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.

Comments

[dark pools of soros]

very true and then we shall see silver and gold break out instead of the dollar as stocks fall

[john_connor]

I agree with that except short term I think bad debts priced in USD's need to be extinguished first.

Gold will have its day I just think it is a bit soon IMO.

[Dirtt]

How else do you reverse the most grueling credit contraction since...Adam and Eve?  And all of a sudden the Chinese want it to float a little.

Riddle me this riddle me that.

What asset class do you expect to be at the bottom of the deflationary wipe out? Me too. I say real estate.

Who in the hell knows how it will play out.  Right now even the perpetrators have no idea.  They are wondering how did so many people figure it out.  Well when you are selling mortgages in South Central LA and on Brass Poles in Vegas and then repackaging them for a pension in Iceland - all the while being bookie and recipient of anything that is good when hell freezes over - even the climate scientists would have to admit it was all a criminal enterprise.

Your perspective nails it for those who do not need greater understanding. Funny thing.  When they understand they still don't get.

Which means if it is not illegal (purposely decriminalized by Congress) now then katy bar the door.  I really think even tort reform is going to freak the living hell out of the status quo.

Island bottom.  Gold will have its day.

But once in 3 or 4 decades dumb money going neutral might not be reason to get hot and heavy about taking out 2007 highs