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The Run On Greece Is Here: Investors Pull Out €10 Billion From The Troubled Country; Crisis Escalation Approaches
Remember the proverbial run on the bank? Well, that was the norm (or rather the outlier) before governments decided to backstop entire financial industries residing within their territory. As a result, the post-Lehman version of "the bank run" will henceforth be referred to as "the country run" and for an example of one in practice, look no further than Greece. The Guardian reports that investors have pulled a stunning €8-10 billion since the Greek crisis commenced in earnest last November. If true, this is the beginning of the end for the troubled EMU-member country.
"In the last four to six weeks a lot of money has been moved abroad;
I've heard extraordinary figures," analyst, Kostas Panagopoulos said.
"People
are moving funds either because they don't trust our banking system,
want to avoid what they fear will be taxes on deposits or are simply
anxious about the future of our economy."
What is ironic is the previously discussed pervasive tax fraud in the country where very few resident actually declare their true income. As a result the implication of these sudden withdrawals on the country banking system is likely exponentially magnified:
While a fifth of the population lives beneath the poverty line, some
20% of Greeks are believed to earn more than €100,000 annually – even
if, according to income tax records, 90% declare salaries of less than
€30,000 a year.
"Greece has a lot of rich people who are not
being taxed properly because there is so much tax evasion," finance
minister Giorgos Papaconstantinou, told the Observer. "If you
look at the actual numbers, you will see that the number of people
declaring over €100,000 a year is roughly 15,000," he said. "I don't
think that there is anyone in this country who believes there are only
15,000 Greeks earning more than €100,000 a year."
And as if the Greek population needed any more reasons to deteset the current economic fiasco, and to draw even more distinct lines of social separation:
The growing flight of funds from Greece has whipped up much resentment
among the public. "It's revolting," said one popular radio chat-show
host last week. "After pillaging the country, they flee with their
ill-gotten gains at the very mention of the word tax."
If you will recall a mere 15 months back, the one factor that truuly excerbated the pre and post-Lehman fiasco, both domestically and globally, was investors' loss of conifdence in the system: first in the deposit custodians and then in money markets themselves. As the financial system is never, by definition, prepared for massive fund flows in the outward bound direction, this is the greatest nightmare of any regulator or any central bank. If indeed the money rush out of Greece has commenced, then it is too late to save the country, no matter what Papandreou or Almunia will say: the only voice that matters is that of the depositor, and what is being said is the polar opposite of the claims of those who continue lying and telling us that everything is fine.
Putting the €10 billion number in perspective: Greece is facing roughly €8 billion in near-term maturities in April and May each. This is Greece, not America, and €10 billion is still a massive number. The latest miraculous Greek bond issue, which was supposed to sound the "all clear" call, was for €8 billion. Investors in that particular GGB are already underwater.
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Stephen Colbert’s video dialog with Elliot Spitzer this past week–amidst much laughter and applause—with Colbert playing devil’s advocate shines a bit of light, IMO, on the world’s problem (my transcription):
Colbert: Let’s talk about the thing you know about, malfeasance in our banking system. What’s happening right now that I and the great unwashed masses that I love should be angry about?
Elliot: Everything. Absolutely everything! What’s happening is that we are rebuilding the system exacly as it was before. The same banks, the major investment banks, have taken tens, hundreds of billions of dollars of your money, and taxpayer money, and are now doing exactly as they did with it before-- gambling with it, taking it out with bonuses and not doing what they should be doing which is investing in the American economy.
C: We’re not going to go through regulation are we?
E: Oh I certainly hope not. We wouldn’t want to regulate an industry that just destroyed our economy. That’d be terrible!
C: But we’ve just gotten the banks back on their feet. It’s a very delicate time in the market right now, Elliot.
E: It is not delicate at all!
C: It is absolutely delicate. You saw the bubble burst.
E: That’s right, we wouldn’t want that to happen again.
C: No, just don’t even talk about the bubble!
E: The news is the same people who inflated the bubble in the first place are back in charge again and the same people running the banks who destroyed our economy are still there.
C: Then all we need to do is get in front of the bubble, make our investments, get out clean before it bursts again, then my friend, I’ve got mine, Jack!
E: And when I know when to do that, I’ll call you first so we can invest together… The real problem is that the White House until last week had not even begun to do what was critically necessary to restructure our financial service sector.
C: Why didn’t he do it when he had 60 votes?
E: That is the question! Many people were begging him to do it. And I will say very clearly, the team of Summers and Geithner has been, in my view, an abject failure because what they have done is take all the money and give it right back to the banks without demanding that the banks change the way they do business.
C: Why shouldn’t the banks get that money? Doesn’t everything in our economy depend on the banks? Loans… all the credit loans go through the banks. Aren’t they the lynchpin? Shouldn’t they get anything they want?
E: Are you running for office?
C: Are you? (cheers)
E: I don’t get into that question (laughter and applause). What we need to do is get money back to the businesses that will invest instead of giving it to the banks so they can play games in a casino economy. And precisely what Paul Volcker proposed we do is what we should do: We just constrain their behavior and say if you get bailout money, if you get guaranteed access to federal credit, which is what they have now, then you must lend that money, not get involved in proprietary trading and the casino economy.
C: I got a friend, where I live in an undisclosed New York area. I’m at his Christmas party. He says to me, Fine fine, you wanna tax the banks, fine! I won’t use my driver, I won’t have the maid come over, I won’t go down in front of the restaurant. You’ll watch this economy crumble when guys like me don’t spend money out! Let’s get to a drink, let’s go…
E: The reality is that these bankers created a system, a bubble that collapsed, leaving us with no net job growth, flat median family income, we have exported our manufacturing sector, we are the largest debtor nation in the world. The paradigm and the entire economy they believe in was fictitious. It was razzle dazzle, and we are now back on our heels and the president of the United States needs to do go China, to the high school students, asking for collateral. We are borrowing from China to keep ourselves going and this is the economy they created!
C: Last question. Ben Bernanke, who oversaw the collapse of not only the United States but pretty much the entire world financial system and brought our economy to its knees, has been reappointed as head of the Fed. Doesn’t this give you hope of being re-elected governor of New York? Because as I remind you, he screwed everybody! (laughter and cheers)
E: I just became a big fan of Ben Bernanke! (laughter)
http://economicedge.blogspot.com/
“The money power preys upon the Nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces as public enemies, all who question its methods, or throw light upon its crimes.” William Jennings Bryan
And that’s why Elliot’s gone.
Burn it--burn it all................
greek rhapsody is diversion from the UK & USA's woes - UK just getting out of QE wants to make it appear as if "All Is Well" and US wants to quietly refi 1.6T of debt hence an engineered crash in equities.
Burn it......burn it all
Greece should have just stuck to ouzo, olive oil and allowing tourist to screw on their beaches.
Bingo. I think they will do it again.
Default. Roll out the Drachma. Devalue and start over.
Go back to farming, fishing and sell vitamin D (e.g. Sun and feta cheese) to the Northern Europeans.
If they are still only 11 million people, they must have forgotten how it's done. They either need to watch the tourists doing it or ask the females to turn over. (Pun)
Naw. I bet they still remember how to screw on the beaches.
20% earning more than US$140k? I don't believe that for a moment. That's mathematically impossible in a place with only a $30k/annum per capita GDP. (according to Wikipedia).
It is true. The underground economy is twice as much as the official GDP.
The population of Greece is about 11 million. So that's the equivalent of nearly $300 Billion to the US. Not insignificant. The real issue here is the Germans. They are committed to the EU, up to a point. If they have to prop up a bunch of failed states, they would be under pressure to pull out. Unless of course they can annex them all. Oops, they tried that in 1942, didn't they? Anyway, I'm betting there's a basement FULL of "New Deutsch Marks" that's ready and waiting, just in case. BTW: I have heard the each Euro note has a serial number identifying the country of origin. Obviously, their coins are country specific. I have also heard that some people hoard just the German Euro notes. What would happen in a default? Do the Greek notes and coins become worth less? Could the populace to decide Greece's fate by rejecting their euros in exchange? Could the banks start rejecting Greek euros? Does it even mean anything? Just a thought.
no it doesnt mean anything but the place of production.
the EU and Euro-Zone has to collapse. The DM could be reborn as an strong alternative to other weakening currencies. Or lets just go out to the Revolution 0.2010
Some hysteria around here. The article references money that "MAY" have come out of Greece based on what some analyst "heard". And there is no mention of what type of money this is other than money belong to "super wealthy investors". It could be their cash in the local banks, which is of course bad for those banks but what affect does this have on the sovereign's ability to meet its maturities? It's not like this was 10bn taken out of the government coffers.
Please don't confuse people with the facts.
"What is ironic is the previously discussed pervasive tax fraud in the country where very few resident actually declare their true income."
You could at the very least have put "tax fraud" in inverted commas. One persons tax fraud is anothers inherent right to earn and keep personal property. How long, in any country, does an individual retain an obligation to participate in confiscatory policies and state initiated financial and intergenerational fraud. The Sheeple keep mouthing the mantra that the evaders must be punished and the State keeps pushing down their throats the fodder of "fair shares and proportionate pain".
Everyone should ask themselves at what point would they change their personal stance? ...a Greek situation, a Venezuala situation , a Zimbabwe situation.....its not IF , just WHEN.
Greece has had more than its share of discordant politics, and I dont think there is enough Nationalist sentiment to hold the society together ( consider the implications of this factor for China and US when perhaps they hit the wall one day ? ). In such circumstances, wouldnt YOU take your money out? This is human nature, and the behavioural aspects will be part of how the entire debt problem evolves ( and note I didnt say "gets resolved" )
Your point is excellent. One persons tax fraud is anothers inherent right to earn and keep personal property. How long, in any country, does an individual retain an obligation to participate in confiscatory policies and state initiated financial and intergenerational fraud. This is the quote for these times.
It depends to whom you are talking on whether taxation is fair. There’s nothing worse than a tax evader, but, then, you have governments and dealers in money who are stealing, i.e., “taxing,” for private gain your labors, and your money. Frederic Bastiat called it “legal plunder.”
Once the squid latches onto you it's all over but the dying:
http://www.youtube.com/watch?v=tcQDO9gDRqg&feature=related
Moody's:
see link for chart of Euro Misery Index:
http://www.researchrecap.com/wp-content/uploads/2009/12/Misery-Index.gif
As the global economic recovery attains a more solid footing, 2010 will at best see a ?normalization and at worst a severe tightening in government financing conditions. Long-term interest rates may increase more rapidly than expected because of an over-reaction to economic news, which we believe will be mildly positive overall. Moreover, the slow unwinding of quantitative easing will accelerate this credit repricing process.
A further theme identified by Moody’s is that the crisis has once again revealed the dangers of financial globalization for emerging markets — namely, the upside of the recurrence of asset price inflation after the downside of precipitous outflows of capital. However, the arsenal of policy levers has not expanded.
the unemployment figures of italy dont represent the reality in any way. Italy has more secrets than china with all the corruption and total media control going on there.
Greece is a pos country run by a few kleptocrats to the detriment of everyone else. The sooner it gets kicked out of the EU the better.
damn them rich people, how dare they learn how to use international banking
fwiw, during the meltdown, thru my broker I found out I could whip my money around in a half hour, getting way way below fdic limits in as many banks as i liked, i took him too task, i'd asked the same question six month earlier, yeah, i know they had insurance up to 10 or 50 million a portfolio, but, i felt safer in numbers
when i asked around no one really knew they could do this, or even thought of it
How much maoney are you going to get when the US dollar is cancelled and a new script is issued with a 100k limit on exchange of old script per person? There is no fool proof hiding spot, not your mattress or multiple bank accounts.
Just a little taste of what is to come. By Aug/Sept of this year, Greece will seem like just a tiny canary in retrospect.
Drachma Zimbabwe Delphi.
Investors run? well, not scaring enough. Depositors run? Boom, greece is done.
Greece has no power of printing Euro, no way of making the depositor whole. The collapse of Greek government bonds means the collapse of the greek banking system. Depositors in the greek banking will be wiped out immediately.
Greek people better run with their Euro money now and fast before it's too late. Just like the union ran the GM into the ground, the greek union will run the greece into the ground, given its democracy system.
Soon, the US will follow, thanks to the same government union and the democracy system initially invented by Greek. Throwing the US into the Pigs and suddenly you got U.Piigs. or PiigsUS.
"some 20% of Greeks are believed to earn more than €100,000 annually"
I seriously doubt that. Average income of a person in Greece is about 650-800 €/month, less than 10K €/year. A median annual salary for a IT project manager is about 33K €. And now we should believe 20% of the Greek make 100K+ and are in fact euro millionaires? No way.
Just by walking on a street you'll see Greece is far poorer than, say, Sweden or Denmark, and in those countries 20% of people certainly don't earn 100K+ annually. There are wealthy people in Greece, but not to THAT extent.
I'll take "OECD" for $200, Alex.
How much is involved in "governments decid[ing] to backstop entire financial industries residing within their territory"?
What is $11 Trillion in "Funny Money"?
Financial institutions received $1.56 trillion in capital injections, $5.21 trillion for asset purchases and guarantees and $4.64 trillion in debt guarantees, according to a study published last month by the Paris-based OECD.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKTCbaJVCvQY&pos=7
"We don't need no stinking IMF": German Finance Minister Wolfgang Schaeuble to world.
Excerpts from WSJ online, Feb 6 2010.
"European members of the Group of Seven nations told their counterparts that budget problems in Greece are "no matter" for the International Monetary Fund, German Finance Minister Wolfgang Schaeuble said Saturday. Speaking to reporters at the end of a meeting with top G-7 financial officials, Schaeuble said there was "no doubt" that the euro-zone members oppose any outside involvement in helping Greece to solve its problems."
Euroland message to world: it's nobody's business but us Euros. Us Euros are not ragging on California, so butt out of our business on Greece.
Excerpts from WSJ online, Feb 6 2010.
"All our partners outside the euro zone have the firm impression that the Europeans will solve the problem and can deal with it and that we are aware of the problem," Schaeuble said. "But we have strongly and unanimously refused to discuss internal problems." To make that point, he added that Europe isn't discussing problems occurring in the U.S. state of California either."
Springtime for Greeceland and Germany. We're moving to a faster pace: German Finance Minister Wolfgang Schaeuble to world.
"Schaeuble also said that he has invited his counterparts to a conference on financial reform in Berlin on May 20 with the goal of preparing for the June Group of 20 summit in Toronto. "Several different proposals have been proposed over the past months from different countries," Schaeuble said. "But actually, the goal must be that we will come to a joint solution...Until the G-20 summit in Toronto, we must find a solution."
http://online.wsj.com/article/BT-CO-20100206-700683.html?
I'll take a handwritten IOU from a greek citizen over anything the IMF would give as a promisory note.
They seem to be conveniently forgetting that the relationship between California and the federal government of the US is very different than that between Greece and the EU.
The US can send the National Guard when California breaks out in riots. What will Europe send to Greece?
The first problem will be the strikes by the unions, probably over pension funds.
http://www.businessweek.com/news/2010-01-27/california-teachers-pension-fund-42-6-billion-short-update1-.html
"The US can send the National Guard when California breaks out in riots. What will Europe send to Greece?"
Well, if history is our guide- they'll ask for the US to send troops.
1948, just when we were deciding to 'play dirty like those Europeans' and keep the spies after WWII.
They never left Greece.
Good, defaults are good, evolution.
Screw the Rich, Banking class.
Storm the Bastile.
Domestic cells verses CIA created.
Fight club, need uniforms on your side, otherwise, civil war.
pooplagrande is correct.
This business with Greece/Dubia is all small change.
The real main event is coming later this year.
August/September.
Sounds about right.
-MobBarleyCorn
Hank Paulson Redux
“We have control of the ship, we have a plan,” said María Teresa Fernández de la Vega, Spain’s deputy premier, hours after José Luis Rodríguez Zapatero, socialist prime minister, told a US audience in Washington: “Spain has a strong and solid financial system.”
http://www.ft.com/cms/s/0/f3a7fc9a-1270-11df-a611-00144feab49a.html?ncli...
The day the world as we knew it ended was "The Last Day of Lehman."
This disaster and disasters to come, now in process, are all based in spreads with one or more legs in OTC derivatives.
History will forget it, but OTC derivatives have already, in the final analysis, killed as many people as wars have.
Greece is no different than Iceland. Eventually the US dollar will come under the same pressure, using 40 states as the Achilles heel to kill the dollar.
Don’t for a moment assume the dollar has some granted immunity. It simply stands in line awaiting its selection while short positions in state debt are being placed. Jim sinclair
by jsmineset.com
"They're Baaack"
Flow data shows an abrupt withdrawal of German and Asian capital from Club Med debt markets. The EU's refusal to offer Greece anything beyond stern words and a one-month deadline for harsher austerity – while admirable in one sense – is to misjudge how fast confidence is ebbing. Greece's drama has already metastasised into a wider systemic crisis. The world risks a replay of the Lehman collapse if this runs unchecked, this time involving sovereign dominoes,
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/718273...
On one of those crisis weekends in 2008 I think it might be Hank Paulson who said, "We need to get this resolved before the Asian markets open on Sunday."
Don't know if its "git er done" before opening of the Asian markets or the European market this time, but my guess is there are a lot frantic phone calls among the Eurolanders and with rest of world bankers going on Sunday night. I would be surprised if there was no annoucement, however much a band-aid, before European markets open.
It seems we may be entering a 2008-like period of frantic weekends with no rest for the wicked.
Update: Geithner will be unable to join in tonight's frantic phone calls. On Saturday at the G7 gang meeting in the frozen Canadian Arctic, Timmy Geithner took a triple-dog-dare (something about triple A rating of US bonds) and stuck his tongue on a frozen flagpole. Iqaluit cam footage of this unfortunate incident:
http://www.youtube.com/watch?v=pFu7SjF7Hfg
No need for all the phone calls. All the financial bigwigs got together this weekend for a big party. Check the news.
gyro time !!!
DOLLAR UP!
DOLLAR UP! lol
a viagra new york second.. but will you love me in the morning
I am sure all the greek monetary outflow is rushing into the safety of the dollar and U.S. treasury market. No safer bet on the planet. Just look at the technicals. The dollar could go beyond the moon and all the way to another galaxy.
Time to go lift some gold phys offers before everyone else catches on to the true flight to safety.
I am sure money is also beginning to leave Spain and Portugal.
At this time all savers in the PIIGS nations should be sending their money to Germany. It makes no sense to have it vaporized!
USD Target 96-104 (2010)
eat it
lmfao
I thought 92 as well. At that point Gekko will be shown the door don't you think?
Maybe the US$ will get to 92, maybe 98. Who knows?
Then I will buy even more gold.
Deflation first. Big inflation after.
The article would be interesting if it stated that the Greeks were moving funds to the UK. Why are the Brits so traumatized of not being in the Eurozone?
There is one thing you all need to know about us Greeks. When our backs are against the wall, we rise to the challenge. No matter what, I will always be LONG GREECE! ELLADARA!!!!
Wow, just like Spring Break in Florida -- only it's in Greece!
ZZzzzzzzz....
What are you fucking kidding me? I'll take the Greek islands over Spring break in Florida in flash. Fucking Americans, they always think they are better than everyone else.
Ti malakes!
I'm an American living in Florida.
I have to agree with you on all counts. I'd ask you to take our spring breakers, wherever you are, but we've for the most part succeeded in driving the vermin out. They now like to reside mostly in Key West and Cozumel.
Yes, we're undeservedly arrogant and as an American it drives me nuts. I think that I sometimes live in a nation of cliched thinking ogres.
Kiate Pusty Malaka!
Beneca!
No, I'm not addressing this to you.
I just wanted to demonstrate my command of the Greek
language I learned from working in a restaurant on wall street.
-MobBarley
ps. Ignore the spanish
oxi malaka,
when you state: "There is one thing you all need to know about us Greeks. When our backs are against the wall, we rise to the challenge. No matter what, I will always be LONG GREECE! ELLADARA"!!!!
and presumably back up your statement by posting a video of a bunch of retards partying it up in Ellas, you should expect someone to point out that it looks just like any place in Florida during spring break (IOW a bunch of retards partying it up).
you want to show how WE rise to the challenge, give us a vid of some Cretan sheep herders or some farmers from the Peloponnese. end of the day, those are the Greeks that will weather the coming shit storm, NOT the malakes drinking and dancing it up in Mykonos or the pseudo-sophisticate Athenians...
na'sai kala
Don't worry about the Peloponnese farmers and Cretan sheep herders, they're tough enough to weather any storm. Like I said, ELLADARA!!! (makes you believe in miracles):
+ 10
How will those (or any) hedonist weather a 20 % minimum reduction in income and benefits with the coming austerity measures.
Entitled, spoiled, lazy partiers (Europe, and especially America) will be the first to become fascists in the upcoming world crisis.
Leo, this is your best post ever!!!
true
Leo,
Its our backs that need to be against the wall when you Greeks are around. :)
We have been in a damned if you do, and damned if you don't situation economically for sometime. Well, the people that own the country that I live in, they have been in a damned if you do and damned if you don't situation for sometime.
Check nearing mate I'd say.
Jubilee is the only real answer, of course.
Looks like TPTB won't give it up though. That means war . Please stand by for intensified sabre rattling, revolutionary outbreaks, and events no one could have foreseen.
It's not if, it's when. Que cera cera. Please remember to treat each other as you would want to be treated, put your tray in the locked and upright position, and hold on tight.
everyone thinks Greece is doomed but i don't. i think they're in the driver seat here and have been for some time. in other words the last person you listen to is an economist. clearly the "rich" are stuffing the suitcases full of euros and heading for monaco so you can't do anything about that. what you can do is state "everything is fine" and then "break the bank." after that things get tricky...hear me out. Portugal apparently is next as they have a problem with some Maoists who sound a lot scarier than all those party animals in greece--throw you support behind "the portugese maoists" and overthrow the democracy and declare Greece some type of "haven for political" something or others. Now the maoists will quickly get the message and loot portugal and put all their ill gotten gains in Greece resulting in all those briefcases full of money running back home to "get in on the action." Now here's where it get's tricky. France and Germany are pretty pissed off. The answer? Talk some smack--something along the lines of "what are ya gonna do you invade.".....HAHAHAHAHAHAHAHA. Then you need to "dial up the muslim hatin' merican's" and tell them "you have all the basing rights you need." there is the problem of Crete which is not funny--but it's not like turkey is any friend of the 'mericans either. of course there is in the immortal words of Hank Paulson "a problem with the russians." we'll get to that later. Happy Trading tomorrow!
My favorite Greek parable:
After many years of running a successful restaurant in New York City, a wealthy Greek American businessman returns to his village in Greece. As the sun is about to set, he goes to the local taverna overlooking the beach and orders some Ouzo and octopus. He watches as a Greek fisherman brings in his haul. He then asks the fisherman to join him and offers him a drink.
"I saw you bringing in the fish" says the Greek American. "Not bad, but have you ever thought of buying a second boat?"
"What for?" asks the Greek fisherman.
"This way you can bring in more fish and make more money" says the Greek American.
"And then?" asks the Greek fisherman.
"Then you can buy a third a fourth boat" says the Greek American.
"And continue buying boats? Until when?" says the Greek fisherman.
"Until you become stinking rich like me. Then you can retire, come here every day, drink Ouzo, eat octopus and enjoy the sunsets " replies the Greek American.
The Greek fisherman looked at his American counterpart and simply replied: "But I already do this every day".
Moral of the story: The malaka Greek American got thoroughly corrupted by 'Anglosaxon' American/ British values and never understood that all along, he was the one missing the point of life. Ti malakes!
Bravo Leo! Auti einai i alitheia!
Leo, you should replace
"Then you can retire, come here every day, drink Ouzo, eat octopus and enjoy the sunsets"
by
"Then you can retire, come here every day, drink Ouzo, eat octopus and enjoy the sunsets, and pay the treatment for your multiple sclerosis so that you enjoy it tomorrow"
High productivity and hight GDP/capita is not only for affording gadgets, but also products and services that genuinely make our lifes better. Even the Greeks can miss the latter. Actually, it is exactly to get the latter that people take the streets : if they were only after Ouzo, octopus and sunset, they wouldn't care.
I know it is below the belt, but you are getting emotional here, which is always bad for an investor. Please view this as a friendly slap in the face, as I appreciate most of what you write.
Since we're all going to "export" our way out of this mess then this exactly what the Euro-zone needs to send the Euro sliding. It's almost as if they had hired Goldman Sachs to stick a pin in their balloon.
About time an EZ country admitted they were in the same trouble as the states of the USA. So now we have a match for Michigan.
The US is relatively weaker than the EZ however (due mostly to health care costs-single payer stupids! But also to military spending, with even Gates surprised at how much fun Bam is having guarding the opium); after this debacle in Delphi clears the focus will be back to the US and it's astronomical financial problems (there are no jobs, there is no credit, houses ain't worth spit, and the DoeLarr is being used like Lady Magdalen was supposedly used before Jesus). It will be easily shined over as the media will be advising 'mericans on how to get a piece of the "Jobs Program" pie. The DXY to move marginally higher...say, 82 by early March. DJ to 96 hundo. Gold to say in the $1040-$1111 range. Then once the US gets the jobs program moving, Hello HYPE and good bye DoeLarr!
Ironically, Michigan is not in as bad shape as some other, larger US states, particularly Kalifornia and New York. Those two will (economically and budget-wise) go boom. Then their evil overlords in con-gress will bail them out. Epic hilarity, or civil war 2, then ensues.
Agreed. After this little Greek conundrum Khali and NY will get theirs (next fall); then Spain and the UK will go boom (next winter). Musical chairs continues. Now, Greece has to go sit with Michigan in the corner and hang out with the clown. The clown btw only makes balloon barbies, no black swans or elephants.
US is last man standing ... with bba+ with Euro at .7900?
Futs down! Imagine!
When the socialists, and the middle and lower classes they represent, start pointing fingers at other people's money, the end is near.
Move along, people...there's nothing more to see here...
You haven't noticed ... the end is near.
So the current rate on GGB 5-years is about 6.3%, which is close to what I got on US 3mo Tbills a few years ago. This is a crisis? Is the significance merely that the Greek spread is so large vs. Bunds, the implication being that without the EU umbrella, the Greeks would be paying 25%? Or is it just that we are now so accustomed to virtually zero percent rates that 6.3% seems like a panic level?
Maybe the real significance is that any budget cutbacks or austerity measures will lead to protests, which will spread as the weather warms to Portugal and Spain, and later to youth in France and Germany.
Greek women are hairier than Italian men.
+1000
If Greece was to default on her debt the banks of the country will collapse immediately. At that event their will be no way for the government to save the depositors of the banks since they will not be able to print or borrow money. The implications to the credit markets for such an event will be enormous since no bank will want to lend to any bank in Portugal, Italy, Ireland, Spain and maybe others. Since this will be the first time since the crisis began in 2007 that depositors lost money it will cause a panic and it is very likely that there will be an immediate run on the banks of Portugal, Italy, Spain and Ireland at a time when the countries themselves are unable to raise capital
Source: Euro Collapse
If Greece was to default on its debt the banks of the country will collapse immediately. At that event their will be no way for the government to save the depositors of the banks since they will not be able to print or borrow money. The implications to the credit markets for such an event will be enormous since no bank will want to lend to any bank in Portugal, Italy, Ireland, Spain and maybe others. Since this will be the first time since the crisis began in 2007 that depositors lost money it will cause a panic and it is very likely that there will be an immediate run on the banks of Portugal, Italy, Spain and Ireland at a time when the countries themselves are unable to raise capital
http://israelfinancialexpert.blogspot.com/2010/02/coming-euro-collapse-h...
I question whether this is the “first time since the crisis began in 2007 that depositors lost money.” The world, including the U.S., is being Latvianized. Remember back in June of 2009?
While Americans remain somnolent in their waning advantage of being paid in the world’s “reserve” currency, Latvians must earn and pay their debts in lats—lats that are being depreciated by bankers because they’ve lost their “competitiveness,” due to “global financial shock.” This means, literally, that the amount of debt Latvians owe to their foreign bankers is doubling, even tripling, in devalued lats. How can this be? Well, as Nouriel Roubini pointed out last June, “The country’s banks are local subsidiaries of Swedish banks” and “a real exchange rate depreciation is necessary to restore the country’s competitiveness.”
Mark Weisbrot reports in January from Riga, Latvia, that “the signs of recession are more noticeable to those who live here – restaurants and coffee shops have lost most of their customers, and construction has practically ground to a halt. Emigration has soared.
”Latvia has set a world-historical record by losing more than 24 percent of its economy in just two years. The International Monetary Fund (IMF) projects that 2010 will be another bad year, with GDP shrinking by another 4 percent. The Fund forecasts a fall of 30 percent from peak to bottom, which would surpass the U.S. decline during the 1929-1933 downturn of the Great Depression.
Wrote Weisbrot in The Guardian Unlimited, “Yet Uldis Rutkaste, an economist who is Deputy Head of the Monetary Policy Department and advisor to the Governor of the Latvia’s Central Bank, told a public audience of several hundred people here on Wednesday that the government would continue with its ‘pro-cyclical fiscal policy.’ The word ‘pro-cyclical,’ which he used, refers to a policy that would be expected to reinforce the downward trend of the economy. This would continue, he said, until wages had fallen further.”
Says Weisbrot: “It is difficult to imagine a government official in the United States, Western Europe, or indeed most countries of the world making an argument like this in public. But these are ‘true believers,’ and they will stay the course so long as their citizens are willing to accept the punishment.”
As a Latvian blogger now living in the United States, Mara, commented last year in regards to Dr. Roubini’s article posted on Naked Captilalism:
“Now the average Latvian is getting wages cut (if they aren't being fired outright) and many social and government institutions are cutting back dramatically or closing entirely. Why? Because Swedish banks needed to be bailed out of criminal loans with IMF money and the Latvians will suffer for this for at least a decade.”
Said Mara, “The unfathomable part was the government's nodding acceptance to borrow from the IMF to pay for bad private loans given out by mostly Swedish banks (for vastly overpriced real estate). Some of the loans were to locals, some other nationalities that wanted 2nd homes in Latvia. My understanding is that most of the mortgages were full recourse, but certainly not guaranteed by the government…”
Concluded Mara, “I would...outlaw mortgages being denominated in foreign currencies and/or payments tied to forex fluctuations, since agreeing to such terms is similar to prostitution, except it costs you, and lasts for 15-30 years…”
It’s just too bad for Latvians that, according to Roubini, the “large foreign liabilities of households, companies and banks are in foreign currency,” and that “the real value in local currency of such debts would increase sharply after a devaluation.” And that to delay the “domestic and international costs” would make the “unavoidable crash—and the regional contagion—even more dramatic and costly.”
So easy, wasn’t it, for the international bankers such as Bernanke to decide how much less those lats held in savings and earned in wages were worth on the market, as Dr. Roubini stated, “to restore the country’s competitiveness “? And isn’t that what’s happening to savings deposited in America's institutions and her US treasuries, to a much lesser degree?
But joblessness, homelessness, and hopelessness are always the price of collectivism under a monetary dictatorship, often brought on by ignorance and apathy.
The IMF/World Bank is the 1944 protégé of the Federal Reserve – with a sordid history of its members getting rich alleged fighting poverty. As Graham Hancock, an astute observer of the international-aid industry, said regarding the IMF in his book, Lords of Poverty: [M]oney has never been easier to obtain… [W]ith no messy accounts to keep, the venal, the cruel and the ugly are laughing literally all the way to the bank… All they have to do…is screw the poor.”
"All they have to do…is screw the poor."
While they create new poor out of the formerly middle class.
Is it Monday in Greece yet?
http://www.wunderground.com/global/stations/16716.html
Quarter to Seven AM Monday in Athens....For some reason Helter Skelter keeps playing in my head....
That truly is ridiculous piece of work from guardian. I have never liked the newspaper and their articles and analysis is unbelievably moronic.
To give u a perspective, Guardian was the newspaper who first backed Darling UK of his claims to see UK return to its pre lehman days of growth much before rest of the world will recover. Currently Pound has lost 10% from the time guardian wrote about UK bright future.
It reminded me of Sadam hussain advisor who kept saying on National TV that there was no US tanks in Iraq even as the US missiles and tanks were smashing every part of Baghdad.
And here is what Helena begins to write:
"A staggering €8bn-€10bn (£7bn-£8.7bn) may have been taken out ofGreece by private investors since it became engulfed by economic turmoil in November"
Notice the word "may". Even I can write that WE MAY BE CONQUERED BY ALIENS TOMMORROW.
EURO is far far superior currency to any other currency in the world with the least amount of debt and least amount of toxic waste on balance sheet.
http://www.marketoracle.co.uk/Article17061.html: EURO march to reserve status
Bill Gross maintains that EU bonds are the safest in world in his january newsletter.
http://www.marketoracle.co.uk/Article17052.html: EU bonds are safest
Aliens tomorrow ... now this worries me.
No, embrace it. We have our bailout coming from the Foundation. Hari Seldon approved it just a few thousand years ago...he's really a long term investor, you know...
Yea but there's aways a Mule.
funny :)
There are two ways to look at the current crisis in eu. Opportunity to be a contrarian or be the crowd thinker and keep going long the worst currency in the world.
Many Greeks will leave Greece as well. This may lead to such sad episodes as this one: a little while ago two Greek guys who tried to make it big in the US and failed were sitting despondent on a bed in a hotel in Brooklyn, talking about what to do next. "So do you want to go back to Greece?" asked the first one. And of course the second one replied "What's wrong with Vaseline anyway?". A true Greek tragedy...
HEH HEH thith ith gunna be cool...
http://www.youtube.com/watch?v=w19hlryiRc8
Tyler
In the graph, the 3/20/2010 bar is sitting in the mid of 2011. Is the date or position worng?
This was a good one Tyler. I wish I had checked in before the game.
Wow G7 says Greece is ok but Tax the Banks:
http://in.reuters.com/article/businessNews/idINIndia-45967220100207?pageNumber=2&virtualBrandChannel=0
Logical conclusion: US caused the problem with their greedy bankers and shady loans, they should pay the bulk of the 'tax' ... there will be blood
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