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Putin Tells Greece to Relax, Points to US Debt
Submitted by Leo Kolivakis, publisher of Pension Pulse.
This will be the final comment on my Greek trilogy before I move back to
covering pensions. Greg Bryanski of the Globe and Mail reports that Putin calms Greece, says U.S. debt big too:
Russian
Prime Minister Vladimir Putin played down Greece's economic woes on
Tuesday, telling his visiting Greek counterpart that the United States
were no better than Greece in handling its debt and fiscal deficit.
“As
we all know, the global economic crisis started neither in Greece, nor
in Russia, nor in Europe,” Mr. Putin told a news conference after talks
with George Papandreou. “It came to us from across the ocean,” he said
in a clear reference to the United States.
“There
(in the U.S.) we can see similar problems - massive external debt,
budget deficit,” Mr. Putin added, suggesting Russia and Greece should
concentrate on the “real economy” to weather the economic crisis.
Mr.
Papandreou arrived in Moscow amid rumours that the cash-strapped euro
zone member may turn to Moscow, still running the world's third biggest
foreign exchange reserves and eager to boost its political clout, for
financial assistance.
Iceland began loan talks with Russia in
October, 2008, after its main banks and currency collapsed. The tiny
NATO member eventually secured funding from the International Monetary
Fund and Nordic neighbours and the Russian loan never materialized.
On
Tuesday European ministers told Greece it may need to take further
steps to bring a swollen debt under control, with Germany saying Greece
should imitate Ireland and Latvia, both of which are slashing spending
and wages savagely.
Both Greek and Russian officials denied
financial aid was on the agenda during talks in Moscow, while President
Dmitry Medvedev said he had told Papandreou to turn to the
International Monetary Fund and the World Bank for help.
“This
is not the end of the world. I believe that we will come out of this
situation much stronger than we are today,” Mr. Papandreou told the
news conference.
Love him or hate
him, Putin is right. While the media's attention remains on the Greek fiscal crisis, the bigger debt crisis is in the US, and the world is starting to take notice. It's high time the Obama administration also looks
into bolstering the real economy instead of the Big Giveaway to the
Wall Street sharks who thrive on volatility (generates more fees).
Of course, Putin also knows how to generate fees, the old
fashion way. BusinessWeek reports that under Putin's rule, Russian arms exports more than doubled over the last decade to $8.6 billion last year.
Back to Greece. Dan McCrum, a columnist for the FT, was on Tech Ticker today telling people Relax, Greece Will Be Bailed Out. And So Will The Rest Of The PIIGS:
For the past couple of weeks, the global markets have lurched
between a state of bliss that bankrupt Greece will be bailed out to a
state of panic that it won't.
According to our guest Dan McCrum, a columnist for the Financial Times, the latter fears are overblown.
Of
course Greece will be bailed out, McCrum says. The bailout won't be
called a bailout (because people don't like bailouts), but it will be a
bailout.
And what about the other troubled European countries in
the group known as the"PIIGS"? (Portugal, Ireland, Italy, Greece, and
Spain.). If Greece gets bailed out, won't these countries immediately
come begging with their own hands out?
Yes, says McCrum. And
they'll get bailed out, too. Basically, German citizens will have to
pick up the tab for their less-productive Euro brethren.
One
thing that won't happen, McCrum says, is that the EU will fall apart.
This project (the EU) has been too long in the making, and Europe isn't
going to give it up over a few annoying bailouts.And, the silver lining: A weaker euro currency will be met with applause by Europe's exporting nations.
Judging by the market's reaction
today, most participants also feel a big, fat Greek bailout is in the
offing and Europe won't fall apart.
Finally, watch this Russia Today interview below with financial blogger, Megan Carpentier of The Washington Independent,
where she explains the derivatives fiasco that hit Greece and what the
fallout from this debacle will likely be. Will those giant squid
tentacles finally be revealed and what will be the ultimate fallout
from this mess? Right now, it's anyone's guess.
»
Paul Kedrosky has an excellent insider's account, Greece: Our Debt, Your Problem.
Lucky as individual countries in the EU, decisions have to pass our parlement first. So even if they want to bailout the PIGS we (the Netherlands) can still say no and decide not to pay.
Thats the reason why the EU is such a useless union. However a crisis in the PIGS countries will probably call for more powers for the EU and this will probably not even need a referendum in EU countries.
Just remember that the Netherlands and France first voted NO to the EU and after a few years, well they created it anyway.....how democratic....
Of course Putin will bash the U.S. debt. But then again, that's what Putin does all the time -- bash the USA.
understand Lisbon treaty renders EU non-liable to bailing member, true or not? if not maybe Greece et al get mauled by IMF or similar Wall St mauler ...
In the Maastricht treaty is a "no bailout" clause. That goes back to the introduction of the Euro.
A bailout will be a hard sell in Germany. If any opposition party makes a bailout an election theme that will put pressure on the federal government. Another possibility is a trade union bargaining and pointing out that there are billions for bailouts and no money for the public. The boss of the trade union for public services (ver.di) Bsirske pointed to the bank bailout in an ongoing bargaining.
Imagine a protest party stating that Germans get pensions at age 67 and pay for greeks getting pensions at 62 plus cutting welfare for Germans and using taxes to help Greeks or whom ever.
A second bank-bailout seems more likely to me even fit is hugely unpopular in Germany.
The bank bailout in the US was opposed by most of the citizenry but that didn't amount to a hill of beans. The bankers will get their way, and their way is a bailout.
Similar story in Germany, but trying it twice will be more difficult.
A bailout might mean bailing national banks but not foreign countries.
Look chaps, The Greek PM has gone and seen Putin to put the wind up the EU. As in, "if you don't lend usq the money, Russia will". The deal after WW2 was that Russia stayed out of Greece, and in return got a free hand just to the north of it.
Churchill did not want a Russain presence in the heart of the Med, and believe me, neither does the EU core either. So maybe the Greeks are just as cute as their history suggests, and quietly, in spite of all the "over my dead body" rhetoric, the germans will pony up the 40 mill required?
I give the EU significantly more chance today of eventually breaking up than I would have given in 1990 of the USSR breaking up anytime soon thereafter. Like the USA, the UK and Japan, they can play "extend and pretend" for only so long. The short-sightedness that passes for "political responsibility" in the world today never ceases to astound and disgust me.
Soon or later everyone and everything gets exactly what it deserves.
often, apparently, much, much later.
Leo, the friend of my friend is my friend right? Paulson claimed Russians tried to get the chinese to dump GSEs; too bad the stoopid chinese had no backbone and did not follow Putin's leadership right? China will eventually pay for their hesitation in a big US default a-la-Denninger for being coward, Putin will lead the wave of the global fascists in the next decade.
And Leo bought into this Greek thingy,forgetting that markets were practically jammed up and were not moving?. Greece has nothing to do with it neither anybody else. Nobody was buying,and the big guys had to drop the market so somebody steps in. Even rallied after the 1070 level to the 1104 resistance,while the Greek turmoil was still furious. And what changed now?I thought traders will always call the bluff,show me EU yor bailout plan,or we push the Euro down. This is what I love about the Wavers(referring to Elliot,Prechter,and Daneric). Markets moved first,and news followed. The Greek overhang(and everybody's elses debt)are still there and they are huge. And if the US can inflate,the Eurozone cannot(Merkel will be shocked if or when Eur/Dxy=3 occurs under her watch,and probably then will decide that Germany survived the Weinmar republic afterall).There was a race to long the Eur/Jpy starting yesterday evening as if there was huge gold and oil reservoir that were suddenly discovered somewhere in the Euro zone. Still watching to see if there is such a thing as p3 as Prechter predicted(of course I also believe that nobody can tell the future). But I would just love to see what that happen,if only to see how the news and politicians are going to interpret it........
Relax tovarich! Move your account to bear.
"Math question cannot be longer than 2 characters but is currently 3 characters long."
0 + -47 = -47, and regardless of arbitrary limits on the answer it is what it is.
Perhaps CAPTCHA uses the same math as the US gov't.
'Take money away from nothing and call it a positive.'
BTW my first captcha is __ minus 44 equals -80. ??
Second -12-__=-72 ???
Yay, third time lucky.
And of course Russia has always been a shining example of fiscal probity and prudence. Political jaw boning does not make Putin right about anything.
I'm curious Leo. How much mileage do you thing the market can get out of this Greek sideshow? I mean wasn't the move off 1044 sparked by the same rumour and inane buy the dip optimism? I say get it the hell over with so we can all sell the news. One large black candle, coming soon to a stock index near you.
Ummm, Greece, Mr. Putin is essentially correct, but one differenec between you (greece/Euro) and us (US) is that the dollar (for better or worse) is still the world's reserve currency.
The world's reserve currency, and a bank of printers that Ben is not afraid to use. I still see that as a mighty force to go against. As for China, I'm with Chanos, get ready for the bursting of their bubble. No threat there, except for a noticeably shorter line at the McTreasury for the 1.3 trillion whoppers we need to sell this year. Now, that's a problem. Greece will be solved, as will ther rest of the PIIGS - their banker cartel is the same one that never let accounts be settled up on this side of the pond. As long as private loss can be socialized they will make it so. Count on it.
The very deceptive name of this enmical, parasitic entity then is a practically necessary part of an incredible, purposed deception; and the only possible real purpose of all this is as much as to cast the nation to the fate not only of illimitable unearned taking from it, but terminal taking by a currency which can only multiply said consequences to no effect whatever but eventual collapse.
The stock/"securities" market bubble of the 1920s of course was the same kind of thing we see today. It was only a false manipulation of ostensible value, accomplished by aggressive short term lending to debtors, drawing them in to the allure of buying and selling "securities" again and again at ever higher prices than the original purchase. If these private "banks" did not already own the subject property, an obvious and very evident purpose of course would be that this false manipulation of value could soon be terminated by withholding the vital further credit necessary to service the debts of the false bubble itself. The related circulation would thus deflate, and the "banks" would immediately become the real owners of the contested property.
Thus amidst the false bubble of an ostensible stock market boom comprised merely of liberally free, unjustifiable masses of credit, Republican presidential candidate Herbert Hoover promised permanent prosperity:
"We have not yet reached the goal, but given a chance to go forward with the policies of the last eight years, and we shall soon, with the help of God, be within sight of the day when poverty will be banished from the nation."
So said Herbert Hoover in his speech accepting the Republican nomination for President on August 12, 1928, a mere year before the private so called Federal Reserve Banks would cease the credit to sustain servicing their false bubble's debts, thus orchestrating their intended multiplication of debt into a mass take, a coup de grace at the imposed end of the first 15-year lifespan of their system of usury in an event we now merely call the First Great Depression. Thus with a terminology either intentionally cloaking cause or leaving cause to mystics, we strip this very man made, man caused, man sought, wholly artificial event of a name which would even allude to its necessarily iniquitous nature.
And so to mere unwarranted hopes of equally or even more hapless and inept supporters, Herbert Hoover registered one of the most preposterous, indelible lies of history. And so furthermore, as is the case for any political quest which ignores or does not solve the real causes of whatever issues face us, the rest of the country and world, however impertinent, would suffer with them, only to one day many years off, merely re-commence the march to inevitable failure in the end of a second inherently limited lifespan of the very same iniquitous system — a system now proven, and in fact even then proven, to have one consequence only.
Hoover spoke for most middle-class people. They only thought the American dream of unlimited plenty was close to fulfillment. The huge industrial machine which had begun building up during the Civil War had reached fantastic heights of mass production. Assembly lines poured out products by the millions, while advertising stimulated the consumer to buy them. From privy, ice-box, and buggy the country moved almost overnight into the New Era of bathrooms, electric refrigerators and automobiles. Washing machines, vacuum cleaners and telephones promised to make life easier and more convenient. Homemade amusements gave way to radio and the movies. American business and American salesmanship had in fact put the nation aboard an express train rushing toward permanent prosperity, but the permanence of the prosperity which indeed we would have achieved otherwise itself hinged on the sustainability and propriety of the monetary system to which it was subject.
Failing to understand the facade of a monetary system which had been imposed upon them, they never dreamed the inertia of their train could be stopped by withholding credit. They never dreamed that their interdependence in fulfilling the multiplying obligations imposed upon them itself meant that over night, the withholding of credit even in one critical sector would bring the rest down like a house of cards.
Nonetheless, a little careful study would have made all that so clear that a national union would have existed which not only understood and foresaw these probable calamities, but recognized how serious it indeed remains that we unite upon nothing less than absolute solution.
http://www.perfecteconomy.com/pg-related-accounts-of-the-first-great-dep...
Everyone want's to blame the ol USA for everything but was that where exponential debt was invented? Heck no. It was one of the first place where an alternative worked and Ben Franklin went into the dens of Nobility excited and speaking about how how well it worked. eh hem! Ooops on that. When people start looking objectively at underlying mechanisms and principles not at escape goats things will actually get some where.
http://www.perfecteconomy.com/pg-related-accounts-of-the-first-great-dep...
"Failing to understand the facade of a monetary system which had been imposed upon them, they never dreamed the inertia of their train could be stopped by withholding credit. They never dreamed that their interdependence in fulfilling the multiplying obligations imposed upon them itself meant that over night, the withholding of credit even in one critical sector would bring the rest down like a house of cards."
Then does that make us, since the days of Franklin, a "conquered" country given the personal debt many people, families, municipalities, states, and the union carries?
Perhaps the Fed is the conquerer....
Greece might not get a bail - out.
money is tight , even fiat money.
The smartest thing that Iceland, Latvia and Greece can do is default on their debt and reclaim the sovereignity of their countries. Cow towing to the IMF austerity is punishing the poverty stricken for being poverty stricken. Any country agreeing to IMF conditionalities might as well have been invaded by a conquering army. The greatest form of revolt is to default and take back their countries.
actually Latvia and other Baltic states are in big trouble coz they changed too fast after the SU's fall... now since a re-integration is not possible their only hope is to merge with Scandinavian (Latvia goes for Sweden, Estonia => Finland, Lithuania= dont know...Poland? )
I live in Russia and I hate Putin. Apparently he tries to be a master of demagogy keeping Stalin as his role model but so far pales in comparison.
you re probably right, but facts are what they are.. even if u had 3 wars during putins administration (actually 2 + 1 now as a PM)..he managed to lift up considerably Russia's notoriety and standard of living... i lived in SU (so I know not worse than u what is the what..)...and now he will barter... bailout for natgas and nato issue ...he already won Ukraine, who's next?
The German taxpayer won't stand to bail out the PIIGS. Their own economy is skirting the brink and they'd rather watch it from their perch. Not that they don't care, they know the truth. I just came from a visit there.
Nikki.
who will ask em?
" You pretend to work and we pretend to pay you".
Excellent.
In USA, many don't even have to pretend to work and really do get paid anyway.
Tell me about it! I've lived in several countries, and the one thing I notice about living/working in the USA is the palpable fear that employees have of:
1) Being fired
2) Losing their healthcare
3) "Appearing" non-committed, and therefore doing copious, useless "face time" at the office
4) Questioning the status quo
5) Taking any meaningful vacation time (understandably, many can not afford to take long vacations or unpaid time as living paycheck to paycheck does that)
Fear is a very, very destructive force in the workplace. The USA harbors the most fearful, insecure workplaces that I've experienced.
Amen to that, SteveNYC. Even if you are appreciated at your job, you know that a single negative always out-weighs a whole string of positives. I've been fearing getting fired for 11 years at my current job, so I have never bought the grand piano I've always wanted. Not a big problem, I know, but it does corroborate your thesis.
Check your democratic ideals in at the door when you enter the workplace.
By the way, read any biography of Putin and you will realize that he is a borderline sociopath.
Leo
While it is true that the U.S. is leading the race to the bottom (of the sewer of debt), it is also true that Russia had its sorry ass bailed out a few years back. So, Putin like all of the Russian mini-me Czars before him, is offering advise, not yet earned.
Perhaps Putin can offer the old Russian economic Model- You Pretend to Work, and We Pretend to Pay You.
And, if hard-working Germany has to carry the burden of a bunch of spoiled Civil Servants and black market practitioners in Greece (and the other PIGS), then the European Union will self-destruct.
The E.U. will easily survive the "loss" of Greece and Goldman.
Putin is no dummy. He's already figured out that the way to garner votes is through pensions:
http://pensionpulse.blogspot.com/2009/11/putin-for-pensions.html
It can't be his genuine concern for the proletariat!
Russia is in a demographic nose dive, with Russian menhaving an incredibly short life span. Like FDR, Putin figures he won't be paying a lot of these pensions. As to taking anything over, don't be ridiculous.
Actually, Putin must have fixed the demographic problem too. Russia has reversed the negative birth/death rate as of August 2009.
http://en.wikipedia.org/wiki/Demographics_of_Russia
We'll see how our (U.S) natural birth/death rates are after a few years of economic collapse like they went through.
And as far as pensions go, don't see how Social Security or State Funds survive with so much debt. Again, Putin seems correct that we have it as bad or worse than anyone else.
Oh, and last I checked Russia still has the largest Nuclear weapons arsenal on earth and after the U.S. dominates space technology. So, they are positioned well to fill a U.S. void in many parts of the world they have interests in (Europe and the Middle East).
He's no dummy and he still harbors deep resentment towards the U.S. I think his goal is to punish the U.S. in the same way the U.S. punished Russia during the Clinton administration. Cripple the U.S. and Russia will fill the void.
Russia does not need to do or say anything to cripple us. We are digging our own graves.
That's the Greek President? I would've sworn it was Jack Layton.
Ha! My thoughts exactly!
Perhaps today's USD weakness was the result of Euro shorts running for cover.
The wall street TBTFs (who should've failed in 2008) don't have a friend left in this world. Blankenfein is a little confused when he says they are doing God's work. www.goldmansachs666.com
Tell me something, after you've stolen everything in the world, what exactly do you expect to have happen next?
I suspect they've already hired Blackwater, Inc. for security.
Might I recommend a soundtrack to this theme:
"Judging by the market's reaction today, most participants also feel a big, fat Greek bailout is in the offing and Europe won't fall apart."
Hilarious, the market rallied today on a short covering Euro bounce because traders somehow believed for a day that Greek's "fiscal austerity" plan will actually work, and that Greece won't need a bailout.
Fairly soon, people will realize that Greece will get bailed out, by loans, guarantees or otherwise, and every other Eurozone country in distress will get the same treatment. The euro will then resume its dive and the market tanks.
So I respectfully disagree Leo.
Putin is wrong. A bit 'o trivia: During the last 200 years Greece has defaulted on its debt a mere 105 times. Those guys are real pros at sucking Europe's tit. Greece is a chronic deadbeat and I don't think Europe is going to fall for it again as the Greeks play their classic "I got you by the balls" game.
Should we really care? Greece is a sideshow. This is no different than how Europe has worked, traditionally. Greece will be there tomorrow. The Euro may or may not, the EU will morph. This is attention ill spent. The main kabuki theater is taking place on China's stage in real time. Just no audience participation, yet.
Buckle in. Gonna get rough, and not from Eurpoe. Best getch yersefs some old semi retired European and Asian hands for mentoring.
All valid points, but you place too much of a link between the USD and stocks. If one rallies, the other has to crater. That thinking will get you in trouble as both the USD, stocks and crude can all rally in unison. More bailouts just means more risk appetite. Be careful.
Fair enough, but my link between the USD and stocks just follows your causal link between the bailout and a stock surge. In fact there is no link with anything, although it is clear on low volume days when the market follows the dollar inversely step for step.
To me, it appears that bailouts are now considered market negative as participants beleive the debt load has reached its maximum, wherever you go around the world. So in the end, yes, a rising dollar doesn't necessarily mean a falling stock market, but bailouts also don't mean a positive market reaction, in terms of debt, equities or otherwise.
I'm wrong.
I think the bigger picture is about to swallow the little ones. If you know what I mean.