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Will Greece Make It?
Well, not if they are able to pull off their stated austerity measures.
Let's see how well they are doing thus far...
Papandreou Says
First Deficit Is Greece's Credibility Gap Jan. ...
|
Jan. 28 (Bloomberg) -- Greece's first "deficit" is its credibility
Greek Markets
Jan. 12 (Bloomberg) -- Greek stocks and bonds tumbled after the |
So, in order to gain credibility, Greece has to apply austerity
measures and close its large budget. Can Greece accomplish this mission?
After all, they are trying to close a fiscal deficit at an
unprecedented pace... Let's gauge both their progress and the populace's
reactions...
Greek
Customs Workers' Strike
Dents Exports, Cuts
Fuel Supplies
Feb. 19 (Bloomberg) --
Greek motorists lined up at gas stations as fuel stocks dwindled while a
strike by customs workers over government austerity measures stretched
into a fourth day, hurting imports and exports.
The Federation of Greek Customs Workers called a three-day strike on
Feb. 16 and decided yesterday to extend the action by six days to
protest government austerity measures aimed at trimming Europe’s
biggest budget
deficit.Greece is once again “hostage to strikes by powerful labor union
groups,” theNational
Federation of Greek Commerce said in an e-mailed statement. The
strike is “catastrophic” for the country’s trade and industry as well as
shipping, food and transport companies and the Greek consumer, said the
Athens- based organization, which represents Greek commerce groups.Exports have fallen 18 percent since the beginning of the customs
strike as the shipping of goods via maritime, rail and air links is
paralyzed, Christina
Sakellaridi, president of the Panhellenic Union of Exporters, told private Skai
radio today.The total value of goods exported by her organization’s members reached
11.4 billion euros ($15.4 billion) in 2009, according to Central Bank
of Greece data.
Customs workers in parts of Thessaloniki, Greece’s second- largest
city, and on Crete, the biggest Greek island, returned to work today,
the state-run Athens News Agency reported. That contradicted a statement
by the customs workers’ union on its Web site that continued
participation in the industrial action was “universal.”
Cab Drivers Join In
Greece’s taxi drivers also staged a 24-hour strike today, the second in
as many weeks, to protest measures including an increase in fuel tax
and the obligation to give customers receipts, part of the Greek
government’s efforts to clamp down on tax evasion.
Private and public sector unions strike for 24 hours on Feb. 24 over
measures introduced by Prime Minister George
Papandreou’s government to reduce a budget gap of 12.7 percent of
gross domestic product by 4 percentage points this year. The government
has frozen wages for public workers and trimmed bonuses, while raising
taxes on consumer goods such as tobacco and gasoline.
I suggest BoomBustBlog subscribers take another look at those exposed Greek banks:
Greek Banking Fundamental Tear Sheet
I'm going to end the Euro-Sovereign debt crisis in two more
installments, and they will be hard hitting ones. In the meantime, make
sure you are caught up because I will be creating a road map that will
track where the dominoes fall - If (actually, when) they start
falling...
- Can
China Control the "Side-Effects" of its Stimulus-Led Growth? Let's Look
at the Facts - Explains the potential fallout of the excessive
fiscal stimulus in China. While not European, it is quite likely to kick
off the daisy chain effect. - The
Coming Pan-European Sovereign Debt Crisis - introduces the crisis
and identified it as a pan-European problem, not a localized one. - What
Country is Next in the Coming Pan-European Sovereign Debt Crisis? -
illustrates the potential for the domino effect - The
Pan-European Sovereign Debt Crisis: If I Were to Short Any Country,
What Country Would That Be.. - attempts to illustrate the highly
interdependent weaknesses in Europe's sovereign nations can effect even
the perceived "stronger" nations. - The
Coming Pan-European Soverign Debt Crisis, Pt 4: The Spread to Western
European Countries
- advertisements -
Deflation, here we come:
http://globaleconomicanalysis.blogspot.com/2010/02/uk-business-lending-f...
To Leo: German MOF denied Der Spiegel's claims in an email, no decision on aid so far; and it will not be aid, but short-term loan to cover the payments due next months probably.
You forget EU isn't with the world's reserve currency, so we can't print our way out, and hope inflation + GDP growth with naturally get us out in a decade as the Fed hopes...
If and when Europe bails out Greece,the GSses and the Paulsons of the world will turn to the rest of the PIIGS. And if in turn the euro core keeps on bailing them out,they will turn to Germany and France,the heart of the core. Then,and after raking billions,the turn will come here. Every one has his turn. They collectively backstopped trillions of dollars on their banx books. And with limited to no growth in the economies of the developed world,it is only a matter of time before the domino principle take effect. ...
It's all a series of nested pyramid schemes - local, national, international; private, corporate, governmental...so total collapse could begin with a card pulled out at any level. Personally, I am gradually taking all my cash out of the bank, converting to silver, ammo, etc., plus doing some other things I can't mention. In short, doing my level best to bring on the collapse. All who can, please help.
Welcome to Globalization. Part of the process is to destroy any cultural identity or national pride people may have in their country and flag hence the now "Warped" society in Greece where no one gives a sh*t.
(AFP) – 5 hours ago
BERLIN — The European Union could provide debt-ridden Greece with up to 25 billion euros (34 billion dollars) in aid, Monday's edition of the German magazine Der Spiegel says, citing suggestions from Germany's finance ministry.
The amount each country would contribute would be calculated according to its relative position in the European Central Bank, Der Spiegel explains.
Germany would therefore contribute nearly 20 percent of the potential aid package, the equivalent of up to five billion euros, which would be made up in part of loans and guarantees.
European leaders have pledged their solidarity with Greece, which has a total debt estimated at about 300 billion euros, but the EU has not announced any concrete financial aid.
The EU has confirmed a series of measures to put Greece under a new form of budgetary surveillance.
Greece is committed to reducing a public deficit of 12.7 percent of gross domestic product by four percentage points over the course of 2010. Countries in the single euro currency zone are subject to a three percent limit.
Athens has also announced a major savings programme which will be controlled by the European Commission.
http://www.google.com/hostednews/afp/article/ALeqM5h2ZtZ7Vxl-hM40w5MY-M4oSC7HTg
The German finance ministry had already issued a denial on this report by 11:30 AM yesterday:
http://www.businessweek.com/news/2010-02-20/germany-doesn-t-have-plan-to...
"Germany’s Finance Ministry said it has no specific plans for helping Greece combat its deficit crisis, denying a magazine report ... It’s “incorrect” that Germany is considering a “concrete” plan for countries sharing the euro to pump billions in financial aid to Greece, ministry spokesman Martin Kreienbaum said in an e-mailed statement. “The Finance Ministry has taken no decisions in this regard,” the statement said.
Greece is “not requesting money from any European Union taxpayer,” government spokesman George Petalotis said in an e- mailed statement today"
Of course this is as expected, and of course this takes moral hazard to another level....but this should be just what was needed to produce the ubiquitous Monday equity rally, even though the market "had already priced in a Greek bailout".
When will the madness end? A day later than one would think, as even in this case "everything is better than expected".
Leo, you do realize that if this is true the EU has opened up the floodgates for Spain, Italy, Portugal, etc. Of course they are going to say they don't need help, just as Greece did a couple of weeks ago. The fact of the matter is.... They do! That package is actually about $450 billion euros, because it must include several other countries. Pushing that much money out not only guarantees the possibility of further deficits in the contributing states but reinforces moral hazard. Realize that Greece loses much more in revenue and GDP for every day a strike shuts down customs, tax collection or an airport than they would save with a nominal annual cut in pay of a few percentage points.
After a dozen or so successful strikes, the best they can do is break even, which leaves them where they started which was deeply in debt.
Wait until you read my next two reports on Europe, and the connection to the US. Keep in mind that banks have been floating on FASB lies for the last year or so. They can't afford another shock that will bring any truths to the surface.
The Greek unions role is more complex than this. The Greek union system has as a part of it a large pension system, with theoretically large assets under management. Unfortunately, the unions are part of the kleptocracy and have been using the contributions to enrich their leadership and have been buying assets for far more than they are worth, through more financial engineering gone mad. If the EU officials gain more monitoring powers over the management of all aspects of the Greek finances, they will find out the dirty secrets that lie in these places. I think this is an attempt by the unions to burn the house down in an attempt to hide these.
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_...
I believe the EU would like to take all reasonable steps to prevent Greece defaulting (as others have said, the similarities to Argentina are striking), but owing to the concerns over the other Club Med nations, need the Greeks to be willing to accept certain austerity measures, otherwise known as living within their means, and to come clean about the real state of their finances. The coming clean part is the problem, as it is not possible to pin the blame on "previous governments" or "evil bankers", but rather the problem is endemic to all pillars of society. Therefore, there is strong opposition from those who fear being exposed for their roles in this mess, such as union leaders, who see more to lose from accepting the type of solution proposed by the EU.
This Greece news item just in:
http://www.theonion.com/content/international/atlas
Another friend sent me this message:
Read this September 2005 Euromoney article that outlines what euro governments including Greece have been doing to hide their debt. There are 5 pages, see below. Required reading for Euro experts.
How Europe's governments have enronized their debtsby Mark Brown, Alex Chambers
Europe's government bond markets are built on a lie. Ministries of finance have adopted corporate financing techniques to give a false impression of their true debt levels. Regulators appear unwilling or unable to do anything about it. Investors and taxpayers ought to know. Mark Brown and Alex Chambers reveal all.Link to full article:
http://polls.euromoney.com/Article/1000384/How-Europes-governments-have-enronized-their-debts.html?single=true
Very interesting read and keep in mind when it was written - 2005!!!
Don't tell me nobody saw this crisis coming!
Jim Sinclair’s Commentary
Greece may well be put into receivership, but in the form of a bailout. So too will every US state that rolls over following the EU example.
In the shadows and by stealth this, without any doubt, will result in QE to Infinity. In this global economy all Western nations are tied together by the web of OTC derivatives; escape from which is not possible.
No currency will sustain buying power, none.
When you take a socialist off the suckling tit, the baby throws a nasty tantrum. They will burn it all.
P squared .... I read this from >> jsmineset.com
a good web site by Jim Sinclair a real honest guy.
Citi Bank must not have much cash on hand..
the solution to greece is simple...tax and collect taxes from the shipowners/builders who have hidden and sheltered their multibillions offshore. collect taxes from the upper class who avoids them more than they would the plague...
I've heard that the purpose of the Greek default is to move the EU to a central taxation and disbursement system , bypassing sovereign governments.
-MobBarley
Germany’s Finance Ministry said it has no specific plans for helping Greece combat its deficit crisis, denying a magazine report that euro-area governments may offer as much as 25 billion euros ($34 billion) in aid.
It’s “incorrect” that Germany is considering a “concrete” plan for countries sharing the euro to pump billions in financial aid to Greece, ministry spokesman Martin Kreienbaum said in an e-mailed statement. “The Finance Ministry has taken no decisions in this regard,” the statement said.
Things are happening quickly .. fasten your seat belts.
Have some cash in your house just in case the banks
don't want to give you any if there is a rush...
Citi - Bank is telling customers " if you want to pull lots of cash out of our bank, you might have to wait up to 7 days to get it."
This tells me they expect a " run " sometime soon..
I certanly hope not..
That is quite a serious allegation. Do you have any information that you can link to substantiate that Citi is telling people they may have to wait 7 days for cash?
Frankly, I don't think the Greek economy is big enough to pull down the world if it is isolated. If it creates a domino effect perhaps, but a Greek default on Monday does not seem sufficient to create a bank run in the US.
If you look at their latest client manual (available online) via: https://online.citibank.com/JRS/popups/ao/Client_Manual_20091228.pdf
You can see it in there, indeed they have switched over to require a potential 7 day waiting period. Very troubling indeed.
"Withdrawal Notice
We reserve the right to require seven (7) days advance notice before permitting a withdrawal from all checking, savings and money market accounts. We currently do not exercise this right and have not exercised it in the past."
Here are a couple of links fer ya! Admit they are from Denninger, and some folks don't like him. But he usually is pretty darn good about dotting the i and crossing the t! And he provides links of his own as well.
http://market-ticker.denninger.net/archives/1983-Time-To-Leave-Citibank-Folks.html
http://market-ticker.denninger.net/archives/1985-Citibank-No-More-DDA-Accounts.html
Thanks cbxer55.
http://market-ticker.org/archives/1985-Citibank-No-More-DDA-Accounts.html
Didn't they basically do this exact thing in Argentina back in 2001?
There will come a point where the Greek Gov't will not be able to implement the requeted reforms; they will quietly inform their EU paymasters. At this point, the question becomes.. what to do ?? It maybe a while down the road; the cuts this year will likely be OK, but the ones expected next year, to bring it's deficit down to 6-7% of GDP, will be too deep to tolerate; there will be strikes, riots & the Gov't will be in danger of falling to a no confidence vote; strikes bring the economy to a halt. The interest in any Greek bond sales will be nil at best; anyone actually owning Greek bonds will begin selling at pennies on the euro. At this point, it becomes a political decision in Athens: default and sink into depression or accept an IMF bailout and sink into depression. My guess: they default. The ECB then backstops big EU financial institutions that are in danger of failing and immediately cancels all CDS's in the Eurozone. Greece then withdraws from the EU and begins printing drachmas again. Prices soar; a hideous depression begins in Greece. I used to think they'd have the sense to bite the bullet and accept an IMF bailout, but the people seem to be in the mood to flip Brussels the finger.
Spoke with my mom over in Brussels this morning and she thinks Europe will save Greece. She tracks the news in Greece closely and told me that the strikes are just a normal part of Greek politics. She was watching Papandreou in London and told me that other European nations, and the UK, are not in good shape, so they do not want to risk a domino effect (famous butterfly theory of finance).
The question now is whether the ECB, the Fed and other central bankers are willing to accept a series of sovereign debt defaults which will destabilize an already fragile global financial system. In other words, it's much bigger than Greece right now and those who think that Europe can easily "cut off" Greece are missing the wider implications.
Newsflash! The global financial system is already dead.
Sovereign defaults are necessary to facilitate a transition to Global Financial System 2.0. I don't believe for a second that what we are witnessing in the world right now is in any way, shape, or form an accident.
actually all "sovreigns" behave in this type of "irrational" manner. this is far from limited to greece. indeed the need for "simplicity" is precisely why these catastrophes are inevitible. in the sense that they represent the "honor" of a society is therefore ridiculous. are you digging a fox hole on the island of cypress? obviously not. you're in that great warrior nation "Canada." how this crisis will play out is very significant. World War I started for less--the potential for the implosion of the EU now exists and one must remember the purpose for the European Union was to prevent just such an event from occurring. Don't think Greece doesn't know this. Perhaps you think "war is politics by other means" but this is a game of brinksmanship of the highest order. in other words, "who pays the soldiers of Greece (or Christianity?)"? in other words this is far bigger than a mere "financial crisis" with feta cheese, dates and olive oil as the "weapons." this is about the ability to govern and the ability to lead--in a time of war if need be.
I used to work for a Greek owned company s in mid-90s and I'm not the least surprised that this is how things have turned out for them.
Very well put. Greece has become the Isle of Lost Boys.
A buddy of mine in Athens sent me this message last night. He is very pessimistic and while I do not agree with him that Greece will be cut loose, he brings up several points that are bang on:
Leo,
If you have some experience with sovereign lending, the situation unfolding in Greece is following quite a classic pattern prior to a full scale default. What is unique about Greece is the speed at which the crisis has unfolded and the fact that Greece is part of the European Union.
The warning signs are reaching an apex and, in my view, we are in the final stages prior to default. This stage is usually characterized by civil unrest and mixed messages being emitted by the government to its people. This is because most arms of the government do not acknowledge that there is a problem (or worse do not care) and continue to spend as always.
As a consequence, the Ministry of Finance is usually the only institution left fighting to save the country from default. It also leads to erratic/desperate behaviour by the MOF as they implement whatever is necessary to delay the inevitable.
I will give you an example of erratic behaviour of the MOF. Last week, they decided to stop any reimbursements of VAT to companies that are making investments in Greece and are due refunds.
The MOF is fully cognizant that stopping reimbursements will essentially freeze investment in Greece since it adds a 19% cost to any investment. This cost now needs to financed into perpetuity or until the Government of Greece decides to pay back.
The Lenders who are involved in our projects are furious. These are the same lenders who arrange to purchase and place Greek sovereign debt in the Capital Markets.
Does this make sense? Absolutely not and the MOF knows this. They are not stupid at MOF and now that they are being led by an alumnus of Goldman Sachs, they are the smartest of the smart and the best of the best (yes, I am being facetious).
The MOF is conserving cash because they are unsure if they can refinance their debt in April and May.
By the way, my feelings for Greece run quite deep. My disappointment in this country and what it has developed into is very painful for me. What is most disappointing is that the average Greek does not give a shit. There is no real pride or honour left in this society anymore. On the rare occasion that you see it genuinely come to the surface (the Olympics etc), there is usually a strong political motive behind it.
Leo - you and I were born in Canada and our core values are a combination of what Canada has to offer and what Greeks were like 100 years ago when they first started to emigrate to Canada. Unfortunately, Greek society took a turn in the wrong direction after the military coup and their core values are quite warped. The French and Germans are seeing this now and have started to wonder if this society is too sick to bring into the 21st century. This is why I think that they will most likely choose to cut their losses.
Unfortunately, Greek society took a turn in the wrong direction after the military coup and their core values are quite warped.
Once again, the work of the US who have at best highly appreciated the coup by the Generals in Greece. The result is here for everyone to see.
Dont want to sound racist but maybe chickens are coming back home to roost...
You wrote:
"By the way, my feelings for Greece run quite deep. My disappointment in this country and what it has developed into is very painful for me. What is most disappointing is that the average Greek does not give a shit. There is no real pride or honour left in this society anymore. On the rare occasion that you see it genuinely come to the surface (the Olympics etc), there is usually a strong political motive behind it."
I am sitting here in the U.S. and observe a strong parallel to this, particularly after the U.S. government bailouts and the unresponsiveness to the suffering by ordinary people. Granted, we are at an earlier stage and conditions are not as dire, but the signs are there. This will not end well.
Leo. Are far as Greece's "warped societal values", well... that is the essence of this crisis, isn't it?
The greeks allowed themselves to be enslaved by the financial industry and their puppet government in Athens.
Greece could have learned a lesson from Americans on this matter. I mean, look at our democracy and our societal values.
Ohh fuck, we're no different.
Cuse' me please. Need to go shopping ASAP. Guns, beans, seeds, ammo, gold..
If this is Greece now, then we're screwed.
Love it!
The only thing that is different between Greece & the USA is time & distance. It's a complete and utter canard that since the Fed has the ability to provide Treasury with newly printed benjamins, our position as the reserve currency will somehow protect us from the final denouement.
False! The $USD is firmly anchored to an oil peg. The only possible way to break this peg would be to occupy the Ghawar field in Saudi Arabia. Think the Chinese or Russians would allow this to happen? Hah!
So now we know the final answer to the interminable inflation v deflation debate: it's gonna be a hyper debt-deflation spiral.
Leo, thanx for the posting. How can you read/understand what is occurring in Greece and not see that this is exactly what is in store for us?
thx for the Insight Leo
Man, it sure does look as though Greece is going to to try to file the equivalent of european chapter 11 bankruptcy.
You still don't realize the extent of the crisis. To maintain their level of spending, they need to keep borrowing. If they file bankruptcy, they can only spend about half as much. Someone is not getting paid.
Leo..thank you for posting this from your friend as well as your views on the matters in Greece. I always find it helpful to hear from both sides of the issue, but it is particularly nice to hear it from people like you and your friend with your rich understanding of Greece and ears to the ground much closer than most of us have.
I appreciate you taking the time to share this information.
Thanks for sharing, Leo.
"Well, not if they are able to pull off their stated austerity measures."
Uh, I think you mean if they are NOT able to pull off their stated austerity measures. Proofread, Reggie. Real writers proofread.
Will Greece make it? Yes. if the Turks couldn't take them out, Louis Hampton Moore Bacon ain't going to do it either. Look at the bailout as "royalties" payable on the idea of democracy and all the play plots the world has stolen over the years.
Worry for nothin' and the pips are free.
(By the way, Reggie, thanks for your work. I try to take my time and appreciate every article you write for ZH.)