

Tue, 06/21/2011 - 07:41 | 1388337 youngman
youngman's picture

These banks that hid their loans to can bet are going to get paid first if they haven´t already been...the crooks get paid first..before the legit loans.....more bonus money for GS..

Tue, 06/21/2011 - 07:37 | 1388320 erklärbär
erklärbär's picture

I wonder how the market will react to either outcome.






Tue, 06/21/2011 - 07:50 | 1388351 BCTwelve
BCTwelve's picture

were you asleep yesterday?

Tue, 06/21/2011 - 08:09 | 1388403 erklärbär
erklärbär's picture

something happened!? Gold a little up, Dax a little down. Certainly not doomsday like ... (I'm fucking ignorant, that's why I'm asking in the first place ...)

Tue, 06/21/2011 - 07:34 | 1388321 Cassandra Syndrome
Cassandra Syndrome's picture

How can they service this debt when the Power companies are going to keep striking. Maybe its just me, but I thought electricity is required to fulfill economic growth ambitions?

Tue, 06/21/2011 - 07:45 | 1388339 qussl3
qussl3's picture

Since when did reality matter?

Tue, 06/21/2011 - 07:34 | 1388322 Gordon Freeman
Gordon Freeman's picture

Who gives a shit anymore?  It's all a foregone conclusion.

Can? meet shoe...

Tue, 06/21/2011 - 07:38 | 1388326 Franken_Stein
Franken_Stein's picture


There will be no market reaction to either outcome.

How could it, when the market is 100% rigged ?


Tue, 06/21/2011 - 07:44 | 1388344 Version 7
Version 7's picture

This is the beginning. Events at the present time are still going linear. Wait for more sovereign defaults to join the Greeks, and the mathematics of chaos will get in charge.

Tue, 06/21/2011 - 07:51 | 1388359 Gordon Freeman
Gordon Freeman's picture

I guarantee that, even if all the PIIGS defaulted, it would not stop the game TPTB are playing.

Tue, 06/21/2011 - 07:58 | 1388377 Version 7
Version 7's picture

The PIIGS default, a coup takes place in one or two, maybe civil war for the most dynamic, banks fail again, stop lending, Dow down 2K pts in a week, social unrest, eg UK leaves the EU, etc, etc.

Use your imagination. TPTB better have a strong knowledge of mathematics of chaos.

Tue, 06/21/2011 - 07:57 | 1388365 speedy
speedy's picture

It's all greek to me.

Tue, 06/21/2011 - 07:54 | 1388366 overmedicatedun...
overmedicatedundersexed's picture

what vote?? the results of this Vote are predetermined..the surprise will be that the greeks voted for the plan and have accepted austerity by 51% -much to the shock of the press...commentators will praise the wise greek voter as responsible.

as stalin said who cares about the vote it's who counts the vote that matters.

see Irish vote and revote when results do not suit.

Tue, 06/21/2011 - 08:00 | 1388373 orca
orca's picture

Some more relevant dates
Sunday July 3rd - Meeting European ministers of finance on greek "solution"
Wednesday July 13 - Release stresstests 2.0 (now even bigger and better!) Eurozone banks, but only if EUR still exists by that date

Tue, 06/21/2011 - 08:02 | 1388389 orca
orca's picture

And for those really interested in the German view on this mess
Der Spiegel article in English, titled "Time for plan B"
Tasty quote:
A 10-member "Greece Task Force" at the German Finance Ministry has worked out how this could function. The experts propose that the Greek government, in addition to the €90 billion-€120 billion in fresh cash it may receive from the euro-zone countries and the IMF as part of a second bailout, also be given access to bonds issued by the EFSF, the euro rescue fund. It could pass on these securities, which have the rating agencies' highest rating of AAA, to Greek banks, which in turn could use them as collateral to obtain liquidity from the ECB.

The problem is that this measure would make the new bailout package significantly more expensive. To ensure that the EFSF had sufficient funds for the operation, its financial scope would have to be increased so that it could really make €440 billion available, as it was originally intended to do. To achieve this, the member states would have to double the scope of their respective guarantees. Germany, for example, would be liable for €246 billion in the future, instead of the current €123 billion.

Prepare to be awed by the markets, because they will go all-out to save the status quo. Best case stagflation bitches!

Tue, 06/21/2011 - 08:16 | 1388419 DavidC
DavidC's picture

If it passes, Greece will come to a halt. Simple as that, the people have had enough.

Iceland doesn't seem to be faring too badly after telling the bankers where to go.


Tue, 06/21/2011 - 08:20 | 1388425 CactusLand
CactusLand's picture

Who really loses in a default, that is the question.  Where did the money come from to lend to the Greeks?  Did anyone work to make this money, or is the simply imaginary 'leverage" money?  If you lend a buddy a weeks salary, that is money, what was lent to the Greeks is is digital leverage, we need to wake up to this.  This article explains further

Tue, 06/21/2011 - 08:34 | 1388448 Frankie Carbone
Frankie Carbone's picture

You've heard of the efficient market theory, right? The "market discounts all news"? Well, the dow is headed to 17,000 by Friday so that should tell you right there what the vote already is. 

Or maybe the market is just masturbating over "less shitty news" and that's good enough to rack another 1,500 on to the dow. I dunno. 

It will be a vote of confidence. And Frankie will lick his 5K wounds on his bearish option position as he should have known better that TPTB simply will not leave well enough alone. 

This is all fucked up. Seems every once in a while I get suckered into "fundementals" and learn my lesson, all over again. 

Never trust fundementals in a "managed" market. 

Tue, 06/21/2011 - 08:48 | 1388494 mpolito54
mpolito54's picture

He will get his confidence vote, no doubt. Otherwise we go for new elections and PASOK will lose. He has 154 (out of 300) majority and I think some of the opposition will also vote for him or be absent. The issue is the midterm austerity measures and already they are discussing some changes. There is some crazy staff there which makes no sense and not much difference financially speaking. The main issues related to the bankrupt public sector, structural changes in the labor market, investment incentives and laws, privatizations, etc. are left for later on.

Tue, 06/21/2011 - 10:14 | 1388804 AldoHux_IV
AldoHux_IV's picture

Sounds like the growth seen until 2009 was also a byproduct of debt which in the end always has a way of overcoming and pushing true growth prospects down i.e. it was all on leverage and stole from the future.  Now they are going to solve it by pushing more debt onto the situation.

Tue, 06/21/2011 - 10:55 | 1388948 SokPOTUS
SokPOTUS's picture

Watch it all go down live, here:



Tue, 06/21/2011 - 11:34 | 1389086 CrashisOptimistic
CrashisOptimistic's picture

It really is astonishing how the entire matter has transitioned from concern that the ECB and EU can't agree on how to fund a bailout (there is zero agreement still on this) to what it now is . . . will a PM with a seat advantage survive a vote of no confidence.

The vote doesn't do anything about Merkel's election losses and her reluctance to write another check.  There is no agreement on what new funding should happen or how.  In fact, the present argument is over whether to give them the next installment of money already approved for them (that hasn't worked).


Tue, 06/21/2011 - 21:43 | 1390856 jackbooted gauleiter
jackbooted gauleiter's picture

The solution is simple. Give the land to the Germans in exchange for the loans. Then instead of paying rent to the local landlord, you pay rent to your German landlord. If things had been left the way they were in 1942, then we wouldn't have to be going through this nonsense now.

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