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Please read my latest entry and post your comments here:
http://pensionpulse.blogspot.com/2010/05/omen-of-things-to-come.html
Thank you,
Leo Kolivakis
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the worst part of the omen is the inverse keynesian policies that the financial markets enable/demand: in times of relative plenty (1983-2007) governments world wide ("liberal", "conservative", whatever) could run fiscal deficits and get financing. in times of relative famine (2008...?) increasingly they can't.
keynes said governments should run fiscal surpluses in times of relative plenty so that they could run countercyclical deficits in times of relative famine. good idea, possibly. however it apparently requires a better political class than the world provided. too bad we will not know how keynes' ideas would have worked for this iteration of the deflationary depression. oh well, there is always next time (but, as keynes also noted, we will all be dead).
Not sure if it is the worst part.
But it is one suiting a consumption game.
When plenty, the supply rate is high, therefore if you want to absorb it, you need to go into debt.
When scarce, the supply rate is low, therefore if you want to maintain/increase your consumption, you need to get someone to fasten their belt.
Saving is counter-productive in a consumption game. You save, you lose. You go in debt, you win. Anyone who is saving is not saving for oneself but is freeing more consumption space for anyone who is consuming right now.
the Papandreou government has been officially served with an order to vacate. this diktat will be enforced by the coming IMF riots of which we have only been glimpsing the first approaching waves of what will become a tsunami of unrest.
The fat guy didn't get a job because there are no jobs. The fat guy didn't get a job because he looks like shit. Would you hire him?
@Leo Kolivakis
I'm Canadian. I'd appreciate a post on the state of the Canada Pension Fund. I recall reading in the New York Times after the Delta Airlines [?] fund melted in the dot.com bust one the trustees of the fund lamenting he did not take a stronger stand against the fund investing in the stock markets. Sometime later I read the Canada Pension Fund was going to invest in the stock markets. What? was my reaction. Currently the CCP is 56% (?) vested in the stock markets. What's going on here. Another issue, Simon Johnson and Peter Boone have suggested the current Bank of Canada Governor, a Goldman Sachs alumnus, might be suitable as the new chief economist for the IMF. What? Your opinions highly welcome.
<a href="http://tippygolden.wordpress.com/tagline-2/">tippygolden</a>
I write on Canadian pension funds all the time, just Google "Pension Pulse", my blog. No comment on Mark Carney and the IMF. Nothing surprises me any longer.
Anyone with a broadband connection is living beyond their basic needs.
ZH sucks without a high speed connection...LOL!
Leo,
I tried to comment on your blog and it appeared only "team members" could comment. Anyway:
The situation of the Greek people is sad. However, it is simplistic to say that the average citizen of Greece is not at fault.
Ultimately, the fate of every person is bound up in the fate of their country (unless they can immigrate).
That is why each citizen should vote not for the politicians that promise the most but for politicians that will do the things that everyone knows must be done.
Save a substantial part of your income; don't go into debt; work hard to build a better society. (Both countries and individuals must follow these rules).
Did the Greeks ever vote for such people? (Neither have Americans by the way, so we are all Greeks now--or will be soon)
What will happen to Greece is sad, but for the society as a whole, deserved. Individual Greeks may have acted responsibly, but as a society they have brought this on themselves. The voice of one wise man will be drowned out by a crowd of fools. One brave soldier cannot hold the line if the others flee.
The same collapse and poverty will happen in the US. Having saved, lived sensibly, and deferred today's pleasure for future security will not save an individual if all his neighbors default on their homes and demand wages higher than the value of their labor (plus govt freebies on top of that).
Watch Greece and fear for America. Greece cannot be saved because, ultimately, they don't want to be. Try talking to an alcoholic about the damage his drinking does--then try talking to a society about the damage excessive spending, to much debt and too little savings does--see which one you have better luck with.
The average Greek, just like the average American, can't save much after paying for basic needs. Why don't you blame the corrupt bankers who pay nothing in taxes?
I'm sorry, Leo, but I think that saying that the average American (and I will extend this to the average Greek, although with less certainty) cannot save is an convenient myth used to excuse bad behavior.
I agree that bankers took advantage of the desire of many people to live beyond their means but anyone that took a "liar" loan out is still a liar. The banker committed fraud and should be in jail but the liar committed fraud also and should be punished to ensure that moral hazard still exists.
People who used their house as an ATM may have been misled by "real estate always goes up" and may have been lulled into a false sense of security by the endless supply of liquidity from the FED but they should have paused before borrowing all that money and maxing out their credit cards.
My wife and I always both worked but we always lived as if the 2nd income was not available. Our friends thought we were crazy because we drove old cars (usually only had one) and we paid cash for everything (once we manage to save enough--we did without until we had the cash).
This is the way most everyone lived when I was growing up. You did without to save and you lived poorer than you were. We still use "Go-phones" where you pay by the minute and we use them only when necessary. We both have cell phones for about $100/year even though we are worth millions--we had a net worth of $0 when we married 30 years ago. This is how you live if you want to have millions. Read the "Millionare Next Door" to see how Americans who do well manage their money.
No one forced people to spend more than they should have. The lack of personal responsibility got us where we are. We elected politicians who promised free money, we spent money we should have saved (as a society and as individuals), and allowed our government to build an empire outside the USA and a huge bloated bureaucracy inside the USA. We (and I am pretty sure the Greeks) did this to ourselves. And, responsible or not, we will all pay the price.
Greece will be destroyed unless the people force the government to act responsibly, to spend within its means, while they work for less, live with less, work longer, work harder and make it their goal to sacrifice to build a better stronger Greece. Look at the German experience. It can be done.
America must do the same. Change direction now. Every American must sacrifice. Take pension cuts, live in smaller houses, drive cars longer, work harder, work longer before retirement, save more, plant vegetable gardens, can food, dress less well, etc.
America must build a better future for its children or perish.
I am afraid both the Greeks and Americans will try to blame it all on the (partially guilty) bankers and choose not to take their medicine and let their country die rather than do what must be done. I hope I am wrong.
Corporate taxes are just taxes upon taxes upon taxes anyway, the shareholders eventually pay capital gains, the employees pay income taxes, and both must pay sales taxes if they actually use that money.
Let defaul/deflation happen already. It is the natural order of things after a massive debt/credit binge. The hangover MUST be allowed. Yes, we will have a depression. However, we will salvage currency(ies).
A Bernanke-styled inflationary depression is going to be far worse for the people. Only the banks will benefit (yes, we knew that all along this was the plan).We will all live in poverty if these f*ckers get their way.
Debt has to be defaulted/paid down, prices must come down. The unemployed at least deserve a shot at preserving the little buying power they have left. Those with cash will ultimately pick up the slack, we will find a bottom. If Bernanke's wet dream comes true we are all done.
This weekend was spent by the Politicos trying to come up with the best lies to tell about how everything is fixed now......... Amazing what people will put up with because they are afraid to act or demand accountability.
The article inferred something different and spelled out specific so-called austerity measures that must be met for IMF and EU. I don't disagree it is all smoke and mirrors and likely none of it will be implemented but greatly talked about for politcal reasons. That's what politicos do is talk. Most have never actually worked a day in their lives. The exmples are abundant worldwide.
Something needs to be made clear: the EU and IMF did not really enforce austerity on the Greek government, the private debt markets did. As that was happening, the EU and IMF offered to allow the Greek government less austerity, in return for the Greek government's commitment not to default on its private debt during the aid period. Obviously the Greek government would have preferred to be allowed even less austerity, but after the negoitations with the EU and IMF, this is the extent they agreed on. It is much less austerity than private debt markets were in the process of enforcing, which was essentially zero deficit immediately.
How could the markets force a zero deficit on Greece? If you can't collect by promise than you collect by force-in this case there was no army to go into Greece to force payment so the private markets were pretty much screwed.
How to force?By attrition maybe?
OK lower my estimate to $50,000 or $75,000. It is still the same point to be made. Families making the above numbers are entitled to numerous benefits to get "da gubberment cheese". I don't disagree everything is more or less out of control and expectations are absurd. It is. I live in a very sparsely populated place, on purpose! Most people would hate it, I am happy as a clam clean in water, with that. Anymore a million represents what 100K used to, not that long ago. Now we deal in billions and trillions. So the bar has been raised as to what wealth is or is not. Pretty crazy.
Cossack- My thesis only requires a change of thinking, which I believe is happening but I agree too slowly. Is your answer to do nothing and let the current staus quo prevail? What I am suggesting is in fact feasible and when people have suffered enough very likely. They simply haven't suffered enough.......YET. The coming elections will set the pace for future events. They are all criminals,dems/reps, its just different flavors!
Just exactly what does the "austerity" issue really mean? In fact it is just a term someone applied to the current situation to give it more political clout. Real austerity is not even close to an issue. If you have lived your entire life off of government freebies any lesser benefit is not austerity, it is an attempt of achieving some form of previous reality. In Greeces case you would have to go back a long way to find that. So the people are so far gone with the "da gubberment cheese" they consider any thing less as austerity? Thats how whacked it has gotten and it is no different here in the US.
Teach them the meaning, dump them in the less friendly neighborhoods of Africa, imo.
Actually, that sounds great, we'll send a random sample of 1/5 of all people outside of Africa in to Africa, either things get better there in a hurry, or we just went back half a generation on the whole overpopulation problem.
how about omens from the past? Argentina defaulted on its debt, but private investment stepped in and picked up the slack. it seems to me that parts of that analogy are in place, a military dictatorship, problems with currency translation, (the dracma is no more, unless you refer to it as the gap between Greek economic activity, debt, and and the umbrella currency, in Arg it was a dumping of the peso, for the dollar) massive tax evasion, deep involvement with the IMF.
Anyway the fixed rate convertibility collapsed, which collapsed the economy. The new devalued peso helped Argentina start exporting goods again. At any rate if you see any real difference its Greeces death embrace with the EURO. Seems like collapse is possible, but without breaking the currency peg, recovery is not. From the previous analogy to Argentina.
Leo,
Another fine post although it is always better to hear directly from you than it is to read others' writings. The part that could not escape my notice was the reference to how G-Pap's family helped to erect the Socialist state and the direct linkage between that socialist state's policies and the plight of the Greek people today.
As we have seen time and again, the IMF recipe is a recipe for failure and imposes on the Greek people a level of suffering disproportionate to that which will be felt by the remaining PIIGS. However, I do not believe that any of these plans will stick. I believe that the IMF/EU rescue package is there to prevent a run on the remaining PIIGS (to say nothing of the insolvency of the French and German banks who each have in excess of $70 billion out to the country) and to give Lazard time to structure a default with the softest landing possible.
All this "austerity" talk has the feel of propaganda. I will be amazed if 20% of the agreement is in place six months from now.
No matter how you slice it, the Greeks at ALL levels have spent money into the future that they simply do not have and they have compounded their situation by hiding it for years. The populace expectations cannot be maintained. Their days of reckoning are here. I will bet $100 to any takers that the lady who had 1 child and wanted another was not married and has lived off the state "prior" to the "Greek Economic Tragedy" any takers? Some one mentioned peoples personal lives as an issue. Of course its an issue and we have to grow up and realize its an issue or we will soon be in the same boat. To some degree we already are! Between the leaches at the bottom of the pile and the leaches at the top of the pile, the actual taxpayers in the middle are facing total destruction unless they wake up and demand some form of fiscal responsibility. Most people if not all on this and other sites fit into the middle group I speak of. $100,000 to $1 mil income that is the new middle class in America and they are to be bled for the other two groups! The lower group is nothing more than pure political power lemmings being fed the mantra of "we deserve" and the upper group of course manipulates the entire process. Unfortunately the political base has control of the money and is therefore one in the same at this point. Not good! Just a diifferent flavor "Fuckin" than the republicans. Fact is we are not much different economically than the Greeks. The video is totally bent to favor the "poor down trodden" who have been living high off the state their entire lives. We have them here in abundance, as well! SO, does feeling sorry and giving them more assistance change anything???? Nope, in fact it makes it worse and Greece is the perfect example today! The only thing that ever works is dealing in reality, not political mantras where the political elites are more than willing to give "anything" away to get votes. Absolutely nothing will really change until the people of the world (US especially) come to these realities.
Remember. "The Revolution will be televised" perhaps it is.
$100,000 to $1 mil income as middle class? What part of the country do live?
Oh yeah. good luck with that happening. It begs the Missouri question: How many times do you have to hit a mule between the eyes with a 2x4 before it will respond?
Answer: WTFK
Leo
The Omen has been in front of us for a generation. Why bother working hard when your house is going to make you a millionaire ? Why bother saving when the banks pay you nothing, so borrowing and stock market speculation runs rampant.
Governments and their beneficiaries promote lotteries- robbing from the poorest to support government bureaucracies. Bread and Circuses for a generation.
Value- added taxes are introduced, not to replace income taxation but to add to the tax burden of the middle class.
Apparently, the political leaders, the crooked banksters, and the government unions are blissfully unaware that they have destroyed the middle (working) class- necessary to support their limitless greed.
Yes, Greece is an Omen alright. An omen of growing black markets, distrust of your neighbors, and repudiation of onerous debt.
We are continuing to reap what we sowed.
Shape of things to come? If it means getting banks and governments to be accountable, I sure hope so, but I'm not holding my breath. If the state dependency culture portrayed by the right hand side of the debate and the IMF is correct then Greece deserves all the austerity measures it faces. Examples of retirement at 53, 1/3 of GDP not declared to avoid taxes, inefficient and corrupt civil servants. No surprises that the people runming the country have run out of people willing to lend and that the country is a living failed nation state. Maybe GS did them a favour by getting them a few years worth of extra credit lines. If other countries in Europe like the UK, Latvia, Spain, Portugal and Italy get hoisted by the same petard then so what? It is only paying back for the "liar loans" written over the last three decades. Value is a scarce resource. The US can look over to Europe and Japan and say, we have our own lessons to learn. Japan has hidden behind a 5-10% fiscal deficit by printing money for twenty years. It owns what a trillion of treasuries? Simply participated in the cloud cuckoo land that goes by G7 government methods. Its crap, always has been always will be. I do believe in a better way. Doom and gloom is way too negative for me. A new theory is just around the corner and maybe the old method of quality emerging from opposition to government will provide that path. I don't have the answer, but hey, I'm slow, not stupid.
Kinda concur with Atoyota but it's his schtick so it doesn't really bother. Also concur with DUH!
Good stuff Leo. If we can not change the power structure in Congress in November then the omen will be omens. Make no mistake. The leadership with the reins are trying to destroy the USA from the inside.
Those are the stakes. The problem "they" still face is that Americans are armed to the teeth. Peaceful revolution? Or civil war? Something has to give. I don't see states like Texas walking down that emerald road.
Like I said something has to give. Rigs blowing up. Nissan Pathfinders about to blow. Water mains breaking. Goldman Sachs and Congress doing the Dog & Pony show. The Gulf of Mexico is a hurricane away. Ad nauseum. With so much a stake who has the balls to some dot connecting.
"Nick" "overqualified" more like propaganda set-up. Could they have picked a non-morbidly obese man to speak and be articulate on the matter? No, regardless of "Nick's" personal life, he was picked to make the association between being unemployed in Greece and a lack of self control. This piece of broadcast journalism is disgusting.
The unions brah! Unions there. And the Unions here. Let's be clear who is the muscle for those holding the reins of power.
Is Greece an omen of things to come?
Duh.
Leo... I'd rather read your posts here than to follow the link elsewhere.
I felt the point of ZH was to consolidate not disperse, but maybe I'm mistaken.
I did read you in the past (here), I've not read you in a while since you've taken to linking your site. There is still enough diversity here to sate my appetite, but I did enjoy your past posts. Otherwise I'd not rant.
Anyways, carry on... just me.
You are ranting. When time permits, I post here and go through editing, otherwise, one click away, and you can read it all on my blog. No big deal, just post your comments here.
i don't have a problem with leo's technique. had to do it anyhow for technical takes' charts which were partly covered by some zerohedge banner.