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Greece 'Finds' Treasure, Stays Solvent For Another Month
Wolf Richter www.testosteronepit.com
The Greek government has been engaging in financial shenanigans on a routine basis for years—example, it hired Goldman Sachs to hide the actual size of its deficits in order to be allowed into the Eurozone. As shocking as these revelations used to be, they don't surprise anyone anymore ... until they come up with something that surprises everyone.
Mid October, Greece is going to plunge into insolvency because it won't be able to pay the salaries of its 1.3 million civil servants and government employees. Unless it gets more EU bailout money. The inspectors from the Troika (ECB, IMF, and EU Commission) are in Athens right now to inspect once again if Greece is complying with the Troika's demands. Most likely, they will leave angry again; getting an accurate read on Greece's finances is like nailing Jell-O to the wall. It can't be done.
Meanwhile, the Greek government has been pressuring the Troika to pay the next installment of the bailout money rather than to dillydally with inspections. Remember, insolvency is going to happen by mid October, they threatened.
But Jean-Claude Juncker, Prime Minister of Luxembourg and President of the EU Group, announced on Tuesday that the next installment of the bailout package wouldn't be paid before mid November (Spiegel, article in German); the inspectors are still trying to nail financial Jell-O to the wall and need more time.
No problem, said Evangelos Venizelos, Finance Minister of Greece, and announced that his government had suddenly found €1.5 billion in a bank stabilization fund that was set up during the crisis of 2008. Enough to keep Greece liquid until mid November.
As if to underscore the impossibility of bailing out Greece and putting it back on track: A 24-hour general strike is paralyzing the country right now. Airports are closed, and tourists and others are stuck. Hundreds of incoming flights have been cancelled. Yesterday, civil servants blocked the entrances to seven ministries in Athens. They're all part of a massive wave of protests by civil servants and government employees who fear losing their jobs, rich salaries, early retirement, and hefty benefits that politicians have handed to them—funded with cheap Euro debt. Take the state-owned railway system. Trainose, which operates the routes, and OSE, which manages the tracks, pay out €400 million in salaries a year but take in only €100 million in revenues. It's all part of the Greek vote-buying system that is now crashing.
For more on the impossible enterprise of reforming the Greek government apparatus: Reform Rebellion in Greece.
Wolf Richter www.testosteronepit.com
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What is "Germany is not paying a dime for Greece" in Greek?
Fuck Greece (1/50 US GDP) and Fuck Europe. And fuck anybody who has a retirement plan in financial stocks. You can't scare me. You are A1 Idiots.
I love this stuff, it can't be made up, reality is better than fiction. I can't believe people think they can stike to keep a system like the trains in Greece going and actually be successful. When you only take in 25% of what you spend that is difficult. Perhaps the schools should teach is little basic math.
The big problem is going to be when the big reality of needing to make more than you spend comes to the US. We are going to see the same people striking and screaming to save the jobs they have that cost more than they make. Reality is really going to hit hard.
Your dead on, when this problem does come to the US it will be horrendous. Because everybody have been counting on the govt. money in many forms to help them out. When this goes away and the govt. paychecks or benefit checks stop coming, people will go mad with rage.
Nailing jello is piece of cake. Stick nail in jello. Find nearest CO2 fire extinguisher. Spray jello until frozen. Nail to wall.
Like too many countries, Greece is one where the wealthy take it as a God given right NOT to pay taxes. Evasion is widespread to the extent of hiding swimming pools from aerial observation with camoflage nets instead of paying the taxes due on them.
This leads to a sense of 'If THEY can get away with it, why shouldn't I?' Everyone is grabbing wht they can - there is no 'common interest.'
Note: the shortfall in Italy is close to what Itanian municipaliteies and othres have lost on crappy US securities.... so maybe this isn't a Euroepean problem alone..... Seems like the US it taking the world down with it and blaming ewveryone but itself.
That Bernanke is a tricky one...
Excellent analysis as usual. Having lived in Greece for six years, I know firsthand the endemic corruption. Even the garbage in my small town wasn't collected without a kickback to the mayor. Sorry to say but only default will restore integrity to the birthplace of democracy.
Here's my latest blog on a similar topic: the renegotiation of Greece's bailout plan and bond swap.
http://how-to-trade-armageddon.com/2011/10/05/watch-the-isda/
"I still doubt, as I wrote in my Sept. 28 blog post, “Germany nudges Greece towards default”, that the ISDA could get away with calling the 50% haircut that is being discussed “voluntary”. That just strikes me as absurd, and what’s more, potentially devastating to CDS markets. CDS would come out looking like the Monty Python insurance salesman’s “never pay” policy."
Spain has Man of La Manch at least, to Dream the impossible dream:
http://www.youtube.com/watch?v=RfHnzYEHAow
Good old peter O'Toole.....don't see many actors this fine any more!
Greece has no one. Sad.
My sources in the Greek union movement...while in general agreement with your piece...would like to make a few corrections. First off "we are not engaging but enraging" the system. Second "we are not trying to prevent insolvency but create since it gives us more money" and third "we're very picky with the type of Jell-o you will nail to the wall...usually red rasberry...but we'll take the vanilla flavored stuff too." And there you have it! Back to you ZH!
The Fed is now forced to threaten the global economy with hyperinflation becuase there's no other way to put a bid under financial assets.
The FED and ECB will keep juggling the numbers as long as it takes to keep Greece out of default. No price is too high to prevent the Euro banks from having to take a big loss. Too many bonuses are at stake.
Let them eat souvlaki.
"You DO NOT pissoff a nation where there are 300 million well armed citizens!"
You haven't understood the words from the Chinese about the "hornets' nest". It's more like : "let them destroy each others en masse [something you do pretty well I might add] then we'll come and pick up the debris. Chinese blood is precious!"
The internecine citizen conflict will probably be short lived. The real fight won't be between responsible gun owners and the criminal element. That will end soon after it begins - one side will lose relatively quickly in most places. Strongmen will appear all over the landscape, but those who seek to pillage and rape will soon be crushed by those with wives and children to defend.
Our atomized society will come together to a greater extent than people think, few will go feral unless their environs remain permanently chaotic. Everyone will be insecure, and will look for security, which will be found in cooperative effort under strong leadership. Maybe TPTB will seek to invoke the various presidential directives which give 'legal cover' to government plunder and slavery, but they will be outnumbered and outgunned, and will be facing people whose children hang in the balance.
That would be about my best guess too, if TSHTF.
Swat troops are patrolling Stevens Creek Blvd in Cupertino, CA (yes, the Apple Cupertino) looking for a Kaiser Permanente employee that went postal this morning 2 dead 4 critical. He managed to get down to the HP campus where he shot a woman while trying to hijack her car.
To say this is rare is a 20 year understatement. But there is more to come....
As I heard that, it was a quarry employee shooting up the 0430 health and safety meet at the on site cement plant (I'm fairly local to it too, as a matter of fact, "batch plant inspection" is one of my Do-Ologist jobs...)
After this it's DOG FOOD for every Greek. It'll turn you into riot dogs. Then the cops won't stand a chance against you!
Grrr...
The London Riots bore of a just cause, but ended in an unjust execution. In the end, it was 75% bunch of kids wanting to steal trainers and televisions, 15% of anarchists/black militants pissed at the system, and 5% EDL racist fools.
The U.S. Riots? Going to make London look like the kiddie games they were. There is a reason a Chinese general once said that no country could invade the U.S.: "They are not only all crazy, but most of them have guns. It would be like walking into a hornets' nest".
I wouldn't want to be the police or the Army (some of which may even turn on their govt) trying to catch the hornets.
You DO NOT pissoff a nation where there are 300 million well armed citizens!
Numbers that I have read:
Population USA: approx. 312,000,000
Population armed: approx. 80,000,000
Average No. firearms per owner: +/- 2
No. firearms DCRB owns: 2
See you at WalMart!
Virtually every adult male that I have ever know has at least one firearm. Most have more than 2. All know how to use them. I have 7, but I am from the older generation, so not sure how the younger ones are armed.
Of our 312,000,000 population, how many are adult males?
Any way you slice it, there are a LOT of guns out in the heartland.
Ah, have you shopped at Walmart recently? There are probably 40%-60% of those 300 million who are so fat that they couldn't hold a gun up. Let alone afford one.
So you're saying that there are between 120 and 180 million who can lift one and afford it?
What happens after the protests cause the state to collapse? Egypt? Libya? Russia (1917)? Germany (1934)? USSA (2008)? Be afraid. Be very, very afraid.
Unfortunately, we have to go through this door, there is no other way. Printing money can't fix anything.
Well, every state collapses when it loses the support of the majority of its people. Neither the military nor the police can stop this. We are in such a deep crisis that will shake the foundations of many troubled countries such as the USA, the UK and the Southern European countries. Order will be restored one day but it won't be a democratic one. Mass lunacy may prevail.
Agreed the idea of something for nothing takes a lot of purging from the human psyche.
Nothing short of a total reset will do the trick.
It is very sad but it seems to be built into our nature somehow that there will always be someone to bail us out.
Until there isn"t......
And only after that reality has totally sunk in, can human potential expand to fill the void.
These Greek shenanigans will be US shenanigans in about a year.
Except we won't be laughing about it, being too busy catching on fire and burning to the ground.
Let the greeks join the martians...they love far away gods on OLympus. Leave the greaks to thanatos and nemesis. They will find their Ulysses to charter a new course. Not dictated by Merkozy.
Maybe Amtrak can help Trainose?
Trainose = Tren No Sé, which will get nowhere, help or no.
Great article there Wolf!