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The Run On Greece Is Here: Investors Pull Out €10 Billion From The Troubled Country; Crisis Escalation Approaches

Tyler Durden's picture




 

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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Sun, 02/07/2010 - 15:33 | 221300 moneymutt
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most interesting weekend since mid-Sept 2008?

Sun, 02/07/2010 - 17:50 | 221470 Anonymous
Anonymous's picture

a laughably simplistic analysis of the current situation. I dare you to stay short, you bunch of doomsaying morons. LOL the next 15 days will be a riot watching the shorts run for cover.

Sun, 02/07/2010 - 20:30 | 221592 geminiRX
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Ben, is that you?

Sun, 02/07/2010 - 21:51 | 221652 Rusty Shorts
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It is a REDACTED that REDACTED your REDACTED. Further, this insidious REDACTED will REDACTED into your REDACTED in such a way that it will quickly REDACTED your REDACTED.

I hope that clears things up.

Sun, 02/07/2010 - 17:50 | 221471 Anonymous
Anonymous's picture

a laughably simplistic analysis of the current situation. I dare you to stay short, you bunch of doomsaying morons. LOL the next 15 days will be a riot watching the shorts run for cover.

Sun, 02/07/2010 - 18:53 | 221519 Monday1929
Monday1929's picture

The bursting of the largest credit bubble in history actually is pretty simple. It is just the type of fundamental event that most investors believe move markets. In this case, they are right, except now they are all contrarians.

Enjoy the Crash. Next week, next month, even next year.

Sun, 02/07/2010 - 19:00 | 221529 moneymutt
moneymutt's picture

I'm a simple dog, I admit it, and have no financial/trading background, so I'm totally ignorant of the ways of the financial world...and I buy that Greece may not be the trigger.

...but I did get all money out of the market (not much, but all I got, in Sept 2007 (a tich early), made money shorting, and put 401k back in equities in late March 09, got out in Nov, but lost a little money shorting banks..so my general, simplistic instincts have done me okay...

are you saying there will be a bounce or that everything will rally from here on out for the next year and on? that, in my simple mind, is not likely...

Sun, 02/07/2010 - 19:57 | 221565 Anonymous
Anonymous's picture

Wow--you're some timer. Where do we go from here, hotshot

Sun, 02/07/2010 - 23:53 | 221753 moneymutt
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no just work in construction, saw housing bubble coming, waited what I thought too long to get out, then figured I didn't have tons to lose in march when things got low, didn't get out as early in fall as I thought I should... you should ask me not when I think I should do something but when I actually do something...besides, don't you have to have more than thousands on the line to be a hotshot?

Sun, 02/07/2010 - 20:47 | 221603 geminiRX
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I think you made a smart decision. Not losing money is always smart. Current market conditions are so precariously catastrophic - one event could make the whole damn thing go. Timmy and Ben can't keep plugging holes in the dam forever.  Only when this market corrects, will I have the balls to go back in. There's no way I will buy into companies with the P/E multiples that they currently carry. Don't feel bad, I lost some money trying to short banks too:) It is good that your reading zerohedge, your financial background is already leaps ahead of many sheeple.

Sun, 02/07/2010 - 20:47 | 221604 geminiRX
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duplicate

Mon, 02/08/2010 - 06:31 | 221964 jeff montanye
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short what, the euro?  please, all, be specific.

Sun, 02/07/2010 - 15:35 | 221301 Hammer59
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Bank run???

Have'nt seen one since '29

Oopps.....

Sun, 02/07/2010 - 19:01 | 221530 mouser98
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it seems that bank runs work backwards now

Sun, 02/07/2010 - 15:37 | 221305 RoastingBankers
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take the market down!

Sun, 02/07/2010 - 15:38 | 221306 Gromit
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One drawback of EU membership is that traditional defense mechanisms, such as Exchange Controls restricting outflows of capital are no longer available. The US does not have this problem.  

Sun, 02/07/2010 - 15:50 | 221320 Anonymous
Anonymous's picture

US restricting outflows would cause a bigger problem...

Sun, 02/07/2010 - 17:32 | 221453 knukles
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Are there any other drawbacks?

Sun, 02/07/2010 - 18:40 | 221509 cougar_w
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Cannot print their way out of the hole they are in.

That one is lethal.

Sun, 02/07/2010 - 18:54 | 221521 Monday1929
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But California does.

Sun, 02/07/2010 - 19:27 | 221546 Anonymous
Anonymous's picture

Print more IOU's, California style!

Sun, 02/07/2010 - 15:38 | 221308 vainamoinen
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Germany will save them, right? - - - Right? - - - I mean they've got to - right? Otherwise things will be a mess, right?

They said on Bloomberg everything was OK, right?

Everything is going to be OK, isn't it?

Isn't it?

Isn't it? - - - - - - - - - - - - - - - - - - - ???

Sun, 02/07/2010 - 15:47 | 221315 Anonymous
Anonymous's picture

Save them with what? Nations are like a bunch of stooges running around with credit cards pledging portions of their limit to "rescue" companies and countries. Eventually, the credit card maxes out. It's going to get ugly. Brass, lead and food are going to be valuable commodities in the New World Disorder.

Sun, 02/07/2010 - 16:02 | 221341 moneymutt
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lead???

Sun, 02/07/2010 - 16:17 | 221356 Anonymous
Anonymous's picture

Of course, how can a country survive with unbalanced car wheels...

Sun, 02/07/2010 - 17:34 | 221454 knukles
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Use unbalanced politicians instead?

Sun, 02/07/2010 - 16:19 | 221359 Anonymous
Anonymous's picture

Traditionally lead was the bullet component of the cartridge. However, after the enviro freaks got a hold of it, bullets are now composed of other metals. However, "lead" is used to connotate the "preparation for the confrontation".

Sun, 02/07/2010 - 17:26 | 221438 Mad Max
Mad Max's picture

Quite inaccurate.  The overwhelming majority (99.9%?) of bullets made and used in the West still use lead cores.  There are a tiny handful of bullets available that are non-lead, either for target use at indoor ranges or for hunting in California, but they are a miniscule part of either civilian or military markets.  So yes, lead still rules.

In the former com-bloc steel cored bullets are somewhat more common, purely for cost reasons (neither environmental nor, as sometimes mistakenly claimed, armor piercing reasons).  These are quite uncommon in the US.

Sun, 02/07/2010 - 16:32 | 221374 Translational Lift
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Brass & lead as in FMJ.....  ;>)

Sun, 02/07/2010 - 16:47 | 221398 Anonymous
Anonymous's picture

I'd recommend hollow points. Greater stopping effectiveness.

Sun, 02/07/2010 - 17:00 | 221409 Anonymous
Anonymous's picture

I'd recommend hollow points. Better stopping power....

Sun, 02/07/2010 - 17:26 | 221440 Anonymous
Anonymous's picture

I find that .308 hollow points are a tad overkill for turkey.

How about you?

-MB

Sun, 02/07/2010 - 18:33 | 221465 Lou629
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#1398 & 1409:

Also inaccurate, in that they frequently fragment on impact, doing less damage to the target.  The hollow point has also been known to get filled with material as they pass thru clothing, rendering the expansion idea worthless. 

Check www.neardeathexperiments.com on this and more. 

Sun, 02/07/2010 - 19:20 | 221541 Mad Max
Mad Max's picture

I mostly use .600 and .700 flat nose solids.

Sun, 02/07/2010 - 21:10 | 221622 Lou629
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MM,

.600/.700? 

 

Sun, 02/07/2010 - 21:31 | 221632 Mad Max
Mad Max's picture

I figured it was as credible and intelligent as 99% of the other gun "info" posted here.

WHAT?  You don't use a .700 Tyrannosaur for squirrels and coyotes?  =)

Sun, 02/07/2010 - 23:07 | 221715 Lou629
Lou629's picture

oic, so then i presume you're with the brady bunch then?  Since you feel so strongly about it, you might want to put a sign on your lawn that says: "i don't think guns are credible or intelligent and you won't find any in THIS house"

....be sure to let the rest of us know how well that works out for you when the shit really hits the fan with the economy. 

Sun, 02/07/2010 - 23:21 | 221723 Mad Max
Mad Max's picture

I've probably been a member of the NRA longer than you have.  You completely misinterpret my point, which is that so much of the gun comments here are worthy of teenagers and bad (bad...) gun shops, I thought I would add my own bad advice.

Mon, 02/08/2010 - 00:55 | 221810 Lou629
Lou629's picture

Gotcha'.  Sorry for confusion.  Not always easy to know the intent when dealing with the written word and not spoken.  Glad to know there are other pro-2A members on this site. 

Mon, 02/08/2010 - 01:16 | 221827 Hephasteus
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Why do I use 600 nitro express? Because well they don't make a 700 nitro express.

Mon, 02/08/2010 - 15:02 | 222350 Hephasteus
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LOL. That's actually an old joke. Some elephant hunter got asked why he used the 600 h&h express and he said because they don't make a 700 h&h express. I guess they finally listened to him 30 years later. LOL

Sun, 02/07/2010 - 17:27 | 221441 Anonymous
Anonymous's picture

Brass + Lead = BULLETS

Sun, 02/07/2010 - 17:29 | 221448 CombustibleAssets
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As in the "New Currency"

Sun, 02/07/2010 - 19:33 | 221550 Anonymous
Anonymous's picture

...wrapped in copper, backed by gunpowder.

Mon, 02/08/2010 - 06:34 | 221965 jeff montanye
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especially without gunpowder.  i'm also ... brass?

Sun, 02/07/2010 - 18:55 | 221523 Gold...Bitches
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gunpowder.  with that you can get the rest.

Sun, 02/07/2010 - 16:46 | 221395 Brak82
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our fiscal situation is too much damaged to help STUPIDs and PIIGS... Everone just grab your towel and DON'T PANIC!

Sun, 02/07/2010 - 17:23 | 221435 Missing_Link
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Run away!  The GIIPSIEs are coming!

Sun, 02/07/2010 - 17:27 | 221443 Mad Max
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Beware the Vogon constructor fleets!  (Beware moreso of their poetry.)

Sun, 02/07/2010 - 22:41 | 221693 perchprism
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Vogon poetry is, of course, the third worst in the Universe.The second worst is that of the Azgoths of Kria. During a recitation by their poet master Grunthos the Flatulent of his poem “Ode to a Small Lump of Green Putty I Found in My Armpit One Midsummer Morning” four of his audience died of internal haemorrhaging and the president of the Mid-Galactic Arts Nobbling Council survived by gnawing one of his own legs off. Grunthos was reported to have been “disappointed” by the poem’s reception, and was about to embark on a reading of his 12-book epic entitled “My Favourite Bathtime Gurgles” when his own major intestine, in a desperate attempt to save humanity, leapt straight up through his neck and throttled his brain. The very worst poetry of all perished along with its creator, Paula Nancy Millstone Jennings (Paul Neil Milne Johnstone) of Redbridge, in the destruction of the planet Earth. Vogon poetry is mild by comparison.

Mon, 02/08/2010 - 19:17 | 222679 Anonymous
Anonymous's picture

Awesome! We've gone from the demise of Greece and the EU to pro 2A comments to Vogon poetry all in the same post. That is some truly enjoyable reading!

Sun, 02/07/2010 - 17:11 | 221420 SteveNYC
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I know plenty of Germans, mark my words, NO bailout for Greece will be tolerated by the German public. Europe isn't America, people revolt over there when their gov's screw them.

Sun, 02/07/2010 - 17:24 | 221436 Missing_Link
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I hope you're right!  If I were German I'd be pissed.

Sun, 02/07/2010 - 18:04 | 221482 Anonymous
Anonymous's picture

Because "Europe" is a fiction. It doesn't exist. It is not like the United States, which at least nominally and centrally 'governed' is but one country.

Greeks can attack their politicians, the French can strike and shut the country down. Italians can attack Berlusconi and draw blood.

That's our problem in the United States: Too big too unify to get at the throats of our Royalty and cut through them.

Sun, 02/07/2010 - 19:35 | 221551 Anonymous
Anonymous's picture

I wouldn't say too big but rather too complacent and ill informed to foster any change. The ones that do care enough to be angry have no idea why they are so pissed off so they blame socialism and birth certificates for their woes.

Those distractions will solve nothing and that's just how the politicians and Wall Street want it - an ignorant populace chasing after their own tails.

Sun, 02/07/2010 - 18:46 | 221510 Gunther
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Steve,

I do not claim to know the majority in Germany but I am fed up with paying for everything with my (German) taxes.
But the government knows how to overrule public opinion here.
I remember the first part of the banking crisis and called my MP's without any success. Frustrated I went to the leftists (Linke) who in my area are considered almost unconstitutional only to hear that bailing out the banks with taxpayer's money was not a big thing.

By now the official EU bailout numbers for German banks are, if memory serves correctly, 50 billion Euro for capital plus 500 billion Euro guarantees for junk paper.
 
The otherwise slow government got that done within two weeks and afterwards the bailout was not discussed in mainstream media any more.

Predicting bailout or not means reading some politician's mind.

Sun, 02/07/2010 - 19:13 | 221536 deadhead
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Thank you  for the view from Germany, Gunther.  Please continue to share your observations, it is appreciated.

Mon, 02/08/2010 - 12:20 | 222168 ConfederateH
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Gunther, aren't you still paying that Solidarity tax, or are you an Ossie?  How is that 20 years of paying for the communists and socialists in East Germany working out for you?

Sun, 02/07/2010 - 19:14 | 221537 35Pete
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It's a little different with the American Public. Here, they scream ouch!!!, then do their best to prepare for another inch of penetration. 

Americans are masters at rationalizing economic and political sodomy as a form of "love" from their masters. 

Sun, 02/07/2010 - 19:21 | 221542 Mad Max
Mad Max's picture

A repulsively accurate description.

Sun, 02/07/2010 - 21:34 | 221638 35Pete
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Well, I HAD to sugar coat it because I thought coming right out and calling it politico-economic ass rape would have been rather distasteful. Don't you think? 

Mon, 02/08/2010 - 10:58 | 222091 Anonymous
Anonymous's picture

Denninger pretty much has that base covered anyway...

Sun, 02/07/2010 - 15:40 | 221310 Anonymous
Anonymous's picture

Don't burn those Drachmas just yet...

Sun, 02/07/2010 - 15:48 | 221316 Anonymous
Anonymous's picture

Greece is only 2.5% of the EU economy. Spain and Italy are about 13% each. They are the ones to watch. California and NY are just as broke and are just as large a part of the US economy. The real problem is contagion. Will it spread from one place to the next?

Sun, 02/07/2010 - 17:31 | 221450 CombustibleAssets
CombustibleAssets's picture

California legislators and analysts are watching Greece very closely.

Sun, 02/07/2010 - 18:56 | 221524 Anonymous
Anonymous's picture

To me this is the key issue. The amount of debt coming on the market from EVERYWHERE, Cities, States, Countries, LBO's, ARM's. People are all so sure US Treasuries are doomed but they are at the end of default risk. Cali, NY, Greece, Portugal, your local friendly LBO firm that has to roll over the debt from the last great deal they executed, you next door neighbor with the balloon ARM due to reset. All these people go tits up before UST.

The CDO sh#$ storm from all this will be awesome to behold.

Sun, 02/07/2010 - 22:46 | 221698 perchprism
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I agree.  I'm forced to have my 401-K in something, so I've chosen the least risky investment possible--- T-Bills.  Wish I could put it in something else, but there're no other   options.  Can't put it into a manipulated stock market, and no commodity funds are available.

Sun, 02/07/2010 - 18:58 | 221526 Monday1929
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No, the problem is not contagion. The problem is that the whole SYSTEM is sub-prime. If it were healthy, it would not be susecptible.

Lee S.

Sun, 02/07/2010 - 19:12 | 221534 pros
pros's picture

Good point...Monday.

The best studies I have seen about the Black Death of the mid-14th century indicate that it followed decades of poor harvests and resulting malnutrition which rendered the population weak and vulnerable.

Will we have a financial "Black Death'?

 

Sun, 02/07/2010 - 21:20 | 221628 Anonymous
Anonymous's picture

I heard for months in 2008 that only a percentage of sub-prime mortgages were bad, and that of the total mortgage market, sub-prime was a tiny fraction. Talking heads on CNBC were trotted out to dazzle us with statistics abou tthe MINOR nature of the subprime problem. They were obviously very, very, wrong. The same thing that got us into this last mess is what will be the next unraveling: leverage. For all the talk since the financial nearly collapsed- not a damned thing has been done about excessive, imprudent leverage and speculation. To the contrary, world governments have put more crack into the hands of these addicts.

Sun, 02/07/2010 - 15:49 | 221317 Gold...Bitches
Gold...Bitches's picture

nothing to see here, move along.  move along.

Sun, 02/07/2010 - 15:58 | 221331 Dirtt
Dirtt's picture

Yes. I know.  I keep moving and moving.

 

The more I move the more I see.  When does it get better?  I haven't seen anything good except that Mass. isn't as rabidly stupid as I thought.  One smaller negative.

Sun, 02/07/2010 - 15:50 | 221319 Daedal
Daedal's picture

...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.

Exactly! You can never be more certain of a fact than when it has been officially denied. (See Bruce Krasting's Piece on Paulson. "Fannie and Freddie -- well capitalized, in no danger of failing").

Sun, 02/07/2010 - 16:04 | 221343 moneymutt
moneymutt's picture

what about Geithner saying US will never have problem with our rating?

Sun, 02/07/2010 - 16:16 | 221354 Handle with care
Handle with care's picture

What a nonsense statement by Geithner.

What if the US was to announce it needs to borrow another 10 trillion this year, will there still be no rating impact?

 

What he should have said is that the US government will never act in a way that could put the US credit rating at risk, but of course he can't say that because without the promise of unlimited government pumping multiple asset classes will immediately collapse in price.

 

Sun, 02/07/2010 - 17:41 | 221461 DosZap
DosZap's picture

The Ratings agency is OWNED by the Fed......no way USA get's derated.

Just hollow talk, to fool the sheeple.Have to act like their responsible agencies.....to ALL.

Sun, 02/07/2010 - 22:19 | 221671 JR
JR's picture

 

It’s obvious Geithner is in the US Treasury, the G-7 and the G-20, Greece and world affairs to take care of Goldman Sachs.  If he is no longer a U.S. government official, representative or citizen, why doesn’t the government take away his passport?

Sun, 02/07/2010 - 16:20 | 221362 Hephasteus
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Have you seen Geithner lately on television? Wall street and the CIA and president Clinton were totally screwing Russia over during thier crash. The people running russia said everything is fine the whole time right up till it crashed. Maybe roles are reversed, maybe something more sinister is going on. Maybe accomplished liars are simply spitting out lies like machine gun bullets trying to see which ones still work.

Fiat currency economys crumble at 90 perenct debt to gdp load. We're at 83 percent with 4 trillion of debt off the books and hidden.

Sun, 02/07/2010 - 16:32 | 221375 moneymutt
moneymutt's picture

did you see how Summers ran Russia into the ground like Havard....that's the plan, when Geithner gets fired, Summer will be in charge of the post-crash...arrrrrgggg

Sun, 02/07/2010 - 16:51 | 221400 Hephasteus
Hephasteus's picture

Ah man good point. Hard to see them when they tag team like that. It's like a serial will killer. First they set up the support get things to this point and now they are running around breaking the backs of everything before they set up the new system.  I mean geez. Harvard has done more to damage the US than any other institution and they get screwed for it.

Sun, 02/07/2010 - 17:28 | 221444 Mad Max
Mad Max's picture

Summers is like an economic WMD.  He might end up justifying a UN pre-emptive invasion of the US.

:)

Sun, 02/07/2010 - 18:49 | 221515 moneymutt
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why are all the drones in AfPak

Mon, 02/08/2010 - 01:23 | 221834 Wilderman
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Because the Tea Parties are still 'local'.

Mon, 02/08/2010 - 06:49 | 221969 jeff montanye
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and what is the estimate for three years from now, with fannie's and freddie's positive net worth guaranteed by the treserve and hostage to current real estate prices/mortgage payments? 

Mon, 02/08/2010 - 12:31 | 222179 ConfederateH
ConfederateH's picture

Hephasteus, Argentina has been a slow, multi-decade train wreck, and Greece will be too.  Amazingly, many Argentinians kept their money and retirements in the bank far too long.

I think the real point here is that as long as you use a bank offering internet banking, a bank run is just a couple of clicks away.  The problem is every smart person realizes this, and it won't take much before all that electronic money is looking for guaranteed safety, and once governments start defaulting, there is one clear counterpartyriskless investment:  GOLD.

Paulson and Sprott saw this coming, and they will do very well.  Switzerland will too.

Sun, 02/07/2010 - 17:34 | 221455 CombustibleAssets
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This is an example of why the Chinese were laughing at him.

Sun, 02/07/2010 - 15:51 | 221321 Anonymous
Anonymous's picture

Sell all bounces - mantra this year

Sun, 02/07/2010 - 18:26 | 221499 Fat Bob
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+1

Sun, 02/07/2010 - 18:50 | 221516 MrPalladium
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You know, selling all bounces is the only way to make money and yet almost nobody talks about it.

Nobody ever made a dime by buying a stock. The money is made only when you sell.

Sun, 02/07/2010 - 15:51 | 221322 Anonymous
Anonymous's picture

Only logical conclusion. Back in FEB when the chatter was about backstopping banx or shifting their liabilities into soverign,then obviously the conclusion was sooner or later soverign will have the run,and it is only a matter of when and not if. So now the domino principle starts,and once it gets to the US, I think rates will go sky high(or the dollar will go deep down). With all goverments competing now with the private sector,there isn't even a prospect of productive growth in GDP and employment. I think for serious economists who would like to see a growth in a real economy,default is probaly the only option for goverments in those situation. But that has to be coupled with a change to the entire fiscal and monetary policy toward a real growth in production employment,instead of a structure that allows for few parasites to suck the whole economy into a blackhole,in the name of saving 401 k-ers(they havn't even done that)....

Sun, 02/07/2010 - 19:03 | 221531 Monday1929
Monday1929's picture

If only one person remains employed (Larry Summers) in the USA, productivity should skyrocket, keeping inflation expectations firmly anchored -during the Deflationary Depression.

Sun, 02/07/2010 - 15:54 | 221325 Hephasteus
Hephasteus's picture

So I guess we know what happened at the G7 meeting.

Fuck greece. Let's get this IMF takeover of the world rolling.

Ya. We're totally going to pull it off this time.

We're going to rule the world with stupid illusory debt.

Yaaaa!!!

I'm going to stop by the office and print me up a couch made of million dollar bills on my way home!!

Sun, 02/07/2010 - 15:54 | 221326 Anonymous
Anonymous's picture

10 Billion does not really sound that bad, could anyone set it in relation to meaningful number? thanks

Sun, 02/07/2010 - 16:12 | 221349 Handle with care
Handle with care's picture

Greek GDP was $357 billion in 2008, so its the equivalent of around $400 billion being withdrawn from the US, or around $80 billion from the UK

Sun, 02/07/2010 - 16:54 | 221404 Hephasteus
Hephasteus's picture

Which it only took 500 billion to crash US stock market. So maybe the Greece bombings on thier stock exchange a few months back had something to do with this. Their market is crashed monday reguardless.

Am I missing anything?

Sun, 02/07/2010 - 17:16 | 221430 Rainman
Rainman's picture

I seem to recall the UST dumping $ 100 billion into the IMF recently.

If $10 billion is to be dumped down the Greek debt rat hole, that is the best of the bad solutions ....... for now.

Sun, 02/07/2010 - 17:31 | 221449 Mad Max
Mad Max's picture

Meaningful?

Do you have 10 billion (USD or Euro)?

How about 1 billion?

No?  Do you have 1/1000 of that amount - i.e. 10 million?

Still no?

Do you personally know anyone who has any of those amounts?

Do you personally know 1000 people who each have 10 million?

US overspending and defense budgets have made the numbers surreal, but they are quite large.

BTW, 10,000,000,000.00

Sun, 02/07/2010 - 18:09 | 221487 Mobro
Mobro's picture

Comparing 10 billion to the capital of an individual makes the number look large, agreed.

Comparing 10 billion to the money flowing through our globalized financial system is a relative small piece of the cake. So a meaningful number to relate is indeed quite useful.

 

Sun, 02/07/2010 - 19:07 | 221533 Monday1929
Monday1929's picture

O.K. , then why is JPM's 8o Trillion in derivatives dismissed? Oh, it's notional.

O.K., why is the 1-5 trillion in actual losses ebedded there (so far) dismissed? Because Jamie Dimon is a great banker. He'll make it up in ATM fees.

Lee S.

Sun, 02/07/2010 - 19:25 | 221544 Mad Max
Mad Max's picture

Greece isn't the whole global financial system.  Not even anywhere remotely close.  National population is around 11M people.  So this is a shortfall of almost 1000 Euro per person, including children, elderly, indigent etc.  I realize that most ZH readers probably can come up with $1000 at the nearest ATM, or at worst during normal banking hours, but that's not true for most people, whether in the US or almost anywhere else (Switzerland, Cayman, etc. excepted).  Even in a nice suburb in the US I don't think that you could count on everyone have a spare $1000 right when they're called to produce it.

Sun, 02/07/2010 - 17:37 | 221458 CombustibleAssets
CombustibleAssets's picture

$10 Billion and counting.

If you lived in Greece and read these headlines what would you be doing Monday morning?

Sun, 02/07/2010 - 18:15 | 221493 Anonymous
Anonymous's picture

Heading for the beach on Rhodos.

Sun, 02/07/2010 - 15:56 | 221327 THE DORK OF CORK
THE DORK OF CORK's picture

I am sure that Goldman and the Greeks will put their collective shoulders to the wheels of commerce and sort this problem - if they don't people will be taking the Piis out of my nation and others

Sun, 02/07/2010 - 16:24 | 221366 tom a taxpayer
tom a taxpayer's picture

Goldman Sachs had its tentacle into the Greek government with "complex financial instruments" going back to at least 2002. Thanks to asdf for link to "Goldman Sachs helped Greece in debt Cosmetics" #220388

http://translate.google.de/translate?u=http://www.spiegel.de/wirtschaft/0,1518,676346,00.html&sl=de&tl=en&hl=&ie=UTF-8

The Greek government still has not wised up to the perils of doing business with GS. Excerpts from Financial Times Jan 28, 2010.

"Goldman plays key role in Greece rescue"

 

"A team from Goldman Sachs was in Athens on Thursday shepherding representatives of Paulson, the US hedge fund, around meetings with local bankers, economists and analysts... Last year it took George Papaconstantinou, the finance minister, on his first roadshow to London and Frankfurt, along with Deutsche Bank. Earlier this week the bank was one of the joint-lead managers on Greece’s sale of an €8bn (£7bn, $11bn) government bond..."

"Mr Papaconstantinou confirmed earlier this week to the FT that he would in the next few weeks go on an investors’ roadshow to Beijing, Shanghai and Hong Kong in order to generate interest in Greek government bonds. It is expected that as with the previous European trip, Goldman would be taking a leading role in organising this roadshow, according to investment circles in Greece.

"JPMorgan has been important in the past but is being shunned by the new government over a controversy centred on the sale of a structured bond in 2007 to a Greek pension fund, under the previous conservative government. JPMorgan denied any wrongdoing and repaid the funds. The socialist government last week announced it was reopening an investigation into the scandal.

"Goldman’s main source of income in Greece is from the Hellenic republic’s borrowing operation, to which it has access as one of 15 Greek and foreign banks that act as market-makers. “They’re very active in the bond swaps market, which is extremely lucrative,” said the fund manager. It also regularly advises NBG, the country’s biggest commercial lender."

http://www.ft.com/cms/s/0/53bbbd40-0c42-11df-8b81-00144feabdc0.html

This hilarious howler quote is also from the FT article:

“Goldman pretty much has taken a leading role on advising Greece at the moment,” said a Greek economic consultant. “Their competitive advantage is that they are smart guys and come up with good ideas. That certainly helps in a crisis like now,” the consultant said."

With "smart" friends with "good ideas" like Goldman Sachs, who needs enemies?

Sun, 02/07/2010 - 16:41 | 221386 moneymutt
moneymutt's picture

and I thought that Taibbi quote "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money..." was a bit hyperbolic....I was wrong...

Sun, 02/07/2010 - 17:10 | 221419 pooplagrande
pooplagrande's picture

Goldman is so fucked...all their silver-tongued BS will come back to haunt them when things start to unravel more and more. They will have enemies stacked in line waiting to get revenge.

Sun, 02/07/2010 - 19:28 | 221547 mouser98
mouser98's picture

not that they don't deserve it, but i don't see a scenario where justice prevails here.  when the smoke clears there will be the haves, and the have nots, and those who run GS will certainly number among the haves.  

Sun, 02/07/2010 - 22:04 | 221662 Mad Max
Mad Max's picture

Definitely, in much the same way that the Israelis simply forgave all the Nazis who escaped prosecution by the allies, and let them live their lives quietly and in peace, anywhere in the world that they might choose to hide.

Errr, I was having a dream about a sort of post-collapse investigatory service.

Sun, 02/07/2010 - 18:36 | 221507 A Man without Q...
A Man without Qualities's picture

I find it strange that a truth seeking blog like Zero Hedge has not covered the details in the "Der Spiegel" article...

It makes me think of "the curious incident of the dog in the nighttime"

Sun, 02/07/2010 - 19:11 | 221535 Monday1929
Monday1929's picture

Yeah, Goldman's cohorts are "fixing" Wisconsin's pension fund shortfall by leveraging up as we speak. Surely they can save Greece as well. Except their job is not to save anything, it is to make money for themselves. Nothing wrong with that, just good to know.

Mon, 02/08/2010 - 12:37 | 222191 ConfederateH
ConfederateH's picture

Question:  Who wrote all the CDS's on those Greek sovereign bond, AIG, JPM, or perhaps GS?  Will uncle sugar step in an cover all these CDS at 100%..

Sun, 02/07/2010 - 15:59 | 221334 Anonymous
Anonymous's picture

Greece/EU mess is just a diversion from the mess in the UK/ US. The UK is getting out of QE and in order for bond yields to stay low, a diversion/mini crash was needed. A similar crash/diversion will be needed as the US gets ready to refi its 1.6T of debt by end of March !!!

Sun, 02/07/2010 - 16:02 | 221340 Anonymous
Anonymous's picture

yes GS tried to get the Chinese to buy greek debt - not sure how much success they had though.

Sun, 02/07/2010 - 16:25 | 221367 john_connor
john_connor's picture

I am going to keep this relatively simple.

Within the week: SnP 1110-ish

By early to mid next week: SnP 980-ish

Within 2-3 weeks: SnP 950.

Then a bounce and Leo can again tout liquidity, recovery, and so forth.

Sun, 02/07/2010 - 16:44 | 221393 moneymutt
moneymutt's picture

"...Then a bounce and Leo can again tout liquidity, recovery, and so forth...."

pls, JC, don't feed the pets...

that is, unless they are white scruffy mutts

Sun, 02/07/2010 - 16:50 | 221401 john_connor
john_connor's picture

Nice.  Well that little bounce to maybe 1050 will be followed by, well, you know.

Allright enough with the table talk:)

Sun, 02/07/2010 - 17:28 | 221442 Missing_Link
Missing_Link's picture

So are these based on some sort of logic or technical analysis, or did you pull these numbers out of your hindquarters?

Sun, 02/07/2010 - 17:50 | 221469 john_connor
john_connor's picture

I mean, if I really knew, I wouldn't be posting here.  But those are estimates based on TA and scale-ups of the prior moves.

 

Sun, 02/07/2010 - 19:39 | 221553 Missing_Link
Missing_Link's picture

Ah!  That would be "I pulled them out of my ass," then.

Here's an idea: if you really think that sort of "analysis" has any validity, license a copy of TradeStation and write a little EasyLanguage script to do the same kind of TA and scale-ups of prior moves on an index ETF like SPY.

Then backtest it and TradeStation will precisely quantify your fail for you, and hopefully, you will avoid flinging such turd-coated numbers onto these boards in the future.

Mon, 02/08/2010 - 06:59 | 221971 jeff montanye
jeff montanye's picture

that's a high standard you set.  

Sun, 02/07/2010 - 18:01 | 221479 deadhead
deadhead's picture

So are these based on some sort of logic or technical analysis, or did you pull these numbers out of your hindquarters

sounds like what the elliot wave folks have on for wave 3 of 1 of P3.  most have 3 wave to 980ish, with wave 5 to mid 800s.

also, a 50% mean reversion would be low 900s.

Sun, 02/07/2010 - 18:22 | 221496 john_connor
john_connor's picture

The mid 800's number seems a bit deep to me for this move, although this latest plunge to 1046 was surprising.  Even given that, I'd be suprised to see us dip below low to mid 900's near term.  The folks at EW always have uber-bearish targets, but I am sticking with my initial guestimates.

 

 

 

 

 

 

 

 

 

Sun, 02/07/2010 - 19:19 | 221539 deadhead
deadhead's picture

the move to mid 800s would (will?) take a bit as there is a 4 retracement up after the 3 down.  it's another tool to use and I find it to be a helpful one for my trading. i like all the classical TA as well, particularly in markets where, according to my view of the world, the market is disconnected from fundamentals and is looking out into the future no more than, say, a 15 minute chart versus the old cliched standby "4-6 months" down the road....seems to me once we look towards later spring into summer, there is uncertainty and we know how that plays.

always enjoy your insights John...thanks.

Sun, 02/07/2010 - 19:43 | 221556 RoastingBankers
RoastingBankers's picture

977-990

target by 2/18

Mon, 02/08/2010 - 00:14 | 221765 bc0203
bc0203's picture

It's really tough to call a market which is being primed on artificial stimulus.  You're always being out-guessed by the the next government press release or favor being called in.  Hard to factor those kinds of things into your modeling.

I can honestly see why people are getting at least part of their portfolios into PMs and commodities at this point, despite the drubbing they're probably going to take in the short term - it's hard to get an accurate reading on where other investments are going in a marketplace like this.

Sun, 02/07/2010 - 16:50 | 221368 pros
pros's picture

I cannot think of an analogy in the recent history of currency/financial crises.
Normally it is capital flight that seals the doom of a single currency peg when the central bank is depleted of its fx reserves.
But in this case the capital flight is from a single player in a currency union...
the effect here is to further weaken the Greek economy, raise the cost of a "bailout" and put greater pressure on a devaluation (departure from Euro).

Roubini and Das 3 days ago:

How to Avoid a Greek Tragedy in Europe By Nouriel Roubini and Arnab Das 2/3/2010 | Last Updated

EXECUTIVE SUMMARY

Greece is the lynchpin of eurozone sovereign risk. We advise going flat for now.

Greece is the debt crisis of the moment, but its problems are far from unique. On their resolution rides the fate of Greece's neighbors, the eurozone and perhaps the EU itself. Greece, like the rest of the PIGS, has an excessive public debt and fiscal deficit and is uncompetitive. A sovereign debt restructuring that reduces both the debt stock and interest burden and a substantial real exchange rate devaluation would clean up the national balance sheet, restore competitiveness and reinvigorate growth. A real devaluation can only be achieved via structural reforms and productivity gains over time; an instant devaluation can only be achieved by exiting the euro, which would require debt default or re-denomination.

Greece by itself may not be systemically important, but Spain and Italy certainly are, so a disorderly resolution of Greece’s crisis would be catastrophic for the eurozone. A debt reduction and/or devaluation would almost certainly tip the Greek financial system over the brink, in addition to sharply accelerating contagion to Portugal, Italy and Spain, dramatically raising the risk that the eurozone would splinter. We therefore expect the crisis to play out according to a well-worn script, with important twists ultimately averting tragedy. The EU and ECB will demand further and more credible fiscal adjustment. Once an adequate pound of flesh is delivered, there may well be exceptional intra-EU bilateral or multilateral lending and monitoring to restore market confidence. We feel that the chances of success in even a very strong fiscal and structural adjustment program would be significantly enhanced by an overwhelming show of support from the EU and IMF. The shock and awe of a massive war chest of liquidity and fiscal reserves, as in the IMF mega-programs of the 1990s and 2009, would help overcome the risk of further market pressures during a potentially long and difficult adjustment process.

The market implications: We advise going flat Greece, pending further clarification of fiscal adjustment and financing plans. The macro challenges are daunting and will take much time and effort to solve, pointing to further rises in CDS and bond spreads, supporting an argument for real money to sell bonds and leveraged money to buy protection or go short. But the rising chance of exceptional fiscal cuts, buttressed by bilateral or multilateral financing, could create a short squeeze any time. Spreads may not yet have peaked, but it is prudent to at least begin covering shorts, though the fundamentals argue against outright longs and selling protection just yet.

HOW TO AVOID A GREEK TRAGEDY IN EUROPE

Financial Armageddon and another Great Depression may have been averted, but the crisis is far from over. Money is now almost free, but credit is tight, and contagion is spreading to all highly leveraged, weak links in the global economy, one by one: mortgage-ridden households (particularly in the U.S., UK, Iceland, Spain, Ireland and Central and Eastern Europe); banks (in the U.S., EU, Iceland and Russia/CIS); quasi-sovereigns (like Dubai World and Ukraine’s Naftogaz); and now sovereigns with large fiscal deficits and heavy current or future public debt burdens (currently Greece and next probably other trouble spots in the eurozone). Around the corner, perhaps sovereigns that enjoy independent monetary policy, like Japan, the United Kingdom and even the United States, may be susceptible. Eventually, all these countries will have to adjust their budgets or face the bond market vigilantes.

Greece has long been an accident waiting to happen, with its heavy public debt and lack of competitiveness. A train wreck is imminent because the budget deficit is 3.5 times larger than previously claimed, and the markets doubt Greece’s resolve. Fiscal incontinence and uncompetitiveness are interlinked across what was known as "Club Med" in the go-go years and is now dubbed "the PIGS"–Portugal, Italy, Greece and Spain. Euro accession and bull-market "convergence trades" pushed their bond yields toward those of German bunds. The ensuing credit boom supported consumption but papered over rapidly rising wages, which far exceeded productivity growth and therefore boosted unit labor costs. The PIGS was priced out of traditional export markets by strong competition from lower-cost emerging markets, like Turkey and Asia. Excessive bureaucracy and structural rigidities in labor, product and service markets discouraged investment in high-value-added sectors, despite wages well below the EU average. The resulting noxious mix of large current account and budget deficits boosted foreign debt. The last straw–dramatic euro appreciation in 2008-09–hindered recovery, compounding fiscal and competitive challenges.

Charts 1 and 2: When PIGS Fly: Soaring Real Exchange Rates, Rising Foreign Debt


Source: AMECO database, RGE Calculations

Source: AMECO database, RGE Calculations

Thus, Greece and the other PIGS countries face difficult choices as bond yields rise:

  • Plan A: Greece can follow in the footsteps of Ireland, Hungary and Latvia with a credible fiscal plan, heavy on spending cuts the government can control rather than tax hikes and loophole closures that depend on historically weak compliance. It can achieve an internal devaluation with deep real-wage cuts and structural reforms to boost competitiveness and productivity growth, like Germany did.
  • Plan B: Greece can resort to financial engineering and fiscal fudges, delaying both fiscal and structural adjustment. Eventually, market access would be lost, perhaps by mid-2010 given how spreads are exploding. Greece would have to turn for direct loans to other member states (reports of which have been denied–at least so far); the IMF (which has been ruled out for the moment); or non-traditional creditors like China (reports of which also have been denied). Alternatively, Greece could devalue, default and re-denominate its liabilities into "new drachma," a la Argentina (which is unthinkable).

Plan A would restore solidarity with other members who are adjusting, improve the rhetoric of the ECB and key member states and bring Greek spreads back down to earth. Plan A is working in Ireland, where spreads exploded as public debt ballooned to save its banks and then shrank after public spending was cut 20%. But Plan A is no cakewalk: Portugal has been deflating to boost competitiveness for a decade, a cautionary tale against gradualism. The harsh medicine of Plan A is best ingested quickly and deeply, rather than in half measures.

Charts 3 and 4: When PIGS Fly: Soaring Government Bond Yield and CDS Spreads


Source: Bloomberg


Source: Bloomberg

Plan A would benefit from an IMF program. In a Europe-only plan, the European Commission would monitor adjustment, and the ECB would lend. Neither has imposed conditionality on members (only applicants with IMF/World Bank programs). During implementation, Greece may need financing, and markets will demand checkpoints, not just sign-offs by interested parties. After all, credible adjustment programs have been undermined by inadequate political commitment and financing. Greece’s fiscal history is far less reassuring than Ireland’s, and EU-only backing may look like a bailout, given the risks to Europe of failure. Charts 5 and 6: When PIGS Fly: Soaring Fiscal Deficits and Public Debt

 
Source: AMECO database, RGE Calculations

Source: AMECO database, RGE Calculations

Europe has so far ruled out IMF involvement because it would signal weakness, but exploding spreads reflect perceptions of weakness that may precipitate a self-fulfilling run on Greek public debt and banks. We interpret news reports of intra-EU financing plans, an IMF program and even bilateral lending by China as trial balloons, signals and feelers to test market and political reactions to different avenues for financial assistance. Our assessment is that Greece is starting to think about the need for official financing but is not ready to take the plunge, given the optics. But we believe the onset of a refinancing crisis would trigger ECB intervention and perhaps multilateral European support through the European Investment Bank or other routes, to provide time for Plan A and contain the collateral damage to the rest of the PIGS.

Furthermore, we believe an IMF plan for Greece would be available for the asking, if Greece were to make a credible commitment to the required fiscal and structural conditionality. There are technical constraints: Most IMF programs are in the form of exceptional balance of payments financing with associated targets and constraints on central bank balance sheets. In this case, since Greece has ceded monetary policy to the supranational ECB, a traditional IMF program would not work. But there are alternatives. There could be a "Staff-Monitored Program" (SMP) in the context of an EU-financed program, with the IMF providing surveillance and monitoring and perhaps even designing conditionality. Though the IMF has tended to shy away from SMPs in recent decades, these extraordinary times call for extraordinary measures. An IMF-financed program could even be designed with direct fiscal support; after all, there have been IMF programs with direct or implicit fiscal financing for Russia, Ukraine, Turkey and Brazil. At any rate, an IMF program would effectively avoid the potential moral hazard of an EU-only program.

Plan A would be significantly strengthened by an overwhelming show of force, in the form of a large war chest of liquidity and fiscal reserve buffers. Gross fiscal financing needs are an estimated 54 billion euros for 2010 alone, and the fiscal and structural adjustment programs will take years to improve competitiveness and reduce public debt. The immediate confirmation that debt sustainability and solvency are being restored will show up in cash bond and CDS spreads. Spreads are liable to come in sharply if the adjustment program is adequately or over-financed, compelling short-covering rather than raising periodic doubts about whether the adjustment will be adequate or subject to tests in the markets again and again. Hence, the best version of Plan A would be a compelling commitment to adjustment up front, combined with a strong financing package.

Plan B would obviate indirect ECB support for Greek government bonds via repos or outright secondary market purchases. Greece’s BBB+ sovereign rating would fall below the ECB’s BBB- rating floor for open-market operations. This limit, already at the threshold of junk, will revert to A- by 2011, and the ECB rightly has ruled out extensions or exceptions.

Plan B would resurrect the historical specter that no currency union has survived without a fiscal and political union. The contrast between the eurozone and the United States would become ever starker: Many states are in a fiscal crisis, but U.S. traditions of fiscal federalism enable local problems to be solved at the federal level. Plus, a chapter of the bankruptcy code is devoted to sub-federal governments, in case transfers fail to do the trick. The eurozone lacks such burden-sharing mechanisms, so bond market vigilantes are turning their sights to other highly indebted sovereigns, even as Greece remains under fire.

The other PIGS countries' stories are different in degree and composition but not in principle: All are highly leveraged, the fundamental source of financial contagion. Spain, like Ireland, has a massive contingent public liability in its banking sector, arising from mortgage debt. Its growth model–residential construction driven by a housing price boom, underpinned by mortgages–is defunct. Also similarly, Spain needs fiscal consolidation and structural reform to restore debt sustainability, reinvigorate growth and reduce its 20% unemployment rate. Italy’s government is highly leveraged, so it too must cut the budget and regain competitiveness against the U.S. and dollar-pegged exporters. Portugal urgently needs structural reform to restore economic dynamism and fiscal health.

Greece, of course, is a microstate, whose GDP is only 3% of eurozone GDP, and whose public debt is de minimis relative to eurozone public debt. However, none of the many legs down in this global financial and economic crisis was triggered by the size of the imbalances in question. After all, Iceland, with only 300,000 people, is a microstate par excellence. Subprime debt was only a fraction of outstanding U.S. mortgage debt. Bear Stearns and Lehman Brothers hardly deployed the largest bank balance sheets. Rather, it was the interconnectedness of highly leveraged entities and the implications of their loss of market access for larger entities that blew up entire national and regional financial systems and, ultimately, the global financial and trading systems, precipitating the first globally synchronized recession in modern history. If Greece cannot refinance itself, then it will be only a matter of time before contagion, already starting to infect the rest of the PIGS, hits Spain, perhaps taking down Portugal en route. In no time, the integrity of the eurozone would be threatened, perhaps along with the stability of the European Union.

Greece, then, is the frontline of the battle to keep the PIGS on the straight and narrow that EMU membership demands. The political commitment to the eurozone of every country that has come under the gun is unwavering: Witness Ireland’s deep budget cuts, Portugal’s painful deflation and the sharp adjustments of aspirants like Latvia and Hungary. Fiscal and structural adjustment, along with exceptional financing, whether intra-EU, bilateral or multilateral, can help win this battle.

But the war is about the survival of the EMU itself. Lack of political and fiscal union and limited labor mobility amid free capital movement make such adjustments critical to the long-term viability of the eurozone. Ideally, to give teeth to no-bailout clauses, formal rules for fiscal burden-sharing should be developed, such as debt restructuring mechanisms for eurozone sovereigns. Otherwise, doubts about EMU sustainability will come back to haunt Europe in every economic downturn or financial crisis. And sooner or later, these doubts will be validated.

Sun, 02/07/2010 - 19:31 | 221548 mnevins2
mnevins2's picture

Can you imagine if Turkey was a member of this EMU club?!?

Sun, 02/07/2010 - 16:28 | 221370 Keyser Soze
Keyser Soze's picture

thith ith thparta!

Sun, 02/07/2010 - 18:01 | 221480 Tahoe
Tahoe's picture

+++100

Sun, 02/07/2010 - 18:22 | 221495 Anonymous
Anonymous's picture

keyser soze?? oh no! another usual suspect...

Sun, 02/07/2010 - 16:29 | 221371 Anonymous
Anonymous's picture

seems an overwhelming bunch of you guys are short biased or market crash oriented, like a bunch of mind numbed robots. no different than perma bulls. here is what will happen: the worlds governments have too much on the line to recrash like 2008. wake up guys.

Mon, 02/08/2010 - 00:28 | 221786 bc0203
bc0203's picture

If you run the numbers, historically, it's just a mattter of time before the governments involved run out of stimulus/bailout bullets and the confidence game is up.  Then what?

Mon, 02/08/2010 - 03:16 | 221910 faustian bargain
faustian bargain's picture

you with your logic and reality. pssshh.

Sun, 02/07/2010 - 16:29 | 221372 Anonymous
Anonymous's picture

Now it's the politics of de facto sovereign debt default. Look what the Administration did to GM bondholders. That's the template for what happens now. Why bother with de jure sovereign debt default when you can just rig something? The point is, this is the next step in Mellonesque liquidation. Along with collapse of the supply chain of course--to which no one is paying attention.

As long as the true unemployment rate among Americans with a Bachelor's degree or higher is under 40%, any lie must and will be told. Why? Because that's what Americans with a Bachelor's degree or higher, DEMAND be done.

Remember what the bourgeois American wants: no problems and no solutions. Take care of it.

Sun, 02/07/2010 - 16:31 | 221373 Anonymous
Anonymous's picture

I see a lot of post saying sell all bounces, the markets going down, ect. ect. Isn't it true that when I'm selling stocks I'm buying something else... bonds, cash, ect. what should I be buying if I'm selling stocks? U.S. dollars? I don't think so... The problem is that there are very few places to hide... There are risks everywhere. I would like some opinions on where we should be putting our money?

Sun, 02/07/2010 - 16:42 | 221388 hack3434
hack3434's picture

The beauty of a collapse...

Sun, 02/07/2010 - 16:48 | 221399 moneymutt
moneymutt's picture

cash for now, eventually no paper nothing, instead physical things that people need for everyday, and those things will probably deflate too...yeah, I know not very liquid and you probably have a lot more money to make safe than I, all I need to do is cash out my life savings and buy a few cases of whiskey...

Sun, 02/07/2010 - 21:34 | 221636 Anonymous
Anonymous's picture

Hoard nickels and pennies. If the face value drops to zero, you still have a hoard of copper and nickel.

Sun, 02/07/2010 - 17:56 | 221475 velobabe
velobabe's picture

i had the same questions. i loaned my friend $100,000. to buy grapes with last fall to do his crush. he pays me 8% a month. helping local farmers, colorado agriculture reputation. he is producing a product made in america. he could never of gotten a small business loan. but this is what needs to happen and be supported.

Sun, 02/07/2010 - 18:52 | 221518 Anonymous
Anonymous's picture

good man.

Sun, 02/07/2010 - 20:02 | 221570 boiow
boiow's picture

"a friend" ." 8% a month" are you sure. sounds like vampire squid 2.0 .

Sun, 02/07/2010 - 20:14 | 221575 velobabe
velobabe's picture

it was his idea. i don't know anything about interest rates. are you implying that is high?

Sun, 02/07/2010 - 18:11 | 221489 Winisk
Winisk's picture

Storing wealth over the longterm in anything other than useful tangible resources is starting to look like a rather quaint idea.  It will either diluted, taxed, or outright confiscated.  Perhaps spending a chunk of it might be more worthwhile.  You know, spend it while you got it.  Take the vacation of your dreams while you still can.

Sun, 02/07/2010 - 21:21 | 221629 delacroix
delacroix's picture

silver is a bargain, right now. the big commercials, dumped a lot of contracts this last week. take physical possesion. do you really think silver is worth less, than it was a year ago? do you really think the dollar is worth more? the demand for silver, exceeds supply, every year, since 1945. we use it up, it's not like gold, and it is getting harder to take delivery of physical. coin shops get $5 over spot, for an oz, and they run out all the time, theres not enough silver, for every person, to have just one oz. don't let the market, and the media, cloud clear thinking. silver is an anchor, in a storm. every fiat currency in history, has eventually failed, because paper, is a perception, backed by a political promise, and we know how good those have proven to be.

Mon, 02/08/2010 - 05:27 | 221944 Anonymous
Anonymous's picture

Toilet paper and whiskey. The new currency.

Sun, 02/07/2010 - 16:32 | 221376 Anonymous
Anonymous's picture

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 thew 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.

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.

Sun, 02/07/2010 - 17:32 | 221452 DoChenRollingBearing
DoChenRollingBearing's picture

The first letter of each serial number of the 500 Euro note from Germany is always "X" (probably the other denominations as well, but I do not know for sure).

There are some who only want the X if they are hanging on to them (for a future vacation, etc.).

Sun, 02/07/2010 - 20:01 | 221569 Landrew
Landrew's picture

What the heck are you talking about? A Euro is a euro no matter which EU member country your in. They are not country specific. Swiss Francs another story they don't take euro in Switzerland.

Sun, 02/07/2010 - 16:33 | 221377 Anonymous
Anonymous's picture

"(problem)people who are not being taxed properly"

Yeah........

Better to be a little Greek sailboat unmoored from your taxation, 'finance minister'.

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