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The Big Fat Greek Lie Is Now Obvious to Spain... So Who's Next to Default?
The big fat Greek lie being spread throughout the financial community is that Greece has been saved. It’s a lie for the following reasons:
- Greece did in fact default
- Greece now has more debt than it did before the bailout (how does writing off €100 billion Euros in debt and taking on €130 billion Euros in more debt improve this situation?)
- The Greek economy continues to implode (youth unemployment over 50%, one in ten Greek youth looking for jobs abroad, Greek GDP fell 7% in 4Q11)
- This Second Bailout was indeed a “Credit event” which the markets have yet to discount (though German investors are already lining up litigation)
- Germany’s finance minister has already admitted Greece may need a third bailout.
Anyone who thinks that Greece is better off, let alone “saved” is out of their minds. The Euro may have been saved for a few more weeks/ months. But Greece is in worse shape than ever.
Indeed, if anything, the Greek situation has made it clear that the whole “give up fiscal sovereignty and implement austerity measures in exchange for bailouts” formula is a waste of time and money. Let’s take a look at the progression here.
- Greece claims it doesn’t need a bailout at all (January 2010-March 2010)
- Greece begins to ask for a bailout (April-May 2010)
- Greece gets a bailout equal to 57% of its GDP (May 2010)
- Greece posts a GDP of -4% in 2010
- Greece announces it won’t be able to meet budget requirements/ payback the first bailout on time and asks for an extension (January-February 2011)
- Greece asks for another extension (May 2011)
- Talk of Second Greek Bailout begins (July –October 2011)
- Greece posts a GDP of -6.5% in 2011
- Second Greek bailout announced/ finalized (February/March 2012)
- Talk of third Greek bailout begins (March 2012)
No other EU country could look at this progression and think “this looks like a good approach.” Indeed, Spain and Italy must be watching what’s happening in Greece and asking themselves whether they want to go through this whole process of negotiating for bailouts via austerity measures.
Both countries have already had a small sampling of the austerity measure medicine. Spain recently implemented a meager 19€ billion in austerity measures while Italy passed 30€ billion in austerity measures in 2011… hardly a drop out of their respective 1.06€ trillion and 1.5€ trillion economies.
Yet, even these tiny moves resulted in protests and riots. One can only imagine what Spanish and Italian politicians are thinking as they witness the widespread civil unrest, country-wide strikes, and economic depression that have occurred in Greece as a result of that country’s full commitment to the EU’s austerity measure demands.
Spain’s official Debt to GDP is only 64%, but its private sector debt is at an astounding 227% of GDP. And the Spanish banking system is leveraged at 19 to 1 (worse than Greece).
Moreover, the country is already experiencing an economic Crisis with an unemployment rate of 20+% and an economy that has been contracting since mid-2011 (in fact Spain’s GDP just actually went negative in the first quarter of 2012)…
Indeed, Spain’s recent efforts to tell the EU to “shove it” have put a crack in the Eurogroup power over individual EU members that can quickly widen.
Spain's sovereign thunderclap and the end of Merkel's Europe
As many readers will already have seen, Premier Mariano Rajoy has refused point blank to comply with the austerity demands of the European Commission and the European Council (hijacked by Merkozy).
Taking what he called a "sovereign decision", he simply announced that he intends to ignore the EU deficit target of 4.4pc of GDP for this year, setting his own target of 5.8pc instead (down from 8.5pc in 2011).
In the twenty years or so that I have been following EU affairs closely, I cannot remember such a bold and open act of defiance by any state. Usually such matters are fudged. Countries stretch the line, but do not actually cross it.
With condign symbolism, Mr Rajoy dropped his bombshell in Brussels after the EU summit, without first notifying the commission or fellow EU leaders. Indeed, he seemed to relish the fact that he was tearing up the rule book and disavowing the whole EU machinery of budgetary control.
The EU rejected this (of course) and Spain has since agreed to meet softer budgetary requirements. But it’s clear that a shift has begun in how EU members will deal with the Eurogroup as a whole.
So… we must consider that it is highly likely the option of simply defaulting is being discussed at the highest levels of the Spanish and Italian government. Should either country decide that austerity measures don’t work and it’s simply easier to opt for a default, then we are heading into a Crisis that will make 2008 look like a joke.
If you’ve yet to take steps to prepare for this, I can show you how: my Surviving a Crisis Four Times Worse Than 2008 report is chock full of information on how to not only survive but thrive during the months to come.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
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Good Investing!
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CDS clearing rules
Gift #2
http://www.scribd.com/doc/85595147/CDS-Clearing-Chapter-8H-rules-PP
PP
Thanks for the heads up, but please add some comments for lazy folks like myself who tend to struggle with the fine print, if not the basics about such weird stuff as CDSs.
Good morning everybody.
I have a surpise for you ( like Kinder-Surpise egg ) :
http://www.scribd.com/doc/85591023/CMA-Clearing-Europe-Ltd-Order-of-Vacation-of-Registration-as-a-DCO-PP
Dont ask me what is it… read the title of the doc.. and click.
PP/??
PORTA, I'm a bit lost here, I know what I'm looking at and does it have the implications I think it has?
TIA
My sentiments and thoughts too.
Not a bad summary article by John Mauldin worth a read - 'There Will Be Contagion'
It is all coming undone. Only a matter of time now.
Always has been from day 1.
Day One. Um?
No criticism of you M4N, but "Day One" is a kinda moveable event, as old as since whenever money lenders first set up shop a few thousand years ago ... long before Jesus purportedly chucked money changers (proto FREX0 out of the Temple.
The modern banking/Ponzi scheme could be said have had its "Day One" in Venice a few hundred years ago, as portrayed in Shakespeares "Merchant of Venice".
Or - as some claim - it all began about a hundred years ago, with the establishment of the Federal Reserve Bank ... or was it the establishment of the Bank of England, coupled with the City of London?
These are rhetorical questions, because no one knows why a predatory, psychopathic 1% (or less) have always had the upper hand.
Perhaps CD might care to comment, if he is reading this.
Very few people are actually greedy and willing to do anything to rip others off, but a small number of people - with no conscience, nor empathy - have always subverted the masses into wars and getting into debt.
Almost makes me want to genetically exterminate the 1%, but my conscience would not allow it, even if it could be proven that some gene disables such necessary social instincts as those for cooperation and fellow-feeling, e.g. sympathy, compassion and empathy. All traits which banksters and most politicians lack.
Next time you watch such as Hellary Clinton and O'Bomber express 'regret' about some latest atrocity (not just them) note how there is NO eye contact. Previously same with shifty-eyed Shrub and Bliar, though my impression of the Berbank and Bibi is that they stare straight at a camera whilst lying.
Rant off ... but this is serious shit folks, i.e. few doubt that we are on the brink of economic melt-down and WW3, 'thanks' to the psychopaths who have always ruled the world ... over 2000 years ago Alexander the unGreat was genociding his way through the same regions being destroyed today.
"Just hand over your gold." love, Squiddy
Europe in its current iteration is kaput regardless of what the managers attempt or what they might 'like'.
There will be austerity, period. Since the beginning of the twentieth century there has been the non-stop waste of perfectly good capital. Now? The cupboard is bare. Saying the cupboard is not bare or that people won't accept this will not change anything. Reality is like that, it can be ... 'unpleasant'.
What is underway is the outcome of the energy impoverishment of Europe and its clients. Whatever resources existed within Europe since the beginning of the industrial revolution are gone forever, squandered.
Forever is a long time.
All European countries other than Denmark and Norway are dependent upon petroleum imports, paid for with borrowed money: a credit regime that must continually expand, with nothing in the way of remunertive uses for the imports.
Burning up the imports for pleasure did not pay and never will: this seems simple but not for the so-called 'modern world'.
Austerity: with or without cream and sugar?
Historic Defaults: Greece:Six Spain:ZERO. Spain will not default,not actual,structured or de facto
En espanol por favor.
No yosei taco's binga akei'. Comprendo mi Amigo?
translation: No soup taco's for jooo.
-Tony Montana.
J.P. Morgan whistle-blower busts company with open letter on comment section of CFTC website.
Copy and paste and save because it will be scrubbed shortly.
comments.cftc.gov/PublicComments/ViewComment.aspx?id=57019&SearchText
AQwww..Spain will just try and run with the US Fed inspired (US taxpayer financed) inflaitonary asset environment until their roll over dates come due.
When are those roll over dates ? Knowing this would make a difference as to the timing of the shiite coming.
Not only did they take on more debt but they got to get rid of that pesky gold that they were stuck storing for all those decades! Only a fucking buffoon or traitor would have signed that agreement. Greece is DONE.
Remember they where appointed by the ECB and EU, when the EU implodes it will be catastrophic.
have you noticed no bad news!
Waste of time? That probably means they'll be doing it several more times. LOL.
austerity is code for foreign conquest and perpetual poverty - it is a total scam and fraud....default here and default now - and pray to god that it destroys a bunch of debt peddling pimps of financial terrorism.....
the greeks do have a fundamental problem of not knowing how to develop free working markets and i do not know if this is a fundamental flaw of the greek people or misgovernance by an evil ruling class....
It's cheaper than trench warfare.
Beware of SIV's bearing Greeks!
Or
The Pain in Spain falls mainly on the Gains!
Graham, stop regurgitating the same drivel.
You want the market to crash ? Post some positive articles.
Stop telling everyone the obvious.
He doesn't get the 'audacity of hope'.
Want some AIDS with your bailout?
Coming to a town near you. Thank god we saved the bankers! I'm not gay but if I get HIV im going to ass rape one of them.
Justifiable homo cide.
OH Behave!