George Papandreou

Press conference from hell, slugfest about corruption, even in Germany

Is Britain “drifting toward the exit”? 

There was a time when Swiss bank secrecy was the passion of every tax-challenged oligarch in the world. Then things changed, Obama made it s badge of honor to rat out anyone you know who has a bank account in Zurich or Geneva, lists of previously ultra-secret account holders started "leaking" and from an asset, Swiss bank accounts promptly became a liability to everyone involved. Such as the matriarch of the legendary Papandreou family, former Pasok Greek PM G-Pap's mother, Margaret, also wife of former PM Andreas, who according to The Telegraph has been revealed as having a €550 million ($700 million) Swiss bank account (she will hardly be happy to learn that Credit Suisse just instituted a negative interest on CHF deposits) in the Geneva branch of HSBC. Obviously lots of hard work by M-Pap went into building up that particular nest egg.

• Union solidarity rubs up against slow economy in LA port strike (Reuters)
• Geithner predicts Republicans will allow higher tax rates (Reuters). And "no risk" of a US downgrade, "no risk"
• Geithner takes hard line on fiscal cliff (FT)
• Narrowing LDP lead points to Japan post-election confusion (Reuters) - not to mention, USDJPY plunges if LDP loses
• Vietnam Says China Must Avoid Trade Weapon in Maritime Spat (Bloomberg)...  and real one, one hopes
• Greece unveils bond buyback plan (FT)
• ECB Can’t Deliver Spain Spread Rajoy Wants, Wellink Says (Bloomberg)
• UK’s euro trade supremacy under attack (FT)
• Merkel Signals Debt Write-Off Possible as Buyback Begins (Bloomberg)
• ECB's Noyer Says Bond-Buying Plan 'Is Bearing Fruit' (WSJ) - as long as just plan, and not execution.

Certainly, don’t let the riffraff decide.

Angela Merkel is finally coming to the one country where the local media will not tire of photoshopping her in various Nazi outfits. The result: at least 6,000 policemen (and more like 7,000 according to Spiegel) will be deployed to protect her on her 6 hour visit to Greece on Tuesday, the first since the crisis erupted in 2009, and which has seen Greek unemployment explode from manageable to 25% at last check. Another result: parties from across the spectrum have said they will protest her visit, and strikes will further shut down what is already a completely shuttered economy. "She does not come to support Greece, which her policies have brought to the brink. She comes to save the corrupt, disgraced and servile political system," said Alexis Tsipras, who leads the opposition Syriza alliance. "We will give her the welcome she deserves."..."We don't want her here," said Yannis Georgiou, 72, who has seen his pension cut by one third. "We will take to the streets against austerity and against the government. Maybe Merkel will hear something and see what we're going through." Finally, with virtually the entire police force tasked with defending Merkel from the residents of her Southeastern European colony, it means that virtually every other place of interest will be left unguarded. Hopefully, nobody in Greece has seen Die Hard with a Vengeance and has access to dump trucks. The one thing Greece has going for it: there is virtually no official gold left anywhere that can be stolen (most of it already has been transferred elsewhere), or otherwise any tourist armed with a camera and located in the vicinity of the National Bank of Greece could film a sequel to what many consider the best Die Hard of all.

Fresh out of the flashing red headline-a-tron:

• IMF OFFICIALS SAY GREECE WILL NEED A THIRD BAILOUT
• IMF SAYS GREECE CAN'T FILL FUNDING GAP ON ITS OWN, UP TO EUROZONE AND ECB TO FIND MONEY FOR GREECE
• GREECE MET ONLY 22% OF PROGRAM TARGETS FOR 2011
• EURO EXIT WOULD SET GREECE BACK BY MANY DECADES

Nobody, NOBODY, could have anticipated that fighting record debt with recorder debt, could possibly fail. And cue Germany telling Greece the party is now over, which, is what (a sliding EURUSD for those confused) it has wanted all along.

To understand modern Greece one must understand it’s ancient history and it’s Geography. The Golden era of ancient Greece was rarely Pan Hellenic, with the legendary exception of King Menelaus’ expedition and siege of Troy, the brief cooperation during the war against King Xerxes of Persia, and perhaps Alexander the Great’s domination of what is now Greece, it has predominantly been the glorious histories of city states. And it’s geography is crucial, it has always been thought to stand as the boundary between East and West, whether you consider the ‘East’ to be Persia, the Ottoman Empire, or Communist eastern Europe it is best to understand that Greece’s eastern frontiers have never been an impassable barrier, infact Greece’s porous frontiers have ebbed and flowed with fickle fate and capricious fortune. As a consequence Greece is one of the most polarised nations on the planet.

It is truly difficult to believe that social tensions may be contained indefinitely under a deteriorating economic scenario – although there is the 'frog in the pot analogy' again. There are also escape valves which surely help keep social tension from mounting such as the ongoing criminal investigation in which former Bankia chairman Rodrigo Rato and 32 members of the failed bank’s board were formally cited this week as suspects of fraud, misappropriation of funds, and the falsification of financial documents; a necessary but inconceivable turn of events compared to only two months ago. Ultimately, however, unless the long-yearned European breakthrough (which nobody has managed to properly define) occurs soon and some form of economic upturn begins to be seen as within reach, there is no reason to believe that Spain’s situation will improve over the next several months. If the summer turns out to be as “hot” as expected, Rajoy may at least have to revise his communication strategy and start facing the public. The cooling variables which currently work in favor of keeping society simmering in a state of fear rather than boiling with outrage may not hold the fire.

Greece's newly confident coalition party has issued a list of zee-demands, via Bloomberg:

• GREECE TO PRESS TROIKA ON NO JOB CUTS IN PUBLIC SECTOR
• GREEK COALITION PARTIES WANT TO RETRACT CUT TO MINIMUM WAGE
• GREECE TO PRESS TROIKA ON NO FURTHER WAGE CUTS FOR 2013-2014

And of course TROIKA will be happy to comply, in exchange for some of that shiny yellow stuff (as we noted here). Though we have a response already:

• DE JAGER: THERE WILL BE NO SOFTENING OF CONDITIONS FOR GREECE

Back in February, as part of the latest Greek bailout of European banks, we noted that the most subversive part of the German-led proposal was nothing short of a gold confiscation scheme. Today, courtesy of The Telegraph, we learn that Germany is quietly reminding the world that the stealthy, but voluntary, accumulation of gold is what it is all about. As part of a newed push for quasi-Federalism, whereby Germany would fund a "European Redemption Pact", in which Berlin would, in the form of Germany-backed joint bonds, be responsible for any sovereign debt over the 60% Maastrtich limit, but with a big catch. The catch is that "a key motive is to relieve the European Central Bank of its duties as chief fire-fighter. "We have got to get the ECB out of the game of distributing money, and separate fiscal and monetary policy. Germany has only two votes on the ECB Council and has no way to control consolidation," he said. Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. "The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal. In other words: a perfectly legitimate, and fully voluntary scheme in which sovereign gold is pledged to a German "pawn broker" until such time as the joint bonds are extinguished, and if for some "unpredictable" reason, a country fails to meet its obligations, read defaults, all the pledged gold goes to Germany!

But why Gold? Why not spam. After all gold is selling off, spam is stable, and the dollar is soaring. Couldn't Germany merely demand that broke countries simply pledge all their USD reserves, and keep their worthless, stinking yellow metal? Apparently not.

In a brief clip from a lengthier discussion between historian Niall Ferguson and ex-Greek PM George Papandreou at this week's Zeitgeist conference, the effusive Englishman lays out perfectly what many are missing with regard to Europe: "Greece is not the problem - it is a symptom of a much more profound malaise that affects the entire monetary union." - just as Lehman Brothers was not the 'cause' of the US's problems. The wasted energy spent moralizing about the 'work habits' of Mediterranean citizens as being the problem is incorrect as this is a European-wide problem - a systemic crisis of European banking and public finance. Papandreou pipes in by noting, in typical toe-the-line manner, that Germany must swerve (in the game of chicken) or there is a major danger of disintegration because "there will be contagion".

The story of Facebook’s disappointing IPO is a gripping tale, and it holds some valuable lessons. But it concerns an event that has already happened. Forget Facebook — there are far more interesting events in play and that will affect you, if only at the margins. They haven’t happened yet, and they may not happen at all. But if they do, you’d sure as hell better have a plan.

“Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.” The Reuters Global Gold Forum confirms that in the small print of the Greek “bailout” is a provision for the creditors to seize Greek national gold reserves. Reuters correspondents in Athens have not got confirmation that this is the case so they are, as ever, working hard to pin that down. Greece owns just some 100 tonnes of gold. According to IMF data, for some reason over the last few months Greece has bought and sold the odd 1,000 ounce lot of its gold bullion reserves. A Reuter’s correspondent notes that “these amounts are so tiny that it could well be a rounding issue, rather than holdings really rising or falling.” While many market participants would expect that Greece’s gold reserves would be on the table in the debt agreement, it is the somewhat covert and untransparent way that this is being done that is of concern to Greeks and to people who believe in the rule of law.

While Iceland is now known as the country that is the closest earthly approximation to banker hell, it is safe to say that Greece is the terrestrial equivalent of banker heaven. Because as explained earlier today, the country's population is about to get a worse deal than your average run of the mill slave - they may get whipped, but at least never have to pay for the privilege, unlike the Greeks. Hence negative salaries. As also explained, the European bailout of Greece, is now formally a Greek bailout of Europe, funded by the country's already negative primary surplus, or better said - deficit (don't try to make mathematical sense of that - a scene out of Scanners is guaranteed). Hence, negative bailout. But the piece de resistance, and the reason why Greece is the in situ version of bankster heaven is the news from the NYT that Greece is also about to have negative gold.