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Greece Changes Strategy: No Longer Demands Debt Write Off, Ask For Debt Exchange Instead
Update, and in line with the FT report, here's Bloomberg:
- GREECE SAID TO DROP WRITEDOWN REQUEST AFTER OPPOSITION FROM EU
So all it took for Greece to withdraw its demands was "opposition"?
* * *
Over a week after the new Greek government came to power, it has presented its first actual proposal of how it hopes to negotiate with Europe that does not involve the infamous "debt write off", which as both Germany and the ECB have made clear, is a non-starter as it impairs the ECB's balance sheet and leads to a loss of "faith" in the money printer, the legacy monetary system and so on. So instead of yet another debt restructuring, the FT reports that Yanis Varoufakis "would no longer call for a headline write-off of Greece’s €315bn foreign debt. Rather it would request a “menu of debt swaps” to ease the burden, including two types of new bonds." Actually he still does, only he is not calling it as such.
The first type, indexed to nominal economic growth, would replace European rescue loans, and the second, which he termed “perpetual bonds”, would replace European Central Bank-owned Greek bonds.
Of course, the problem immediately emerges when one considers what we explained a long time ago: namely that a distressed debt exchange, such as what Greece is proposing, is what the rating agencies have always deemed an Event of Default, and thus something which the ECB will never agree with as it once again impairs an ECB-held security.
To be sure, the Greeks themselves realize that this proposal is nothing but a debt haircut under a different name, but hope that Europe will pull an Obamacare and bet on the "stupidity of their own taxpayers" to let it slide without anyone noticing. To wit: "[Varoufakis] said his proposal for a debt swap would be a form of “smart debt engineering” that would avoid the need to use a term such as a debt “haircut”, politically unacceptable in Germany and other creditor countries because it sounds to taxpayers like an outright loss. This would mean that in order for such a deal to be successful, the Troika would have to bribe Moody's and S&P to keep their mouths shut and to "exclude" Greece from their traditional event of default definition (something which the recent DOJ "settlements" could provide assistance with).
Another aspect of the proposal is the Greek desire to link debt, or rather interest, to GDP, which begs the question: what happens if Greek GDP continues to decline - does Europe pay the Greeks a negative interest? Sarcasm aside, there are two problems with the Greek GDP-linked proposal. The first, and most important one, is that it won't work. As Reuters explained over a year ago:
Some of the world's leading economists have united behind the concept of bonds linked to GDP, which they say could prevent painful debt restructurings like those in Argentina and Greece.
The Bank of England last month published a paper on GDP-linked bonds, joining Yale University and the International Monetary Fund, which have also pushed the idea in recent years. "Return on these bonds varies in proportion to the country's GDP," the bank wrote.
But investors say the idea will never fly.
"This is an interesting academic exercise, but I believe it is unlikely that we will ever see widespread issuance of GDP-linked bonds," said Mark Dowding, a senior portfolio manager at Bluebay, one of Europe's largest bond funds.
In theory, GDP bonds would allow countries to manage debt-servicing costs depending on their economic cycles, in essence providing a form of recession insurance. At the same time investors could take comfort knowing that they would not be subject to a Greek bond-style haircut on their sovereign holdings.
Yet purchasers of the debt would likely demand a return high enough to nullify a sovereign's other benefits in issuing such an instrument.
"I know investors who would buy these kind of products," said Gabriel Sterne, an economist at distressed debt brokerage Exotix.
"But I don't know any who would accept them unless they were compensated significantly for the uncertainty of income streams."
And the second one is that Greece already has GDP-linked securities: warrants, as does Argentina. And in the case of the latter, it failed miserable to avoid a re-default.
Both Argentina and Greece offered GDP-linked warrants as a sweetener to encourage bondholders to take drastic writedowns on their sovereign holdings.
"It's the equivalent of receiving equity in a corporate restructuring," said a debt specialist at an investment manager with over US$100bn under management.
"If things really turn around, you get exposure to the performance."
In the case of Greece, investors attributed little value to the warrants at first. But as the country's economic outlook has improved, trading in these securities has ratcheted up. The warrants, which slumped to a low of 25 cents in the first months after Greece's restructuring, are now worth more than five times that amount.
...
Furthermore, governments would be less willing to build a significant buffer of GDP-linked bonds in a good economic climate, as it would then be more expensive to service them.
And once the GDP-linked warrants became a significant part of Argentina's debt-servicing costs, for example, investors feared the country would be unable to pay them.
Greece learnt from Argentina's experience and capped the coupon payments on its warrants at 1% of the notional amount annually, with a call option from 2020.
Then, in addition to the "haircut that is not a haircut", the new FinMin has proposed that the government would "maintain a primary budget surplus — after interest payments — of 1 to 1.5 per cent of gross domestic product, even if this meant Syriza, the leftwing party that dominates the ruling coalition, would not fulfil all the public spending promises on which it was elected."
This also is confusing since the only time a nation should maintain a budget surplus is if no longer needs external funding or, if it intends to defaults as the CFR explained over a year ago.
Ironically, by promising to preserve a primary budget surplus, Greece is warning the Troika that it can default at any moment, and thus intends to preserve its bargaining leverage.
And then there is the last aspect of the Greek proposal, that the "government would target wealthy Greeks who had not paid their fair share of taxes during the nation’s six-year economic slump. “We want to prioritise going for the head of the fish, then go down to the tail,” he said."
We wish them good luck, especially since it was not just the wealthy Greeks but everyone who decided to stop paying all taxes heading into the dramatic Syriza election. And if there is one thing taxpayers are loathe to do once they stop paying their taxes, it is to resume paying their taxes.
Still, while the proposal is surely another non-starter for Europe, what is most substantial in the FT report is that, like it or not, the Greek government has decided to play ball with Europe and is slowly but surely willing to concede to the Troika's demands. Which means that any expectations of a sharp standoff between Greece and the ECB can now be written off, as the new Gree finmin has just made it clear that despite the bluster and rhetoric, he will ultimately accept whatever terms Europe offers him.
Perhaps most ironic, while Greece has proposed a debt haircut in all but name, what it now seems almost assured to end up with is a continuation of the current status quo. In all but name.
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An unmitigated disaster unfolding.
Relax, there is a team of economists looking into this situation.
But isn't this like swapping fat ass wives??
Unless that's what they're into..
Don't lose track of which shell the pea is under...ready... GO!
Well, if rumor holds true, at least the Greeks like getting fucked in the ass.
pods
debt swap? WTF
With Lazard 'advising' what do you expect.
John Perkns' Confessions of an Economic Hit Man comes to mind.
Wake up time:
http://seekingalpha.com/article/2871836-lbma-data-points-to-gold-and-silver-default-video
http://www.safehaven.com/article/36534/lbma-data-points-to-gold-and-silver-default
now I understand why the DAX is up
bitchez
check the chart: https://pbs.twimg.com/media/B824xGxCIAAiiAK.jpg:large
It seems clear (already!) that this Varoufakis is just another whore to the same Bankster establishment that created all the problems in the first place.
ALL OF THIS IS JUST DEBT PAPER-SHUFFLING. WHERE IS ANY TALK ABOUT HELPING THE REAL GREEK ECONOMY AND THE GREEK PEOPLE?
And the truth arrives...
Many of us were watching the actions, not the words. These actions have just doomed Greece to "more of the same." Rhetoric is just that, rhetoric.
Syriza has two choices: leave the EU and face the consequences (very harsh, but a genuine move in a fresh direction) or play the game. They're playing the game.
Still can't conceive of taking responsibility for themselves and their own future without access to "the bankers' money". The story of our times.
A shame.
Fuck That Didn't Take Long .............
The Greek Leaders Have Just Been Inoculated With ""CENTRAL BANK DOCTRINE"" SERUM ...
Greek People Are Doomed!
swap the greek debt for enron debt
or better: swap the greek debt for shares of maiden lane vehicle instruments
http://newyorkfed.org/markets/maidenlane.html#
just default already
Looks like he sold out.
"European Unity" wins again.
I think I am just going to keep stacking and turn the TV/ZH off at some point. The squid will keep this going for as long as humanly possible, which is longer than my patience will run.
Meet the new boss, same as the old boss.
If they eat their promises at this stage so easily, the whole Greece WILL BLOW UP!
Greece has the right to PRINT Euro to pay off debt for free.
Exactly. Currency is for people to use in their transactions with each other. But in Europe these days, currency is being used like a revolver in a stick up.
Unless the Troika provides some relief, the rising momentum from the Greek people will push the new government to draw a line in the sand. That line is default. And it is the first domino of the southern nations in rising against the banker tyranny.
The top leaders of the new government are not alone in facing the anger of the Greek people if they don’t deliver on promises that were made so strongly. In addition, the new members of the parliament elected will have to face their constituents as well; not a pretty sight when the election issues were so black and white.
The news is, the fight is growing against banker control. The best to happen for all of us would be the breakup of the EU, because it is the stepping stone to world government.
“Globalization is a barbarity, it is the country which should limit its abuses and regulate it. Today the world is in the hands of multinational corporations and large international finance.” -- Marine Le Pen, leader of France’s National Front party and vocal critic of the Transatlantic Free Trade Area (TAFTA),
"debt write off", which as both Germany and the ECB have made clear, is a non-starter as it impairs the ECB's balance sheet and leads to a loss of "faith" in the money printer,
But printing several trillion out of thin air just STRENGTHENS the FAITH.
Sure, from the logic within the ponzi.
The Syriza finance minister said it in the interview posted here on ZH: "...debt deflation is the wrong way...".
Syriza is just another populist scam (populist = say what people want to hear, but don't act as suggested and promised).
Now we know who the real opposition is: Syriza not being prosecuted but Golden Dawn politicians are sitting in jail.
"The Greek Colony" is now open for business.
so.. you see, they cannot exit, they are not allowed to wipe any dept either, so, what remain, full forward, make another bonds....
lol...
this is endless and i come to the conclusion not a fucking sheep on earth will riot against this coz every body is part of the scam, it is a world wide fuck fest.
definitivly pointless to read any information from here, msm, whatever, is everywhere same. world is everywhere the same.
pathetic.
I think I have to place a major rant, here
Haus-Targaryien seems to be miffed that "European Unity won again". I'm sorry, but I don't see the connection with "The squid will keep this going for as long as humanly possible...". It's like saying that the AAA Anonymous Alcoholics "won again" and the biggest pusher of drugs "will keep up pushing"
whatever your issues with the eurozone, it is an alliance of balanced budgets countries. it's about less debt. The Squid works for the forces of "moar debt". Don't mistake the victims for the pushers
Publicus comes with something imo quite useless: "Greece has the right to PRINT Euro to pay off debt for free". It's a shared, common currency, remember? It's like sharing an account with your brothers and sisters, and claiming that your little sister has a right to plunder the shared account in order to pay off her debts
If the Greeks had the Drachma, and would have devalued it... this would have had the usual consequences, including higher rates, destroyed savings and high resulting debt
Tyler Durden wrote: "This also is confusing since the only time a nation should maintain a budget surplus is if no longer needs external funding or, if it intends to defaults as the CFR explained over a year ago."
and here I seriously have to rant: no, no, and no again. Any nation should maintain a budget surplus, at any time
The only time it makes barely sense to use Keynesian demand-supporting measures is after a major war... and this according to Lord Keynes himself
A public household (aka tax gathering state) and a private household aren't that different: they both need to put reserves for a rainy day. they both should be cautious with debt
the whole Greek drama would have been different if the Greek budget would have been with a surplus all the time, particularly during the "good times", and bought some gold, for example, with it
then, as the credit boom - similar to an alcohol/drug binge - went it's course, including the successive hangover, it would have had the internationally useful reserves to cope with it, instead of having to watch national assets going down in price and having to fire sale some of them at the worst time ever
it's called a National Treasury because it's supposed to have some treasure in it, not only a register of debt
excessive credit leads to binge consumption, and then to excessive debt. this is the real enemy, and the only way to escape this is to be cautious, and keep a budget surplus all the time
seriously, even as a private person, if you aren't able to spend less then you make... then you do have to rethink your whole financial position instead of distracting yourself with a small binge shopping tour. and the same applies to whole nations
rant end
I got as far as "an alliance of balanced budgets" and then stopped.
Another one of your rants in abstract. I'll summarize my thoughts,
The Squid uses "European Unity" to distract and confuse the masses as to the true reason for the EUR.
Every idiot in my building thinks "its for European unity, world peace and Skittle-shitting-unicorns" while the large banks know its to make them insane amounts of money at everyone elses expense.
I am clearly working for the wrong company. I should go to the banks, and enjoy this shit show as its goign to last a lot longer than any of our accounts/earnings potential outside the beast can hold out.
as you often wrote, you think a "tabula rasa" would be... swell. you don't appreciate how much suffering this would cause
don't comment to my posts if you are not willing to read them carefully. I'm sick of this superficiality
how can you accuse my comment of anything if you don't read it? too abstract? well, here something tangible and personal: are you sure you are living in the right country for you? what you are experiencing seems to me is a continuos culture shock. Modern Germans are generally like this, and you don't seem to be German enough yet to understand them
Ghordo -
I really have no culture shock, but I have had my eyes opened to how the Western Media works. Once you "see the light" no matter how much you may want to going back -- to being "just like everyone else" you simply -- cannot.
After I commented, I went back and read what you said -- and as always, you have great points. My problem -- I think with many of your posts where I reply as I did, is you look at the EU and the EMz in the "abstract." You analyze the situation as it is "on paper" (e.g., in the treaties) and more or less ignore what is actually being done.
For example, you cited a "union of balanced budgets" -- and while on paper -- this is the way it is -- in reality it isn't the way it is. I sense you get frustrated that we refuse to look at the EU and the EMZ's problem through your abstract (being the paper version of the EU and EMZ -- not the way it actually is) view.
Amusing that he accuses YOU of "superficiality." I smell an institutional haven for textbook orthodoxy.
the true reason for the EUR is the Dollar global reserve currency and it's credit binge complex,
the true reason for the EU is globalization driven to fast/far by rapacious transnational interests
don't mistake the organisms for their illnesses and parasites
evidence for my points: the currently raging currency wars and the damn TPP and TTIP proposals
Europe is about balanced budgets? BBWWAAAAHAhahahahahahaahhaha
Bullshit. Total Bullshit.
European socialists simply keep an open door policy to the third world to pack voting roles and suck up more balance of payments transfers. Politicians in Europe don't want balanced budgets, they want POLITICAL POWER. And to a socialist, that is simply putting people on welfare and guaranteeing their vote.
Do you honestly think the Germans are inviting in so many Turks because they love Kabobs? Perhaps its this https://www.cia.gov/library/publications/the-world-factbook/rankorder/20...
Europe has a negative indigenous population growth, and politicians are using immigration to keep the pension house of cards afloat. How's that working out for ya?
For fucks sake, in Belgium you can vote in local elections EVEN IF YOU AREN'T A CITIZEN OF THE COUNTRY. That is madness!
Balanced budgets my ass.
this is a wonderful example why I'm leaving ZH for a while
what have balanced budgets to do with immigration? or with voting rights? do you even read your comment before hitting the "save" button?
>what have balanced budgets to do with immigration?
According to about a zillion research papers, if its highly skilled (ie Switzerland) is has a positive impact. If it is low skilled, it has a negative impact. You may want to take a look a the chart that shows the HUGELY negative fiscal impact of immigration in France and Germany below.
http://migrationobservatory.ox.ac.uk/briefings/fiscal-impact-immigration-uk
Don't let the door hit you on the ass on the way out.
interesting. and yet still not relevant. besides a comparison of the real costs, your argument is about immigration, first.
if it has a negative budget impact, it would be still something that could be tackled by either addressing the issue or their costs. it reminds me that stupid British argument that the local coucils aren't equipped to cope with foreigners. is that a fault of the foreigners or of the local councils?
there is nothing in all this that would prevent a restructuring of the British national social spending in a more balanced way, for example. plenty of EU countries have done exactly that. don't blame the specific UK sclerotic state issues on others, including foreigners. Cameron and Farage are already doing it sufficiently
there is nothing that prevents the UK to restrict the very important non-EU immigration to qualified, high income net-contributor applicants, for example
the study you cite has on the first page the official numbers, before the study tries to correct them "Cross-country evidence for the years 2007-2009 suggests that the fiscal impact of migration in the UK (+ 0.46% of GDP) was greater than the fiscal impact of migration in 16 other OECD countries. The UK occupies the 11th position (out of 27 countries) in regards to the positive fiscal impact of migration across OECD countries."
that's half a percentage point of GDP. in the greater scheme of things... not much. further, it goes on with:
"The existing estimates of the fiscal impact of immigration in the UK are limited because of a lack of data and accurate information about a wide range of important factors. For this and other reasons, a significant number of assumptions must be made in order to estimate the fiscal effects of immigration, and results tend to change based on these assumptions."
and there you have it. the UK was an immigration country way before the EU was even dreamt up. And it's still unable to have accurate data. sclerosis the fault of foreigners?
the whole study would not be necessary, including it's own estimates, if the UK had proper statistics. it's simple, local councils would just need the proper IT to cope with it
No, you are talking GDP which is a meaningless number, GDP per capita is important. It is no good if our GDP doubles but our population goes up by 10x.
The estimates you also quote are very dodgy, they assume children of immigrants are automatically non-immigrants and thus do not use schools etc, in short even with the rosiest tinted glasses the figures show a net burden. And our budget deficit also shows an increasing burden.
And the UK was never a nation of immigrants, quite the opposite, we were able to grow and develop because our country was stable and homogenous while other countries were wracked with internal divisions. The myth the UK is a nation of immigrants is just something the multiculturalists push, their fantasy world never existed though.
"the UK was never a nation of immigrants" explain then to me the 1.2 million Pakistani living in the UK. or the Commonwealth Citizen. (nope, not the EU's fault, btw)
and the list is longer, including half a million Irish since the Act of 1917. don't exchange a multiculturalist fantasy for an anti-multiculturalist fantasy
in the greater scheme of things, the UK is, since 1840, the main promotor of globalization. which is nothing else then... less borders
Re: "globalization. which is nothing else then... less borders" Whoa! How's that for hubris.
Spot on, immigration is a factor. We have these welfare states where everyone who lives in them is entitled to benefits including a pension.
But the low paid get subsidised by the higher paid because people want a higher standard of living, however when you open the door to unlimited immigration you have tons of low paid workers paying very little in taxes but receiving the same high level of services, even worse they are destined to being an ever growing burden on the state as pensioners.
The sums do not balance, either you restrict immigration to the highly paid only (therefore the skills you need) and thus each new immigrant is a net positive on the tax income, or you get rid of the welfare state and allow anyone in which works too, you cannot have both and still have a balanced budget.
piliage, I forgot about your choice of words: "Europe is about balanced budgets? BBWWAAAAHAhahahahahahaahhaha "
not Europe. the eurozone. the UK, for example, did not sign any treaties regarding balanced budgets. see here: European_Fiscal_Compact
I agree with you that the collection of UK statistics is abysmal, but the entire immigration debate conveniently ignores a few key facts. The UK does need high quality immigrants since the quality of our education system has continued to decline since the effective abolition of the grammar schools, with the result that we now manage a common level of mediocrity such that there is not the home grown sufficiency of graduates in the physical sciences, hence the need for immigrants who will make up the deficit. The remaining quartiles of low skilled immigrant labour, regardless of their origin, condemn the UK to a near perpetual low wage, low tech economy and enable employers to operate on a beggar-my-neighbour basis, constantly driving down wages. The numbers of highly skilled immigrants are relatively few when comparred to the numbers of low skilled migrants, who form the bulk of those coming to the UK. The impacts on housing, health, employment, the environment are never properly taken into account , if at all, when measuring the cost benefit ratio's of immigration. The entire real picture of immigration and it's impacts on the UK are an iceberg of unknown proportions, but there is already sufficient evidence to shiow that the UK is headed for social , environmentakl and economic catastrophe. BTW I am not a UKIP supporter, detesting as I do, virtually all UK politicians in equal measure.
Meet the new socialist thief.
Same as the old socialist thief.
The only promise that you could ever believe from a communist government is:
Never Pay. Never. Never. Never.
So much for having Icelandic balls
coercion is a funny thing - it creates friction...
and friction creates heat...
melted maybe?...
What do we do when our patience runs out?
Historically the golden internationalists and the red internationalists always have allied when push comes to shove.
It becomes clearer every day, why Greek's Golden Dawn movement is being prosecuted and it's politicians are jailed while the red internationalists of Syriza are welcomed by the bankster's establishement. Throwing a few populist phrases around while their internationalist brothers play shocked politicians, but behind the scenes they very much agree, how to develop world government further and reduce the nation's souvereignity.
Just wait ....way too soon to tell. Confuse the enemy and keep them off balance. Also Induce them into some moves to reveal some of their thinking. I say this is still the first inning !
I smell payola...
+1000 Sofa I stated it last week and it still holds true today. Actions speak louder then words. All politicians promise the voters free money on the backs of the producers to get their votes and it worked.
They promised hope and change. Nothing changes without real action. The original country that actually broought an elected republic with equal rights for women is now doomed to kicking the can.
It is indeed a shame as no other word fits the bill.
I do not think the EMU will allow SYRIZA to increase their spending like they have stated and so much for the big words the people of Greece have handed us our mandate!
It looks like a default, walks like a default, it is a default period!
Remeber, Greece is the land where no one pays their electric bills, and whole islands are declared blind so they can collect government benefits. The country has grown hopelessly corrupt and cynical -- everyone thinks everyone else is cheating so why not cheat too. If you think Grexit will suddenly cure that, you are deluded.
The Greeks were not exactly kicking and screaming while all the Euro debt piled up to subsidize their lifestyle. Yes, the whole system was skimmed by banksters, and the same time it was skimmed by blind islands and everyone else. But that does not mean cutting the banksters out will suddenly cure the place.
You could draw the analogy as follows: debt junkies to banksters = drug junkies to drug dealers. Yes, the drug dealers bear some moral responsibility. But in a democracy, do junkies vote for the narc or the dealer? Duh ... they vote for the dealer, right up to the moment when they turn about when they blame the dealer for all their problems. Given the libertarian leanings of the ZH crowd, the sympathy for debt junkie morality is surprising.
Greece is hopelessly screwed, not only by banksters but by its own fiscal imprudence. There is no easy way out. I agree they should bite the bullet and Grexit, but cold turkey hurts bad.
I have a Greek co-worker, part of the exodus of frustrated young people seeking their fortune elsewhere. His observations match yours. Real reform is impossible while the monkey remains on Greece's back.
A good friend of mine came to the US from Greece. He says that Greece's welfare program is so generous that people were flooding into the country, from other countries, getting onto government benefits (hmmm... sounds similar to the U.S.). Until Greece turns to a responsible government - not its socialist/fascist economic disaster system - they will simply keep repeating what they've done four times in the past 100 years. That being to default on their debt.
The syriza dudes were just squawking like iceland until their swiss bank accounts were funded. Then they immediately switched to the same old status quo.
As I said a week ago, the banksters will either bribe or blackmail the new greek gov. The latter is very easy when you print currency.
I have to disagree. What you're saying is that the billions and billions stolen by the status quo, and transferred offshore and in Swiss Banks is the same as the 200$/month payment for 500 "blind" people that probably used it to go to the supermarket. This is the main argument used BY the status quo, in order to have the greek people pay the bill for the pillage of Greece and its future generations. "We ate the money together" is a famous phrase of one of the most corrupt ex ministers of the most corrupt party, PASOK.
It appears that, while meeting with the UK Chancellor George Osborne, he was given a choice between a private showing of the Zapruder film, or a sackful of money. Who knows, maybe Osborne even bit off the head of a live bat, for emphasis and effect. Go Ozzy!
ALL Finmins are Whores, by their very nature. It's in their DNA, and is a prerequisite to assuming the 'position'.
Clearly they simply had a 'better' (more alarmist) election campaign than their opposition, to get elected. The Greek PM and his FinMin are merely playing Good Cop Bad Cop, to force better terms and concessions out of the Banksters in London, who run the banksters in Paris and Frankfurt.
Of course, as Tyler points out correctly, those who stopped paying taxes will not start paying them again. And I contend that other PIIGS will take note of this precedent and follow suit in their mud-wrestling match with EU Banksters.
"It seems clear (already!) that this Varoufakis is just another whore to the same Bankster establishment that created all the problems in the first place."
Perhaps, but he has inherited a tough situation without any really good solutions except debt forgiveness. The countries who gave money to Greece will need to voluntarily write off some part of the debt.
The solution may be default, and adoption of the drachma, or conversion of all the debt into drachma, which is the same thing. If they can not get debt forgiveness, then they should probably rip the bandage off. The long term lesson, that I warned my European friends while they were moving towards adopting the euro, is that currency = sovereignty. A country that does not have its own currency is not a sovereign country but will be controlled by whomever controls the currency.
You can extend this notion to the dollar empire and the FED. Some countries nominally have their own currencies but rely on the dollar for settlements and even internal trade, and thus have proportionally reduced sovereignty (control over their own affairs). And since the FED now controls the dollar, the US is a vassal of the FED, as are the countries inside the dollar empire.
+1, but I disagree on this "The long term lesson, that I warned my European friends while they were moving towards adopting the euro, is that currency = sovereignty. A country that does not have its own currency is not a sovereign country but will be controlled by whomever controls the currency."
if it was true, then gold would be the ultimate destroyer of sovereignty. because it is the ultimate non-national currency
sovereignty is having your own defence forces, your own army, police, tribunals, and taxation
old-style sovereignty during the times of gold implied you have a treasury, and you filled it with... gold. i.e. what you need in order to defend yourself, in case of war
and so my rant again: sovereignty does not get "lost" by sharing a currency, it gets "lost" by squandering resources
many here mistake sovereignty with sheer raw power, particularly in the US. on the greater landmass, we are more used to sovereigns in troubles, up to temporary partial or full incapacitation
and so every sovereign should, in doubt, just freaking balance it's budget, or, even better, have a budget surplus. which leads to reserves. it's really that simple
No, by sharing a currency they allow other nations to create money (by debt or by the direct printing press), or to reduce the money supply by running a surplus, they also allow other nations to control their industry by interest rates. Add in the other effects of the EU such as open borders that mean that Greece now sees all of its highly skilled labour leave the country as they try to pay back their debts, or the cargo cult mentality of the EU development fund that spends indiscriminately the wealth of its nations, this really is not going to work.
EddieLomax, you seem not to have understood that credit creation is done by... banks. your argument is really neither here nor there
the main driver of rates for the whole world... is the issuer of the global reserve currency. the FED. all the others... have to cope with it
your arguments make me think you are British. how is it with the British Pound? disentangle a bit your mass of non-related arguments
Greece is a pretty good example of the effects of the EHM.
I think YV had something unpleasant whispered in his ear at Downing Street.
I think that Greek Judge should declare debt repayment unconstitutional....problem solved.
Looks like Project Cornhole is well underway.
CORNHOLIO!
once a politician, ALWAYS a politician...
obviously he realized his choice was the pile of money or serious exercise in contolled death by extermination of "just will for the people".
Punk ass bitches! Isn't Greece one of these countries where the people can just demand a new election and throw these new assholes out of the "people's condo"? That would teach the next new assholes to keep a promise.
On her wedding night, the mother of the (sexually inexperienced) bride told her daughter that, if her new Greek husband ever requested her to turn over for sex, she should leave him and come right home.
Two years later, when the husband asked her to roll over, the girl tearfully told her husband that she would now have to go home to mother, because he was requesting her to turn over for sex.
"But darling," the husband asked. "Don't you want to have children?"
Let the games begin. Default without calling it a default. That's all that's being negotiated right now.
Pretty please with sugar on top, don't call it a default!
My thoughts exactly.
Call it anything but what it is. No truth allowed. Sheesh.
I don't know when or if Jesus is coming but Dionysus doesn't appear to be in any hurry to leave.
would not want to trigger a CDS claim by saying default or certainly the mountain of derivatives piggy backed on everything.
Well, this would actually be the second restructuring of the Greek debt. The Troika already extended the maturity and lowered the coupon a few years ago to avoid using the "default" word then and triggering the CDS, as you point out.
Now we will get another restructuring to kick the can and avoid that "word" again. The hippies on Naked Capitalism will cry like they did when Dylan went electric.
Meanwhile, Syriza proposes "GDP-linked bonds". There's a reason it's called "fixed income", FFS. Who the fuck is going to buy these? It might be better just to do a Brady-bond like swap. But you cannot get the Left to accept this. So we get the unicorn-like GDP bond that nobody wants.
And anyway he's proposing to run primary government surpluses. So this is tantamount to surrender and we're just discussing the terms.
Would appear the Swiss have had enough.
NO WAIT!
THEYRE BUYING EUROS AGAIN!
THE SWISS ARE BUYING EUROS SHEEPLE!
ALL IS WELL!
MOVE ALONG!
interestingly, yes, the SNB seems is defending the "proper" level of the CHF versus the EUR... again
and Switzerland is experiencing a deflationary shock. a small one, but nevertheless. already some companies at the border are switching into paying their empoyees in EUR
nobody lives in a vacuum, in this modern world under the spell of globalization. Switzerland is a bigger trade partner to the EU then... China
Don't lose track of which shell the pea is under...ready... GO!
If I recall correctly, total Greek sovereign debt is less than $300 bn. On its own, the ECB and member banks could withstand such a default. Where this gets wicked is that while the notional value may be manageable, there is no doubt that the shadow banking system sold CDS on those bonds (who in this world would buy Greek debt absent a hedge?) and since purchasing CDSs doesn't require ownership of the guaranteed security, there's a pretty decent chance that the total in CDS greatly exceeds total Greek debt and a default event could be a pretty big deal. So...., Mr. Unpronounceable FinMin, default already, the carnage would be fun to watch.
What is really farcical about the Greek proposals for writeoffs and restructuring is that the buttholes ran out a EUD 1.5 billion bond issue in July, 2014. That was just to make sure they got the maxx cash before they applied the shaft to the lenders. Three year bonds with 3.5% rate. Probably expected to have to have more bonds outstanding so that the ECB QE would have something to buy.
http://www.reuters.com/article/2014/07/10/greece-bonds-idUSA8N0OT00320140710
"default already, the carnage would be fun to watch."
I do not think it would be fun to watch at all. The banker, political and other elites will be either bailed out or make money on this event. The averge guy will be the ones who suffer from increased taxation or theft of their savings accounts, IRA's, 401(k)'s, pensions, inflated currency, etc. They will just take that from us and call it a day. As a country song once said, they "will get the gold mine, and (we) will get the shaft."
Getting near the close of the market, time to pump up the stock market and monkey hammer gold back down.
He's just shining them on. They are in serious talks with someone else. and this other entity will foster them rather than exploit them. but this is sensitive information and must be kept hushed up for now.
look for Russian and Chinese ships, both merchant and war, making great use of the greek ports in about a month.
So, your Debt is better than My Debt? Just another exotic financial term for stupid tax payers to digest. A Turd is a Turd. No matter what color it is or what you care to call it. Greece is sooo fucked. I'll bet the FinMin was threaten by the IMf/ECB to play ball or go swimming in the North Atlantic...
Has anyone seen his family today?
for Christ sake, it was on the guy's blog for 3 weeks - http://www.bloomberg.com/news/videos/2015-01-13/feb-28-greek-deadline-is... - ~6th minute
great article. Call me when you sink lower...
double post and no delete button...
Greece has NOT learned ANYTHING from Argentina YET.
When they get away with a 67% haircut , then they will have learned.
So, the greeks will continue to pretend to work, the ECB will continue to pretend to help, and the bankers and fascists in the E.Z. will continue to enrich themselves.
Sounds about right.
On plus side, syriza's new office has wifi now. a few more tweets please Varoufakis. I had a feeling Syriza wasn't going to be Europe's Syria.
Maybe Greece should try exchanging their debt for PRODUCTIVE WORK. Kind of like a capitalist system that makes everyone better off.
Nahhhh... work is hard. Why do hard stuff when the government promises "free" stuff for everybody?
Don't worry! I have it on good authority that Goldman Sachs has volunteered to measure the Greek GDP performance so as to monitor fairly the new GDP-linked bond coupon amounts.
Sold out again. That was quick.
My guess is a couple shows of real force got things back in disorder.
One more of these compromises by a popular elected leader, and the betrayed voters and citizens will perceive the necessity of formulating their own 40 caliber platform.
Like the greeks were going to do anything...lol. Talk shit and yes sir master sir....back to pickin olives.
Some likely don't know the difference between olives and sheep droppings. Maybe they can get some EU subsidy money to train the pickers.
Not sold out. Greece will get something out of this- better terms, in one form or another, probably a haircut on whats owed. It'll be complicated, but better for Greece. They'll take their time bleeding the country out now.
not a good sign for the people of greece...
sounds like someones been selling "wolf tickets..."
or shall we say "writing checks that yo ass cant cash..."
"...or shall we say "writing checks that yo ass cant cash..."
Yes indeed. With Greek GDP what it is, there's little prospect of servicing the interest on the 315 B, let alone returning any principal. Good luck ECB squeezing blood out of that turnip. Couldn't happen to a nicer bunch of psychos.
Even beyond the prospect of debt servicing (or lack of same), it is odious debt....a point made on this site many times, but always worth repeating.
I don't think it's as much a sell-out, as a clever way of defaulting. This way it allows the EU to save face so they can continue the farce and not have the whole damn thing unravel.
I wonder how much the Greeks are just going through the motions on negotiating before they do something drastic. Maybe people in this new Greek gov't are feeling out all their options (discussing with Troika). If they learn they're left with nothing but bad options (keep with austerity, shut up and listen to what we say), perhaps they'll openly default. But learning those options takes time - maybe they're just doing their due diligence right now. It's still early after they took power, yes?
And maybe I'm an optimist.....
Hopefully they refute the rumor tomorrow.
The EU banksters rolled over the debt when the Greek threats extended to turning toward Russia.
Suddenly, all obstacles became solvable. The Greeks are world-class masters of Tax Avoidance, and the Banksters are World Champs at Fiat Games and the Fiat Shuffle.
Both parties knew how this was going to play out. Only the gullible public and hope-a-holic wing thought that anything honest was going to come about.
As I commented after the Greek PM's first speech: "Nice Talk. Now let's see the Walk".
"Sold out again. That was quick."
One of the primary pillars of Syriza's hopes was debt relief to manage servicing the rest, so it does seem that way, but maybe not. I reckon that visit with Osborne in London - the banker's dimwitted whore - pretty much scuppered the hopes that Greece would get 50% off despite the empty voices of support in France and out of Obama's backside.
Secondary is not adding to the $315 billion debt mountain (No more loans but investments, and it's not just a matter of semantics, but abrogation of risk and liabilities) - This one still stands for now. If this is also conceded, you could definitely shout, "Sell out!"
Tertiary - food stamp program (TBA)
Here is the actual proposal conclusions from Varoufakis at his website. You can decide in the coming weeks whether they've sold out (remember it was never their intention to leave the Euro, but reform it) or are being forced into the waiting arms of the Russians and the return of their Drachma. Personally, I think the latter is the much better choice for them in the long term and as a consequence better for the rest of us by initiating the great reset.
https://varoufakis.files.wordpress.com/2013/07/a-modest-proposal-for-res...
"remember it was never their intention to leave the Euro, but reform it "
correct, but his "reform" intent is Neo-Keynesian: to allow budget deficits. meanwhile, the EUR treaties are about balanced budgets
It was always going to be about stick and carrot. Greece does not want to leave the EU or EZ. This crap will go on till 28th Feb.
Rethink and do it our way and you and your family will live.
He got a call from an economic hitman.
A couple days ago someone predicted that few moments behind closed doors would make everything ok again..
I am sure the slideshow provided by the NSA was a large part of the persuasive rhetoric. There are no perfect people and with the surveillance state no one can make hard choices if it hurts the elites.
And the 180 turn is almost complete. Now to come up with a different name for the Troika, like Supervisory Committee or even better Commissariat. Don't want to upset them lefties you know.
I got some hate from ZH when they won this election. I stated on this website that pulling for another socialist party does not sit well with me. Now the true colors are showing. Look this whole world is evil. You know how we change evil...we fucking die. Then we have our peace. Until then we deal with it. Thats why we are at ZH, a place for us to vent the idiocy of the world.
I don't think the fact that tsipras is socialist has anything to do with it. Left or right doesn't really matter at this point, it's all past sins and corruption.
You think there are no idiots here? Look at how many people here are supporting Syriza thinking it is some form of solution. With their economy minister connected to the George Soros foundation. We have more than plenty of idiots here.
We have our fair share of idiots and it seems a large portion have recently flooded the comment section. Lots of newbies but there is potential in the group. Just have to weed out the CIA and Mossad cock suckers.
Amen.
"Lots of newbies" says it all.
Knucks, got to keep them in check haha.
"Thats why we are at ZH, a place for us to vent the idiocy of the world"
True, but it would be a great pity if that's the only purpose of ZH.
Today Armstrong commented:
"The danger we face is that those with experience on trading desks of fixed income and FX, see what I see, but cannot speak out. When you work for an institution, you cannot speak for whatever you say will be attributed to your employer... I get a lot of emails from people in the business. They often take the theme that was great – I wish I could say that...Hopefully, when the crash comes, for once, lets call in people with experience. Not the heads of banks. Call the traders on the front line. They get to see the capital flows live. Political correctness will cost us our future and hide the truth about what is unfolding."
http://armstrongeconomics.com/2015/02/02/danger-of-politically-correct-a...
I like his comment about solving the issue at hand after a crash. IMO, if any of us say we are traders after the crash, a lot of us will get the rope just like bankers. You can not expect an American to understand a trader from a banker. Hell, there was an article yesterday of the silly little monkeys trying to figure out roman numerals of the super bowl. Google just proved exactly why not to give a shit. Our only shot to ending this debacle is death or hopefully one these powerful men has an ego so big he fucks it all up on pride alone.
Rebrand yourselves. Refer to your species by honest terms like "Gambler" and "Hustler" and maybe you will be spared.
I fit the criteria of those terms. The one thing about my type of species. Its a very lonely world as a profession and knowing how it all works is even more depressing. This is where I vent. Joe Sixpack has no fucking idea.
Gauleitung?
Right, like anyone wants an investment linked to bullshit GDP numbers.
An act of 'make-it-up' as you go along desperation!
Just pull out!
not even close yet, I promise
we aint payin!
The Greek people are only on the hook because they've been bamboozled into it - same goes everywhere.
Odious Debt.
In international law, odious debt, also known as illegitimate debt, is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion.
Not that there is any international law, really, only the law of force.
Yeah, new boss same as the old boss. Same as it ever was.
Who, no I mean WHO could have seen that coming!? ;-)
What aboot giving the Germans a couple of Greek islands worth 315 billion Euros. Then all is even. Then tax the shit out of the German owned islands.
Sorry, there is no way out of this mess.
Looks like the Death Star isn't destroyed yet.
Darth Draghi - Captain Varoufakis, I am your father.
Monkey and Suit rings a bell!
Not really. It's just a tactic move.
Or, they could swap you into new bonds that pay in a different currency other than the Euro. Perhaps they could call this currency the Drachma, and then they could print that new currency to pay off their debt and actually take their medicine one way or another. That might enforce the structural change that their economy needs to be self-sustaining.
Plan C:
... the system shows signs of panic, which means that the European officials don't know exactly how SYRIZA will react. In case that SYRIZA has a secret agenda, and be pressed by the lenders beyond red lines, it could nationalize the central bank and return to the national currency, blowing up eurozone.
It seems just about every country is in debt up to it's ears.
The important questions are:
1. How did all this 'money' come into existence.
2.To whom is all this (fictional) money owed?
So the 100,000 march in Madrid, Spain was a fantasy to be ignored by Central Bankers ?
Podemos is a bunch of idiots from a country that produced nothing of significance the last 500 years. Idiots aside there was nobody there!
Can, meet Foot.
Foot, meet Can.
Free Bubble Up for everyone.
I believe they have already met, under similar circumstances.
We must be getting towards the point where the toe cap wears out, I would have thought.
actually, Mr. V has presented the EU with a giant
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very funny that Mr. V
;-)
https://www.youtube.com/watch?v=svzPm8lT36o
Typewriter Artist
https://www.youtube.com/watch?v=99D2BuA5EyI
Patience ;-)
by the way, Typewriter Artist rocks!
can't do that because either Mr. V's hands are deeply in his pockets or reaching out for MOAR before going deeply into your pockets
note to junkers,
when i say "the EU", i refer to the institutional frameworks and governance structures thereof, not the people of the EU.
It will be hard for Greece to bake this cake unless they are willing to break some eggs.
At some point any real solution for a major problem is going to mean someone will feel a big dose of pain.
Leadership is about convincing people that some pain now will bring better times in the future.
I am not just talking about your average Greek being hurt - but every party that has a stake in this clusterfuckassrapeabortion.
Looks like the Troika has bought off another Greek FinMin
Communist comes to power making promises he had no intention of keeping. The anti-aristocrat turns out to be another aristocrat. There's a pattern emerging here.
"The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which."
Same as it ever was...
So more borrowing off Peter to pay Paul. Or should it be borrowing off Peter to pay Peter. Squid Logic...
"some of the worlds leading economists....."
(like Krugman?)
Perpetual bonds against a debt that will never be repaid (the ultimate in can kicking).
Why not quit the fucking charade and just declare BK?
ecb will not agree, it's beyond their kind of reality, and V knows that, so it's simply escalation. ecb can be kind of flexible, but not like this. it's like watching james dean driving the car toward the cliff. good job. ESCALATE!
logical conclusion is agreeing to start the game over on equal footing again.
no EU citizen or inhabitant left behind.
greece will go tits up only if their banks collapse. ecb holds the plug and for a long time they've been threatening to unplug it in similar situations. syriza is the first to make a stand here: ok, unplug it with all the consequences. just watch their banks, those are the only charts that matter now.