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Greece's Extortion Racket Jumps To The Next Level
By Wolf Richter www.testosteronepit.com
At the beginning of the week, participants in the G-20 meeting in Cannes were still thinking that their sojourn in the ritzy town on the Côte d'Azur would be a relaxed affair of photo ops, handshakes (air kisses between Merkel and Sarkozy), and fancy dinners, interrupted by rubber stamping the previously negotiated Grand Plan of bailing out Greece, bondholders, and banks. And in between, they’d put Italy back on some kind of unspecified track.
Then, on Wednesday, Giorgios Papandreou, prime minister of Greece, who isn’t even in the G-20, fired his bazooka: with a sentence about a referendum at home, he single-handedly knocked the world’s financial markets into a vertigo-inducing tailspin.
“I want more,” he said in between the lines, “and if I don't get more, just watch what will happen to the financial markets and even to the world economy, including China and the US, if I say a whole paragraph.”
Partiers were stunned. Their beautifully constructed Grand Plan was scattered in little shards on the Greek marble floor. The Euro plummeted. Stocks tanked. Italian and French yields spiked. Things got ugly. Suddenly, it seemed that Cannes would go down in history as the place where the Euro came unglued. And a new word was coined: papandemonium.
Whatever chaos this caused in the Greek political scene, it did accomplish exactly what Papandreou wanted: total worldwide attention refocused on him.
To get him to back off, German chancellor, Angela Merkel, and French President, Nicolas Sarkozy summoned Papandreou to ... a finely crafted multi-course French dinner. Afterwards, a dour-faced Merkel and a grimacing Sarkozy stepped up to the podium and officially gave Greece a Bushian choice: either you're with us, or you're against us.
Well, being Europeans, they were more nuanced.
Merkel, by now the unquestioned boss in the house of Europe, was the first to speak. The referendum has reintroduced fear into the markets, she said, but we’re steeled against any contagion, and our defenses are in place.
"We want Greece to stay in the eurozone, but"—the word elicited gasps—“there is this one-sided decision by Greece, and that has changed the situation." She went on to dictate the questions Greece should put on the referendum—stay in or exit the Eurozone—and the timing—have it wrapped up by early December. Of course, the sixth bailout installment would be put on hold until Greece accepts all previously negotiated provisions. Period.
Then Sarkozy spoke, and his love-us-or-leave-us speech mirrored Merkel’s. Not a cent of the agreed upon sixth installment would be made unless Greece fully accepts the conditions of the bailout package.
"Now the Greeks have to decide if they want to continue in this adventure with us or not." Unlike Merkel, he didn't say that France was "steeled" against Greece’s exit from the Eurozone, given the state of France’s tottering mega-banks and its shaky triple-A rating. Six months before an election that is getting increasingly difficult for him, he fretted that an unraveling of Greece would trigger a downdraft in the French economy, an uptick in unemployment, and a further collapse of the French stock market—the CAC 40 is already down 53% from its March 2000 high and hovers at levels first seen in July 1997.
They’d responded to Papandreou’s shot from the bazooka with a barrage from their howitzers. And the officially unspeakable idea of Greece’s exit from the Eurozone had coagulated into French and German words.
Papandreou's party rebelled. Parliamentary chaos ensued. He backed off the referendum. A caretaker government was being discussed. A vote of confidence would be held.
Greece, which for a decade rode the euro-debt gravy train to wealth and sent huge profits north to German exporters, has been tearing itself apart over the social costs of returning to a life within its means. Its political system is a corrupt vote-buying machine. The tax system encourages fraud. The state-dominated economy isn’t competitive. And whenever there’s a problem, there’s a strike. What they absolutely must have to solve all these problems is more money.
“€80 billion by the end of February,” announced the Greek finance minister Evangelos Venizelos in a statement yesterday. Turns out, before the dust has even settled on the papandemonium, the Greeks are back in Brussels negotiating with the Eurozone (Figaro, article in French).
Based on the framework agreed upon on 27 October in Brussels, the amount includes the guarantees made to Greek banks in exchange for their accepting a 50% haircut on their holdings of Greek public debt and the amounts needed to recapitalize them. It would "save the Greek economy," the ministerial statement said.
Greece would "offer the necessary political guarantees" during the meeting of the Eurogroup in Brussels on Monday "for the timely transfer of the sixth installment of €8 billion.” The very installment that Merkel and Sarkozy vowed not to pay a cent of. Alas, if Greece doesn’t receive this money by 15 December, it will go bankrupt, Venizelos explained, thus pushing the extortion racket up to the next level. And Papandreou won the vote of confidence.
"Tax fraud is a national plague," said Venizelos after he found that Greeks owed $50 billion in back taxes. But it's complicated.... Greece's Extortion Game.
Wolf Richter www.testosteronepit.com
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"...the amount includes the guarantees made to Greek banks in exchange for their accepting a 50% haircut on their holdings of Greek public debt..."
Except it's not 50%...
http://www.zerohedge.com/news/here-how-50-greek-haircut-actually-just-28
DavidC
Richter actually might have got something right.
GPap saw the 'bailout' deal and said 'that's no bailout'.
It leaves Greece with the same debt level as 2009. and it's a 16% haircut, not 50%.
It's 50% of private debt, if those banks willingly accept it.
It does nothing for the troika debt, which is registered under English [colonial?] Law.
If you don't believe me, follow Max Keiser.
Now, GPap screwed his own people mercilessly, but he thought there would be a pay-off,
because, dont' forget, this is a banking crisis, not a Greece crisis.
So, he quickly realised that he would be lynched (eventually) at home.
So, he pulled his trick, which I insist was brillliant, even though he got embarrassed internationally.
GPap went short SPX before his "referendum" announcement - and with huge instant profits - now plans to move to a more conservative country than the USA....
....France
I'd like to thank Merkozy for helping show Greece the exit door.
Greeks never would have been allowed to leave of their own free will.
But, let's think first. Greece should leave he Euro the day after
it collapses. Otherwise they'll get a bad deal, under English law.
BTW Richter, you building up GPap into this world-beating behemoth is just
your way of making folks focus on him and the 'nasty, lazy' Greeks. Nice try.
I have to give GPap credit. He's the scapegoat of the whole thing
(and he, in turn, scapegoats the GR workers/poor),
so he said let's give Merkozy and the Troika a shock and maybe then some of them will die.
How is he a monster? Merkozy just pantsed him in public and said "do what we say, or there's the door".
So, as I told ya, I give GPap credit for pissing off the bankster-addled EU powers
and making them desire to
set Greece free.
Freedom at last.
BTW on another comment section one guy said the unity government in Greece will be called the National Socialists.
Does that ring a bell, Wolfie?
This is off topic but America is about to enter a new phase this coming Wednesday. What do you get when you combine DHS and FCC? something called the EAS.
This has never happened before on a coordinated national level, for this first trial run of EAS it will be limited to all traditional media but mark my words a year from now the next test will be across all media, That means if you are doing whatever on your android, iPhone, laptop or anything connected to the internet a friendly pop up message will suddenly appear from your government.
just do a Google search of EAS DHS FCC and see what you get
and if you are a broadcaster here is the manual in PDF format http://bit.ly/tD87fB
This must have something to do with those stupid public service commercials they keep airing on TV.
Don't panic...you will be returned to Oprah in three minutes!!!...lol.
Shouldn't the Greek people have the right to vote on the terms of the deal? I know that the EU has been a very undemocratic institution, but this is rather blatant. In itself, this strongarming of G-Pap ought to have a chilling effect on Greeks about continued participation in this European 'brotherhood'.
The structure of the EUSSR is designed to prevent public interference in important decisions, well - pretty much any decision really. When a crack shows, the politicians panic.
Do cows get to vote on when it's time to march off to the packing plant? Does corn get to vote on when harvest time is? Come on - you don't really think any of us are going to be granted a say in matters by TPTB, do you? There will be no elections unless the outcome can be controlled - or unless the outcome doesn't matter.
The first rule of Euro Club is NO Referrendums; the second rule of Euro Club is Every Summit features free tranny whores.
people should have a choice about which branch of the river they are going to be sold.
Yes and the people of the US won't have any more say than the Greeks in what branch of the river we'll be sold into. Occupy all you want. Slavery will become ever more codified here, too, anyway, just as it's happening in Greece despite much more impressive resistance than we'll ever put up. The first wave of genuine austerity is supposed to be announced this month. But, I suspect our politicians will be just as dysfunctional as Greece's or Italy's in coming to grips with the fiscal reality we face. In the end, though, they'll have to kick the rusty can at us even though it's not ours. I know you know that already. Just making conversation and helping lay out one of the next stops on the road to our new future for any newbies who might wander in.
Gotta love it when it's a "sin" to let the public decide instead of having them give up their authority to thir "elected representative".
It should be stated as "Which branch of he river they bought" when they spent borrowed money.
But I agree that the referrendum was a good thin to have proposed. The Greeks are just the first national economy to have to pay for the dance. It will be painful and the method of payment should be voted upon. There is not much real differnece in what the result of the adjustments will be, it is simply a matter of how they can attempt to place the blame. If there is no popular vote then the population can continue to blame someone else.
The real challenge of this vote would have been to the entier EU. Can a Country withdraw without any financial consequences to others?
the terms of the offer are complicated and they are considering putting the question to the sheeple. How will the quiestion be poised? Pay them now or pay them later? We Greeks must stop living beyond our means and actually all take a reversal in our life style to pay for the big party we have been having for the last 20 years.
Greeks of means will be leaving the country by the boat load.
Oh yeah, there's an Angel's song that's just perfect for this topic (set to 11):
http://www.youtube.com/watch?feature=player_detailpage&v=WSBD3JFIgVw
Anyone know when WW3 is supposed to start? Everybody thought it was supposed to blow up in September.
"Heyyyy... It's frickin' WW3! You expect me to pay my debts when there's a World War goin' on? C'Mon!!!"
It was going to be such a nice, tidy little World War.
CW
Joe: take it away...
http://www.youtube.com/watch?v=r4eEvTRejDY
I like the reaction to the proposed referendum; "Ask the People; The People ?" Are you oughta your friggin mind, what do you mean Ask the People"? Boy they got that message across right away.
Well, Merk, Sark and Pap all deserve one another, but credit to Pap for winning this round and pity the Greeks and Europeans as they all will be paying the bill from their income and/or through austerity. Next up Pap blames Merk and Sark for forcing him to not have the referendum. Give him credit though he played them and many many others and likely doubled his portfolio in the process. The question remains, since Greece is bankrupt will Pap bet the house again or will Merk and Sark, now thoroughly humiliated, raise the stakes.
Why not just execute the terms of the agreement? Read the terms of the agreement. You borrow money, you make installment payments, you miss payments, I take your collateral.
What's that?...you have no collateral? You did not spend the money I loaned you in the manner you said you would?...You say, I was not specific in how you spent the money?
What do you mean the contract was written on thermally sensitive paper and I left it on the dash board of the car?
I calling my big sister.
In the euro or not, there is no difference for Greece.
Greece can buy crude oil w/ euros but can only borrow them: these are sent to the German banks. Nothing is left for the Greeks themselves except for a larger amount of debt to pay off. Meanwhile, the country cannot earn anything, its economy is dead.
Out of the EU and Greece won't be able to buy crude with drachmas. Nobody will accept them, not even the Greeks which will dump them on black currency markets to gain dollars or euros. Since each day will require more drachmas swapped for the hard currencies, the outcome will be a short life for the drachmas.
Most Greeks won't mind much -- it's been a poor country since before the Ottomans -- but those with shiny, new BMW's will be pissed.
Look for fuel prices in Greece to rise to $40-$50 per gallon as the crisis unwinds .... conservation by other means.
The Greeks do not need much oil nor do they need the EUR/USD. They will soon develop a way to trade Maroccan hashish and cigarettes for Russian (and maybe Libyan) oil. Same old, same old. They are traders, sharp ones!
I'm sure the US will be happy to make an offer to buy Drachmas in exchange for bases to stage large military buildups and give them USDs to buy their fuel. Opportunity knocks...
Greece will dump the euro and embrace the USD as it's national currency.
I have a loose understanding that this has actually worked in Zimbabwe?
Will someone nuke Cannes already?
Aw, come on it's not the towns fault. They just provided the hotel rooms and the tranny escorts.
Yep Greece isn't in the G-20. They're in the G-27 (kinda like the Russell 2000 for the minors). Their last meeting was a couple of weeks ago. Their unanimous mandate going forward was for all members to buy a dog and name it Clue so they had one.
Ouuu ! That's harsh. Also, funny.
Owe the bankers $300 million Euros and you can't pay... it's Greece's problem.
Owe the bankers $300 billion Euros and you can't pay... it's the bankers problem, which due to the socialized nature of banking losses these days... means it's the European taxpayers problem.
So G. Pap actually has Europe by the balls not the other way around. If Greece walks from it's debt and exits the Euro converting domestic Euro deposits into new Drachmas one for one... and then allows the market to devalue them they will be experiencing growth in things like tourism (their only real industry outside of feta cheese and tranny porn) much sooner.
Building political pressures due to bankster imposed austerity in Ireland, Spain and Italy will make these nations scream for those same crazy Greek haircuts that were on offer as well or they will leave... yet still the bankers must be paid by someone or the European banking system ceases to exist. Which means no more free money for the politicians.
Last one holding the EuroBag looses.
Shipping.
HTH.
Good night time story mom. Does it have a happy ending?
Spot on, spot on I totally agree with you. Greece does have the rest of europe by the short hairs, and G-pap knows it but I think something else happened. When he was "summoned" (I would of said after the referendum), it showed who was in charge. I think more was said in private than what we know. He could have been threatened and/or even blackmailed to not have the referendum (which everyone knows the populace won't support). Because it could take down the EU, the ECB, the major and minor banks and flip many of the countries from a recession to a very hard depression overnight and for years to come. They most certainly said we won't let your small country take us down pure and simple. So when he came back and Sarkozy and Merkel trumpeted what G-pap was going to say to his govt. body, that any referendum on the debt would have told the rest of the EU that Greece was getting out of the EU.
That scared the politicians on both sides because as many of said the countries that shouldn't have been in the EU in the first place (Greece) had been living high on the hog through fraud and a wink and a nod while Germany and France and the Netherlands where subsidizing their lifestyle. They where essentially saying and G-pap that if you vote or want this referendum we get kicked out and we will be on the outside of the Western Europe. If I was Greece I would say the hell with it and default and go back to using the Drachma. They can peg the Drachma to whatever currency they want and then they will have the power to print their way out in a pinch if they have too. And with the Drachma being low in value it will make exports from Greece and anyone having a company building things in Greece cheaper. End this game and just say F off and get your country back.
Also I didn't know that Greece made Tranny Porn (which I love), I know other countries but I didn't know Greece had a big thing over there. Have any sites you know?
What is this "Tranny [(transmission?)] Porn" of which everyone speaks so highly?
could be transvestite?
your not in kansas anymore
First Reality was awful, then it became desperate, then fragmented; now it's frigging dissolving; this whole carnival is beginning to resemble a sixties Acid Trip movie.
"... and then allows the market to devalue them they will be experiencing growth in things like tourism (their only real industry outside of feta cheese and tranny porn)"
Hmmm... growth in tranny porn. Sounds like a new Barney Frank stimulus measure.
isn't everyone exporting tranny porn in these days of dire ends? would Nero be playing his fiddle or watching tranny porn if he was alive today?
They would hire him to play the background music for the tranny porn movies.