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SocGen Tries To Make Sense Of The Complete Chaos That Is Europe Ahead Of The Greek Vote Of Confidence, Fails
If anyone has a clear idea what is going in Europe, you are smarter than us, and may move on to a different post. For everyone else, here is a must read piece from SocGen that tries to make sense of what is rapidly becoming the biggest clusterfuck in modern European history, in which everyone hates the outcome that is predetermined by the bankers, yet nobody knows just how to achieve it.
Courtesy of SocGen's James Nixon.
The initiative now lies with Greece
The morning after the night before; or is anyone really sure what has been agreed so far by the Eurogroup over the last two days. How much one wonders is an agreement "in principle" actually worth? This being Europe details of the plan continue to emerge from disparate sources. It’s now clear that some of the ideas discussed by in March have re-emerged. Hence the effective lending capacity of the EFSF is to be increased to its full €440bn by increasing the government guarantees from 120% to 156%. At the same time, in an attempt to make it easier for Greece, Ireland and Portugal to issue debt in their own name, the Eurogroup has agreed that ESM financing to these three countries will not be senior to existing debt. Beyond these initiatives, the two hurdles to a new Greek bailout remain agreement on the exact form of private sector involvement and getting the Greek parliamentary approval for the latest round of austerity measures.
On the former, German Finance Minister Wolfgang Schäuble has indicated that he wants to open discussions with private creditors to secure their contribution. This hints that Angela Merkel’s much trumpeted compromise with Nicolas Sarkozy on Friday is less than a complete capitulation. Weekend press reports suggested that Mr Schäuble intends to pitch a "compromise" to the ECB which would see the EFSF issue debt which could be offered to the Greek banks. This would be consistent with the efforts to re-dimension the EFSF and earlier hints that the lion’s share of any private sector contribution would fall to Greek banks. Of course, how the ECB views this compromise remains to be seen; certainly the idea of the Greek banks taking on new debt that they can post as collateral at the ECB smacks of monetising debt. Mr Schäuble said on Monday that no "additional incentives" are needed to get investors to contribute voluntarily to a new aid package for Greece. "The incentive lies in the fact that everybody, especially creditors, has an interest in a good, stable development," Mr Schäuble told reporters after the meeting. "And because they have an interest, they also have a joint responsibility and that does not require additional incentives."
What is so surprising is how much the Eurogroup appears to have handed the initiative to Greece itself; if the Government falls after Tuesday’s vote of confidence presumably we reach the point where the crisis starts to get really sporting. And, if there weren’t hurdles enough, the latest from Mr Papandreou is a referendum on the whole kit and caboodle in the autumn. The risk for the Eurogroup is that the gambit of pressuring Papandreou may now backfire with some of the Greek press seeing this as a full frontal attack on the PM. In many respects the situation in Greece very closely mirrors the political situation in Portugal. The right-wing business orientated opposition is unhappy that their spendthrift socialist government still haven’t bitten the bullet and undertaken root and branch reform of the public sector. Hence Mr Papandreou continues to rely too heavily on hypothetical increases in tax revenue rather than wield the axe over his own supporters. As in Portugal, the opposition may be prepared to bring down the government over this if they can and force new elections. This would leave the Eurogroup having to negotiate with the different political parties in Greece in order to secure agreement on further austerity.
There will now be another extra-Eurogroup meeting on 3 July with the aim of finally agreeing a new Greek package conditional on Greece having finally passed its Medium Term Fiscal Strategy. Parliamentary approval of new deficit cutting measures and of the privatization plan would "pave the way" for the disbursement by mid July of the next €12bn tranche of bilateral lending to Greece. In the interim European Commission and Central bank officials alongside the IMF will be back in Athens this week to draw up a "memorandum of understanding" with
the Greek government – providing it survives the vote of confidence on Tuesday. The Greek parliament will vote though the Medium Term Fiscal Strategy based on the "memorandum of understanding" on or around June 28.
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It's going to be historic, with the PIIGS in succession wanting to all default, there is the contagion.
ANd the US markets have completely lost the plot = major bulltrap
Sudden Debt, where are you? This is your bailiwick, dude.
Sudden Debt is from Belgium, right? Probably he had a heart stroke after reading this.
Or he is too busy selling everything he has and using the proceedings to buy PMs.
Sudden debt is from belgium but i always see him posting in late mornings in america like he is keeping an american schedule.
That boy sometimes sounds more american than my new york friends.
Got ya game on? Time to trade! Yen
And EUR goes to 1.55
Euro/dollar are port and starboard of the same ship foundering in an ocean of debt. It lists one way, it lists the other, as the increasingly frantic passengers rush from one side to the other. Which side will take water & go under first no one knows, nor does it matter for the ultimate outcome: the ship sinks.
or the trilateral lean-to of the three drunkards Yen, Dollar and Euro.
You to ya Barkie little bird! Money doesn't sleep!
+ 1 oz. Ag.
The solution is to make both sides as close to even as possible. Dollar Euro parity, coming to a forex cafe near you.
The deck chair arrangement must be perfect in order to have the proper effect on the passengers. When does the band appear playing Nearer my God to thee?
http://www.youtube.com/watch?v=pj-1b1Yvep8
That is to metaphor what haiku is to poetry. Well done.
+1 venti mille lire!
LOL...i read it, anyway...
Wake up! (yen~
It's the old cliche: When you owe the bank a little bit, it's your problem. When you owe the bank a lot, it's the Bank's problem. Greece owes just about everybody a lot, and Greece will set the terms. If the Banks (ECB et al) don't like it, Greece will tell them to stand in line to receive their new Drachma's along with the rest of its creditors.
yeh, it's pretty funny really, you got all the politicians and bankers posturing and saying a bunch of nothing....painfully, slowly realizing the can to kick down the road has left town, and then you got Greece over there, the turnip, saying fuck off.
The only bloke to get anything organised in Europe was from Austria - and it ended badly.
Other than that, all other European politician lead solutions end in abject failure, so Greece is toast, the EURO is toast and Europe is toast.
Enjoy the farce while it lasts.
That's a gross overstatement.
Just because a monetary system fails, doesn't mean that everything is lost.
Or that this is the end of the world.
No one got killed.
No infrastructure destroyed.
It's just some numbers on some bank accounts, and some pricing signs.
This is not the first time we saw a currency reform in world history,
and certainly not the last.
So what.
I doubt many Argentinians thought that when their currency collapsed in 2001, protesting out of hunger...
That's not true
There was an earlier guy from Corsica. He organized perhaps a bigger portion of europe than that jewboy from Austria
And before that there was Charlemagne. And Julius Julius Caesar did a bang up job. And there were all those popes. Never worked.
The latency is terrible. Is it my ISP, or is someone messing with ZH?
duplex
duplex
duplex
>>If anyone has a clear idea what is going in Europe, you are smarter than us<<
I am not smarter than you but Bismarck is. A 150 yr ago he said:
It is easy to build a tower in air, but very difficult to tear it appart.
That is exactly what is going on in Europe
The end will come not because the people revolt against the Illuminati but because the Illuminati starts to come unglued.
Only if the people are sheeple incapable of motivating and organizing themselves; i.e. only if democracy doesn't work because people are too stupid to participate in it - well, let's see, where do people participate n democracy?
US presidential election voter participation: Ca. 40%.
EU national parliamentary elections voter participation: ca. 90%.
So where, in this world, are the passive, disengaged, led and corralled sheeple concentrated?
Like the Greeks that are out in the street some of us are past the voting scams. When the Fascist have taken over and you lose every election you stop wasting the trip to the poll .
Max Keiser giving a speech to the crowds in Greece!
http://www.youtube.com/watch?v=Rq4aHM73CtI
Its like euro quantum physics, if you think you understand it, then you really dont understand it.
When you think about it, Europe's problems have always stemmed from some idiot trying to "unify" it. Usually, he uses lots of force and kills a lot of people in an attempt to "organize" what is inherently chaotic. Napoleon and Hitler are obvious examples. But you can go back to war after war where some idiot king thought he could conquer europe and convert it into a superior country ruled by him. And all these guys had some measure of good intentions. That this has been tried so many times and has never worked should be a clue.
It matters not that this time it's bunch of recycled hyper-socialist bureaucrats trying the same idiotic stunt The result will be the same for the exact same reasons.
Is there anything worse than provincial HomeLand US citizens feeling smug and superior to places they do not understand, have never visited and therefore can only spout mindless cliches about?
It may make you feel great to say "stupid" three times back to back, but it isn't very informative. Instead, try to make a case for the superior character of US social cohesion and democratic participation in US political and social economic processes. Your theory, should you have one or be able to manufacture one, will be swiftly tested in the next 12 months.
The United States is still one country, whereas "Europe" is not.
It would be like trying to organize all of North America and the Caribbean under one currency, and then wondering why little Haiti or Cuba is resulting in all of these problems.
I would say the US is actually multiple nations held together by a common language, currency and force. There is little common feeling and in general the regions want vastly different things out of life and government. We arent a people- its more of a very dysfunctional family made up of Billy Yank, Johnny Reb, the Marlboro Man and Suzy Moonbeam.
If and when the currency and/or economy unravels the political structure will also. I dont see the south sticking around for long, it is to the US what the Ukraine was to the USSR.
What was the UKRAINE to the USSR??? A metaphor? Seriously, if the South wants to go, I wouldn't fight and I don't know many guys up here (ND) who would either, and I hope they take Florida and Texas with them, fine with me.(Run on sentence, sorry). We'll be eating sugar beets and winter wheat but we'll have oil.
California? SELL IT TO THE CHINESE!
Resolution to the PIGS problem is very simple : example Greece.
Today, Monday, at midnight Greece officially leaves the the Euro and creates the NEW Drachma. It is devalued 40% to the EURO relative the OLD Drachma rate. On this basis the banks issue a unilateral voluntary "hair cut" signed at 10 am Tuesday morning, with a 50% write down of Greek debt. ie : The banks take a knock of around 175 Billions Euros with a new payment extended schedule offered.
On Tuesday, mid-day Greece officially re-joins the EUro group again. Its assets and liabilities are now revalued in the New Drachma rate. Greece now has less debt and is a darn side competitve.
Rinse and repeat for Portugal and Ireland. Problem solved and German and French banks are much leaner but the sovereign debt is over.
ECB issues bonds from then on based on a common fiscal policy of all EU members. No more national bond issues. Voilà my recipe made from Greek honey and rich olives.
Exactly right eureka Napoleon was the greatest champion for what we in the USA consider Freedom and Liberty in the history of the planet . Napoleon was the success of the Citizen as a share holder in their Government , while the Brits bowed to their king. Napoleon was determined to spread Liberty around the World even if he had to kill some of the ones they were trying to free.
Is there anything worse than provincial HomeLand US citizens feeling smug and superior to places they do not understand, have never visited and therefore can only spout mindless cliches about?
To answer your question, yes, the European little penis syndrom is worse.
You have it wrong; it is the guy with all the guns who has the small penis - that's why he needs all the guns. Psyc 101. Happy studying.
This may be true NOW. But 10 years ago, europe was an immature bootlicker of the USA, with an inferiority-complex. Heck, the whole EU and EMU thingy was promoted with the message of europe no longer consisting of small nations, but instead being a bid bad block, like the USA, russia, etc. Now, they may have enough confidence (and resentment towards the USA), to no longer feel inferior for such stupid reasons, but back then they did.
Fully agree. Europe consists simply of too different cultures and economies. And why should this be a problem that needs to be "fixed"? There is no need to make all europe same. All that may be useful and desireable, is to have an efficient way for those nations to discuss and cooperate on mutual interests, and with mutual consent. Perhaps also the ability to launch projects in which multiple nations (not necessarily all of them) participate. But not as a "top-down hierachy", but instead those nations cooperating with mutual consent.
We don't need europe without borders.... we just need an efficient way to cooperate and coordinate with mutual consent.
i bow im not worthy
i still can't understand why greece must leave the euro if they default
will Illinois leave the dollar zone when they default
or leave the eurozone without defaulting
No, but maybe they can join the Euro
I hear the gyros in Greece are great.
Quite simple actually. Europeans are trying US recipes, they are on the same path as the US was in the 1800s, how they built their so called melting pot.
So if you understand gangs, you understand the following with ease.
The Euro currency is sold as a protection. With outside threats put in the lime light. Yet one other threat and one very actual is the Euro threat itself.
Being part of the Euro currency protects from the Euro itself.
If Greece defaults and stays in the Euro, they will keep being protected from the Euro threat.
Once out of the Euro, they will have to face the Euro threat and Europeans will use Greece as an example of what happens when you leave the Eurozone.
"If you let the gang down, the gang lets you down. Better stick with us if you dont want to fear us."
If you understand the gangs, you understand US citizenism.
Just out of curiosity, anyone know the over/under on the confidence vote? Couldn't find on in-trade
I'm still waiting for some banker to tell me how they intend to pyramid debt forever.
Maybe a small pamphlet or website would help, perhaps thats what they were discussing at the Bilderberg meeting?
We sheeple need all the help we can get, when it come to understanding the great ones....
"If anyone has a clear idea what is going in Europe, you are smarter than us,"
Good that ZH finally admits that it has been spouting garbage (for more than an year). Now, STFU
have you met kito?
Thanks for contributing.
If you have known it was all junk for a year already, I am suprised you are still here. Maybe you are to dumb to find the back button on your browser, so you could head back to cnbc.com.
Ah, a Goldman employee is with us tonight - welcome to Rehab
Excuuuuuse me - PIMCO has been also talking about this GARBAGE for 1.3 years, see the famous "Ring of Fire" essay by Mr. Gross. He runs billions of yet-to-be-garbage bucks. (IO Feb 2010). Most intelligent commentators, of whom you seem to be notably excluded, see brinks-Person-ship ahead, difficulties, and much more discussion. STFU IS NOT AN OPTION. Sorry.
Personally I am Most Interested in whether the Banksters WIN, or LOSE. In your opinion, I feel only Amusement.
Mr. Troll, meet the Ring of Fire. FLAME ON!
ok and the final outcome is?
Little benfit in simply criticizing.
Surprise. Look what happens when govmunts sell the power to print free paper money to a few greedy, psychopathtic, asshole billionaires in exchange for some measly campaign contributions.
Ever heard of the State Bank of North Dakota run by state employees? Might want to see where ND's state economy stands on unemployment, interest on savings, growth, etc.
Can't really answer properly, but we are swimming in oil now so are short drill hands, engineers, mud pushers, etc etc even cowboys Yes, the State Bank HAS functioned well.
Nearly deserted and very dull can have some good points too.
IMO Greece will partial default (it has already) and then leave the EZ, but it's lose/lose, as Ireland will catch on with the default option, then Spain and Portugal. Essentially the EZ will shrink. They either roll with that, or we get a contagion of civil disputes. If the ECB/FED (USD swaps) go mad, oil inflation will take out EZ backstop - Germany.
Europe is going into a recession with regions going into a depression or a squeez between extreme stagflation.
It will be Germany asking the crap countries to leave, they do not want inflation.
The EUR will tank, maybe parity...but its going down.
Who needs Greece? Nobody, except of course the Greeks.
By appearing to give the reins and responsibility to Greece itself to negotiate the terms of any solution to its exuberant debt and insufficient productivity and revenue, the entire responsibility for any outcome rests entirely with the greeks. Rather brilliant, I would say.
Whatever the final outcome, matters little to EU. In fact, any outcome has its specific advantages;
1
if Greece were to leave the EUR and or even EU, it benefits the EU segment which is increasingly against Turkey's future contemplated entry into EU; if Europe-Middle East bridgehead Greece can't deliver EU standards performance on a range of issues, how could possibly Turkey?
2
if Greece's creditors roll over debts, take some haircuts - and both creditors and Greek debtors get some handouts in return for various conditions - everybody loses a little in the short term and wins in the long term, because presumably Greece hereafter integrates EU standards of prodcutivity, budget restraints and stringent government revenue collection regimes.
In other words - every media touted concern is vastly exagerated, and part of market manipulation schemes as much as or more than expressions of rational concern.
Watch in stead for US municipal and state budget crisis to hit the media in Q3. Perhaps then US citizens, media, observers and commentators will get their priorities straight and start sweeping the dirt out of their own "Greeces", from California To Florida, from Washington to Illinois. I assure you, everything about Greece is going to be forgotten very soon and a much bigger, much more relevant and clear and present danger will mount to the forefront of US minds.
England just said they won't bailout Greece...next will be Germany.
Of course. England is an island - and if it could, it would put an outboard motor on itself and quickly steer itself to the Caribbean and be the 51st star and state in Old Glory/US.
England IS US's "boy"(and -toy). England takes its orders from the White House.
England has helped the US oligarchs try to destroy the EUR for quite some time.
Hence, to achieve some balance of perspective, I coined the term the "USUK"s.
US+UK, The original Globa-Fi-Scum, who rigged and invented the "piigs", merely to cover up their own inadequacies. There is something ROTTEN in the Anglo-Empire - however westwardly it shifted itself, it still believes that might is right - except might has morphed into nothing but smoke & mirrors.
Well, we helped the B of E oligarchs a couple generations ago so fair is fair.
So you are a nationalist hegemon then?
We all need to focus on our core competencies, for us it is hegemon. Not too many opportunities for the retired hegemon, or the hegemon has-been.
Is this why Tony Blair was so insistent that England join the EURO?
Do you still read newspapers or are you hanging on to some old school, coffee shop attempts at quasi-intellectual discussion?
Ah, but did they join, old boy?
You see, it doesn't matter what Tony says, or, how the Brits feel about it, it matters what Uncle Sam says.
I wonder what you read?
If SocGen doesn't know by now what is going to happen, it's already too late.
Greece is in default.
They're just trying to figure out how to rearrange the deck chairs so they can avoid calling it a default, because the ECB's pile of PIIG bonds will make them insolvent. But at the end of the day it's still going to be a default and none of them are going to fool anybody and it's not going to matter how they end up trying to disguise it. (J. Turk, N. Farage)
Greece is in default.
They're just trying to figure out how to rearrange the deck chairs so they can avoid calling it a default, because the ECB's pile of PIIG bonds will make them insolvent. But at the end of the day it's still going to be a default and none of them are going to fool anybody and it's not going to matter how they end up trying to disguise it. (J. Turk, N. Farage)
An organized joint default is needed by Greece, Ireland and Portugal...then watch the games begin, whack a mole banker will a popular sport very soon..that sounds like a good app!
My take is:
This is an effort by the European banks and the elites, underclasses and governments of the PIIGS to foist the results of their profligacy on the middle class of Germany and its future generations.
They will partially succeed.
Going by the comments here I am beginning to think that Euroland really is going down this time. I am basing that judgment on the testiness (bitchiness) of some of the posters here who seem to have had some crazy attachment to the EU, (instead of their locality/region).
The same thing is going on in the U.S. People should have tended to business at home, close to home. That is where we all got into trouble, believing all of this transnational claptrap that was to make us all one, (and all rich).
"Weekend press reports suggested that Mr Schäuble intends to pitch a "compromise" to the ECB which would see the EFSF issue debt which could be offered to the Greek banks."
Wow! Monetize = Inflation. This is TARP over a secular default.
So......buy TZA at 38, or no?
dunno
But waiting for Asia to fix shorts on the EUR...
before or after the 1st Molotov is thrown re: Greek confidence vote
Does anyone know about the Zero Hedge Team....any contact number.....?
(202) 224-3121, ask for Barry Sotero
mercifully, this soon turns from a conversation about politics to a conversation about cash flow
Are you a cash cow?
tribal rivals for a thousand years. look, they dont like each other, never have never will.
nobody dares time it. cuz you look stupid. Fine , i will look stupid.
How about right fucking now brothers and sisters.
look at the effort it took to beat germany, the dominant tribe of europe, and the character of the people that did it.
Was it close? One tank ditch..... aka the English channel, or i would be on ZH holding an alpenstock yodelling in my lederhosen. It does not get closer than that. Ja?
Tribes are tribes. They dont mix. Empire builders are empire builders, they can suck my anaconda.
They can't have Greece leaving or defaulting, because if they do the other PIIGS will do it also. Believe it or not, Ireland is in much more trouble than Greece but they haven't been out by the thousands to protests like Greece and Spain.
It's "uncertainty" about what corporations want (tax cuts, no regulation) over here that is keeping the stock market down. It is uncertainty about Greece and the Euro, that takes our market up.
Ladies and Gentlemen, choose your weapons.
It's "uncertainty" about what corporations want (tax cuts, no regulation) over here that is keeping the stock market down. It is uncertainty about Greece and the Euro, that takes our market up.
Ladies and Gentlemen, choose your weapons.
Hey, MadCow! Ya want cash flow? Just open your wallet. This is just more 1 hr trading info.
It's all the pig Markets move on anymore. Ooops, there goes EURUSD.
asia is up EUR is down, shorts on...Greece implodes, EZ smokes...
Close your EUR shorts toot sweet, that was just Paulson making up his bad investments in Chinee Christmas trees. It's transitory. Ooops, 2 late.
Fitch is now throwing the default word around...
Will Fitch downgrade pmsMoody's? TWWW.
what this means is the rating agencies are now starting to smarten up. they know that a taxpayer revolt is inevitable in the EZ. banks will have to take the pain and countries will go into defaults. a flush out. problem is the CB's may not party with this and start printing...
Dream on. If you think the ratings dips don't consider themselves a part of Goobermint, just check them out. Even better, name a single member of the bathrobe brigade that knows what a rating is, and why.
it's reality, UK banks are withdrawing money from the EZ, as will most other EU banks - hence a liquidity crisis about now.
hey the 5day just got taken out on the EUR
To what end? That's the one thing I don't see anyone talking about, is what does all this messing about gain? The whole basis of these 'loans' is supposedly that it will tide them over until what, growth supposedly returns? Well that theory is absolutely wrong.
It's nothing more than throwing good money after bad. Really, only idiots throw good money after bad....that and banksters who smell profits from encumbering a country with more debt.
Time. All they want is time, because they believe their BS.
"Economies always grow, because they always have."
They ignore how socialism and it's ilk destroy economies.
Morons on parade. Go long a lot of popcorn.
And they have run out of time, the unions and their strikes will sink Greece.
I'm back with my two cents worth: Personally, I really don't give a flying fuck what happens to "Grease", the YewRo, or the rest of the PIIGS Sty. It's ALL been an organized clusterfuck from the beginning, and as someone stated above, YOU should be concentrating on YOUR own economic realm BY BUYING PHYSICAL GOLD AND SILVER on the "droop". Fuck Europe (although I've had many cool times there, mainly smuggling from Morrocco to Spain, but that's another story). WE have more important shit to worry about, like how do WE get this asshole for a president out of the country, and the rest of the bought off spineless minions in the legislature in a hole somewhere for starters. Then burn the Wall Street Shylocks at the stake. Maybe a bit more than two cents worth.
How do you wipe spittle off a webpage?
Market meltdown on first Molotov awaiting Greek political madness.
Market meltdown on first Molotov awaiting Greek political madness.
The journey from here will be predictably hellish for all. The outcome however, quite uncertain.
In can't find 'Netherlands' on the post. I can't find 'Finland' also. They must have a say on the bailout as EMU states, probably 'No'. It can't thus pass.
Well atleast one less problem for the EuroGroup, in Portugal elections were held 2 weeks ago and the a right and center-right coalition is now in place.