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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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greek bank management is ripe for change.
true, one week since syriza took the charge and so far they've done everything according to their public manifesto. must be awful.
de facto euro bondage and debt stretching under interest rates which are not dictated by the money market...Obama approves.
Perpetual bonds, So that's how to enslave a nation.
So what exactly does this mean?
It does mean that with the arrival of investment bank Lazard we are back to bullshit-bingo
Sadly, I think we have regressed farther back than bullshit bingo...
http://yanisvaroufakis.eu/euro-crisis/modest-proposal/4-the-modest-propo...
If Greece is selling you bonds, trust me; ITS WRITTEN OFF!
What is the interest rate on the debt?
Beware of Greeks bearing gifts ...................to themselves!
greece should declare default and tell ECB to kiss their asses goodbye
so what exactly transpired? what does it mean? is it just another kick the can scenario?
But But.... The new greek government doesn't wear suits. They are just like you and me. Plebes?!?!
So what now? What color leather jacket does my master wear?
LOL someone showed him the Zapruder film, slow mo.
https://www.youtube.com/watch?v=B8IvKx0c19w
Bill Hicks Puppet Show - "The Elite"You mean the version that was filmed from an angle nobody's seen before, the one that looks suspiciously like it was shot from the grassy knoll? The one they show all new presidents when they're sworn in? Bill Hicks discussed that notion at length.
"....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."
Oh, so it's all semantic.....
If this report is accurate, then this is just more "extend and pretend" the Vanofakis decried was unacceptable over the weekend. Once again, fantasy prevails over reality.
Leave the fucking euro already.
I call kabuki theatre. This is the 50% haircut presented in a face-saving manner for all parties.
Meanwhile oil's not coming back barring WWIII.
We're all greek now.
Here is an idea: let those greeks solve their problems their selves! Without help of EU, ECB, Germany, etc.
Time to grow up!
Good luck!
You do know that all these loans are being diverted directly to the big banks, specifically the German bank Deutsche Bank, right? Greece gets very little of this money.
I get the feeling you really have no understanding what is actually going on. There is massive socialization happening, but not how you think.
It seems we all have some growing up to do.
Yeah, well the German pension funds and insurance companies are big stake holders in German banks so quite frankly as a German citizen I don't give a fuck what you think is going on. I don't even care that the money was stolen from the Greek oligarchs. In the end, Germans will be on the hook again. When Greece defaults and Germans are losing their pensions, you can just imagine how that lead Hindenburg is going to float in the sky.
So stop your bitching. Your tax dollars then are being used to bailout your pensions and insurance policies. Why did you folks need to grind the Greek citizenry into the ground in the process?
Pension? Oh wow, you really think you're getting a pension? Unless you're a bankster, NOBODY in the West is getting a pension. Those days are over. Our masters have better uses for their money than paying pensions to elderly proles overdue for a visit to the euthanasia clinic.
Eventually German pension plans will stop paying out too. What backs German government bonds? The taxes paid by Germans. Guess what? They're running out of German taxpayers. Turks don't pay taxes. They cash benefit cheques and have more Turks.
Eventually the bonds will be defaulted on, your pension will stop coming or won't buy the price of a cup of coffee, and if you don't have a rich son or daughter abroad who can take you in or send you money for groceries or medicine, you'll be in as much trouble as the Greek pensioners who kill themselves every day.
Go on, though, please, feel superior to the lazy Greeks you read about in Bild. Tell yourself it can't happen in Germany. Just don't say you weren't warned when it does.
Greeks voted in goverment that took that loan. Where is the problem?
They are trying to be like the bankers in 2008, but only bankers get unconditional bailouts.
When will bankers grow up and submit themselves to market discipline without their TBTF security blanket.
So you're fine with a default? or you want them to stay and pretend they can pay? which one Freedom? because you seem to not know where you actually stand on anything other than accepting the spoon fed crap out of the mouths of thieves.
Do I smell the strange odour of Credit Default Swaps looming in the background?
Shhhhhhhh!
No. Never.
Not ever.
Are you crazy? It was just a passing fart. Everything is fine.
Osborne's bidding has done the trick.
Bullish for Berlin real estate.
"I'll have a family-sized portion of hot Greek fudge and 22 spoons please."
Their learning quick. all politicians have to know how to let their opponents save face.
default but change the language...why not.
It looks like the investment bank came to the rescue and opend it's suitcase full of pink clothes, make-up and lipstick to "dress the pig". Merkel will watch with horror when the pig will approach her....... The greek government seems to have already scrapped their mantra: "The debt pile is so huge, it can never never never be repaid"
"Perpetual Bonds"
No sovereign plans to ever pay off their old debts.
The trick is finding a way to make your new debts old.
Syriza is just like any other political party...tell the voters what they want to hear to get elected, and then fleece them some more. Works every time!
http://www.economist.com/news/leaders/21641200-syrizas-win-could-lead-gr...
"Back on your knees, bitchez."
Someone had a messenger drop by and the package had a fish wrapped in newspaper.
Everyone in the Mediterranean knows what that means and it's not a suggestion you might want to increase your intake of Omega 3 fatty acids.
No socialist paradise for you, Greece.
Let us swap some paper. It will work out better that way, we promise.
They might need to be reminded Venezuela just ran out of toilet paper!
It's not a bond if it never matures.
A ““debt write off”… is a non-starter as it impairs the ECB’s balance sheet”
Well, of course it impairs the ECB’s balance sheet.
So, what does changing terms of such debt do to the balance sheets of Greek taxpayers?
That’s right: such re-negotiation “impairs” their balance sheets.
If we look at this situation in full context, there are probably few, if any, Greek taxpayers who consented to such debt in the first place. Before anyone can be obligated to pay such debt, he must first consent to the contract. There is no other way according to natural, constitutional or statutory laws.
At least that’s the assumption (not necessarily the fact) in America.
Greeks have the same rights Americans have (or had). The only difference is that Americans declared and won such rights with their Revolution (temporally).
What we are witnessing in Greece (and next Spain) is prelude to what will play out in this country: ‘How do we respond to demands that we pay a debt imposed without our consent?’
The absence of consent regarding taxes, debt and regulations was a major complaint that provoked our Revolution. It is, in other words, no small matter.
Americans have forgotten this, or never learned it; they also do not know they have the same rights and powers American Founders had.
Actually, changing the debt terms changes the debts' value (presumably lower, else why do it), and thereby damages the ECB balance sheet similarly to a write-down. Whether the ECB chooses the recognize the value impairment from terms changes is another story, but one that's largely irrelvant. The markets will price the debt accordingly once the terms change (if they do), and the ECB will then see its balance sheet impaired recognized or not.
No matter how they slice it, Greek debt is worth less (2 words) b/c there's simply too much of it. Looks like the ECB going to be the bag holder here unless they can use this interval to unload their Greek debt holdings onto some other patsy. Good luck w/that one.
(BTW, agree w/comments about consent...)
Big difference.
The Colonists had no representation in British Parliament as opposed to Americans who voted for the Congress there ,as their proxy, that signed away their money to banksters, so they are legally responsible for the debt.
That's why you have to watch those cocksuckers and be on them every minute, but nobody does, so here we are.
I'd say it's high time (too late?) to adopt a provision of the Virginia Plan and institute recall elections for Federal level office holders.
Aw, screw it. How bout those Patriots, huh?
What makes you think you, or I, have representatives in Congress, or state legislatures?
A more fundamental question is, “What is the act that establishes, or not, such representation?”
Was it the act of your birth? Then what happened to the American ideal that all people are born free… not to mention the right of consent? Consent, you see, is the basis of all valid contracts… even those that benefit bankers.
Again, what establishes that representation? I maintain that it is the consent of each individual. This means that if I say I have no representatives in Congress, there is the end or your “representation”.
Of course, to declare is one thing; to make it effective is quite another. And to solve this problem requires a large number of people to finally realize they have the same right as I; and that we must combine our efforts with others of like minds in order to protect our rights and property. In other words, we must establish First-Amendment assemblies. Americans forget, or never learned, that assemblies were the engine of the American Revolution: from town meetings, to county and state meetings, and finally to Continental Congresses. In these assemblies, private men exercised their sovereignty (raised money, troops, supplies; they acted as supreme courts, sent ambassadors to foreign nations et cetera)… and Americans today have no knowledge of this power they have.
My article, ‘Pawn or Fool?’ addresses your problem regarding representation, and your liability to pay debt for which you never had a chance to give your consent.
Just another Greek Tragedy. How many times do suckers fall for "hope and change" before they learn. This is still all just about arguing over a payment plan with the credit card company.
"...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."
And there you have it. The outcome will be an assignment of a new set of names. The grand speeches given by Tsipras pre-election will go down as nothing more than grand speeches. The Greek people need to get used to austerity and to shedding their excessive unaffordable lifestyles.
I do not believe at all that Yanis Varoufakis and the Greek government have any slightest intention of capitulating or 'giving in' or any 'continuation' of any substantional aspects of the machinations of the current delusional process. Some in the media tried their utmost to find or indeed create intent by Varoufakis to use leverage and threats to achieve relief. He was intense about taking any such media to task and was steadfastly adamamant that this was not their intent at all. But he also made crystal clear repeatedly that Greece would steadfastly pursue bilateral 'deliberations' to reach a resolution that would allow Greece to, in reality (rather than pretense), progress to restoring Greece to a functioning economy. He has visibly eschewed talking to any EU adminstrative bodies AND so far the Troika. Instead he has met with representatives of individual countries in the EU. And Tsipras has directly addressed the populace of, e.g. Germany, to put Greece's case directly to the people. Varoufakis has explicitly pointed out that the 'Troika' has at least two layers of function - one the policy level and another a bureaucratic level that are trying to 'govern' or force Greece to acquiesce to their toxic notions of 'fixing', which are dead-obviously destructive and devolutionary rather than providing any slightest progress for recovery.
Everyone on this forum should be completely aware that it is absolutely impossible to ever recover from a 175% debt-to-GDP level. Even half of that would be an extremely difficult and arduous and painful and LONG process.
My sense is that this political group is as knowledgable in terms of economic reality as any (extremely rare breed) sane economist. Which, of course, means that they are unique at this point in the Western hemisphere where every (we know of a very few exceptions of small countries) country is now in the grips of insane politicians who operate on assumptions and 'policy' that are delusionally destructive - accompanied by 'establishment' economists who are as delusional or even more radically and destructively delusional, if that is possible.
My sense is that this Greek political group has, indeed, viable options to set Greece on a recovery course - even if they have to do so with unilateral actions and on-their-own autonomy. My sense is that this group will be unswerving and even implacable in deliberate and steadfast progression.
One could anticipate that the entire EU bureaucracy has such an incredibly intense sense of entitlement that they will never compromise - and that Greece will ultimately be forced to whatever extreme of separation necessary to control their own destiny. ...... Is the EU bureacucracy so far gone into autocracy that they will pursue warmongering to try to control Greece ??? ....... What a dismaying and toxically corrupt age we live in.
Brussels is all that and more.
It seems you left out the part where Greece plans to roll back reforms that will cost a lot of Euros they do not have. Yanis Varoufakis has yet to explain how he plans to square that very round circle without taking more money.
Those Euros to stuff in paychecks and pension envelopes have to come from somewhere.
There's a strong whiff of bullshit emanating from from the new Greek govt. Who will be the recipient of that maloderous package remains to be seen.
German taxpayers, that's who.
Because everyone can just walk all over them. Been done several times over.
Here's what will happen. Instead of paying their debt, the Greeks will export their corruption and lack of tax collection to Germany.
Germans will bust up the social contract and perform GERXIT, just that Germans will stop paying into the EU and start living like Greeks.
Well, the Germans have been exporting their inflation to Greece, spain, Italy, Portugal, and France for the last 7 years via an undervalued Euro, so that seems only fair.
In the distance, I hear a can being kicked.
i forgot to remember
something i never should have forgot.
be careful what you desire,
for it becomes all that you are.
Debt is debt, it is either paid, or should I say serviced, or it is not. All the swaps and engineered attempts to alter reality will fail. I get it now, Greece is looking for a more sophisticated "extend and pretend". That is going nowhere!
jack - i usually agree with you on everything - but this time - i think it's germany looking for a way to extend, to figure out how they are going to cover the DB blowup. they know greece will default, they know france is behind them, because france wants to default also. everybody wants to default except the germanic countries. so merkel is trying to buy time to figure out how to minimize and varko went along with it, as a gentlemen should, because, it really doesn't matter if he defaults today or tomorrow, that's what's gonna happen. greece doesn't have the money, and never will. and they ain't handing over islands in exchange.
i am only hoping this is the case.
and behind that - we hope (for humanities sake) lloyd and jamie don't have a lot of exposure (negative) to greece, if they did, they would call cia and co. and have mercenary inc. into athens and start trouble.
but i suspect l & j were smarter, are very short greece, and our good friends and DB hold the other side of the trade.
let's hope the central bank of mars is ready to bail everybody out.
cause the money ain't there. never will be. and the leverage on bets is XXX times that.
They were talking big and bad, up to the point where they had a barrel pointed at them. Get in line little doggy!
Ooooo, yum, "perpetual bondssss. . ." Sounds great. I wonder if Greece can write a cr*pload of derivatives on them and get GS to market the stuff. Maybe even get other banks to buy them and get Uncle Sugar to guarantee them. What's a few hundred billion more to USA's balance sheet? Meh. Small potatoes.
UNTIL IMPORTANT PEOPLE START DYING, IN GREECE OR ELSEWHERE-----------it's a bunch of pansy ass bullshit.
people forget that you cannot just negotiate in the air, until blood has been spilt.
greeks just building a horse of bonds, to be delivered to brussels..a gift to the EU. There is joy and celibration tonight dancing around the horse of bonds....but wait.
So, no Grexit? Seems they quit playing Russia against the EU now?
Apparently they have plenty of money - http://www.zerohedge.com/news/2015-02-02/wtf-headline-day-greek-judges-j...
That was quick! What, just over 1 week?
Greece:: Imports- Euro$48.86 bn. (2013)
:: Exports- Euro$27.57 bn. (2013) <WOW!!!>
Note1: ~38% of imports are 'crude petroleum oils' ~Euro$19 bn. that Russia could reduce by 15-25% if certain Greek ports (Piraeus Port Authority & the Port of Thessaloniki) were to become accessible.
Note2: Think Greek jewel of the Turkish 'Aegean Coast',... Smyria, coveted by Turkey and the Turk's own,`Antalya', the gateway to the Turkish Mediterranean. http://en.wikipedia.org/wiki/Antalya
http://en.wikipedia.org/wiki/Greek_Merchant_Navy (largest in the World!)
http://en.wikipedia.org/wiki/List_of_ports_in_Greece
http://greece.greekreporter.com/2014/11/02/turkey-provokes-greece-and-cyprus-over-aegean-sea-rights/
jmo
Ps. Just think if the Aegean was licensed for drilling with Russian know-how with royalties going to Cyprus, Greece and Turkey to pay down debt when reality (price discovery?) returns to the energy markets.
Ps2. This is why the British are nervous concerning Greece and the fallout of Turkey regarding Israel? http://en.wikipedia.org/wiki/Turkish_invasion_of_Cyprus#mediaviewer/File:Cy-map.png http://en.wikipedia.org/wiki/Smyrna
interesting
Russia maybe has link that can help them out of the hole.
And another politican sells out. I wonder how much he got.
he and his family got an insurance policy against self inflicted nailgun injuries.
hey! perpetual bonds was my idea for the entire debacle.
if the euro doesn't want to play then the ace in the whole is default. see how that impairs the eu balance sheet.
That didn't take long for the newly elected officials to sell out their citiznes! The populace was already 'unstable' there. I wonder how much longer things will remain somewhat civilized! Keep a close eye on Europe. Once they crash and burn we won't be far behind. Look how crappy our economy and dollar based assets have performed this year. And this is when everyone is fleeing from the Euro. Imagine when the foreign investors realize that the dollar and our economy sucks too!!
There is time to protect your wealth by buying gold and silver. Nobody knows exactly when the plug will be pulled. But when it does you will not have much time to get your ducks in a row. If you know someone who is little hesitant about getting into silver, giving them a candle with a silver coin is a great idea: https://www.etsy.com/shop/ScentSavers?ref=hdr_shop_menu People are excited to learn that a small silver coin is worth so much.
I've always said that when you hold real silver you realize the stuff we use today is not money and is worthless!
Maybe Greeks realize that no one creates wealth anymore. They are no exception. So why start over when they won't be able to get anywhere near the 2007 lifestyle ever again?
Central policy makers: We didn't create that Greece debt.
Obama, We didn't built it.
So, the modern Oracle of Delphi now resides in Brussles?
Maybe in Brussels - but Brussles? I doubt it.
As I predicted, you know why?
Because STARVATION was the other option
Money god and thunder rod.
Soros, banksters, and politicians.
Need one know any moat?
Just how long can this shitshow keep up and what is happening in the Ukraine.
The NAU?
What's next in the promenade of false flagology?
Where are the bushs and what is isreal doing now?
Peace! Not just a concept.
Maybe the Greeks consulted with Slick Willy Clinton; "it all depends on what the word 'is' is." Semantics and language having been lost and bastardized with the coronation of Emperor Goebbels long ago, the fact remains anybody with one brain cell is an idiot for "loaning" Mr. Panos one fucking Euro. It's gone; they're fucking broke; you ain't ever seeing the money; get over it.
www.traderzoo.mobi
I don't know, I kinda like the idea of "perpetual bondage" er bonds...
These guys are clever. They will "attempt" all sorts of mechanisms that "sound plausible" but just barely "won't quite fly". After a few of those, at least "regular folks" will understand when they throw up their hands and...
DEFAULT 100% DEFAULT
Which is the right thing to do, after all.
It was only fiat, after all... from nothing to nothing.
Then mint a huge pile of 1 gram pure gold "drachmarks" and show the world how to flourish. Throw off the authoritarians.
Sorry, momentary daydream.
I just realized the problem with someone using gold currency. With the world wide distribution of gold trading companies making a profit on the spread of the bid and ask, everyone would quickly buy up and hold any gold currency that was issued as a hedge/insurance against fiat. It would probbly take a trillion dollar amount for this not to happen. Nice idea. Don't hold your breath.
Journalists, ZH included, are remarkably keen to put words in Varoufakis' mouth or put him in the ring. It's like watching a bunch of school kids form a circle, push some geek into the middle against the schoolyard bully and chant "FIGHT! FIGHT! FIGHT!"
Jesus-H-Christ, the dudes are probably still trying to get the wifi working. Calm your tits and check back in 6 months before calling "sellout".
+1 Mediocritas, not long ago it was customary to give 100 days of "benefit of the doubt" to any new team, executive or government
Who care about Greece? Last time I checked, they stopped being relevant a few thousand years ago.
Actually, The Byzantine Greeks did a good job protecting Europe until 1453 from both Turks and Arabs. They never allowed Jews to be educators or adminisrative officials, but protected them.
They are all just dumb ignorant sheeple. The 0.01% as well as the 99.99%.
Since Stonage - nothing changed.
As the NSA already has them on their balls.
Fuck Europe.
Fuck NSA.
DOW to 30000 and all is well in Neandertal men's world.
You say nothing has changed since the stone age, then deride the Neanderthals? Those were probably better times in many ways.
Intellectually bankrupt 'leadership' just like the Greek Proles who actually believed in the same ole ole just more of it campaign promises.
What bullshit.
Tsipras:
Please tell me you're not losing your nerve man.
It is so obvious to anyone with an IQ over 10 that this party does not know what they are doing or what they want.
No I think what's clear is the threats from outside are starting to have an effect. As in "we'll Ukraine your ass if you don't comply"
DER SPIEGEL reports that Greece is FUBAR and not even a complete writedown of debt will change anything.
Default is an option but it won't change the fact that Greece is de facto BK.
Troika, no Troika it doesn't matter!
Maybe they're reporting this to soothen the effects of the looming default onto the German taxpayer?
Cornholia is coming to Germany!
MY GOD MAN : THIS IS PAY AS YOU GO SOVEREIGN DEBT BONDS
Very Much like the Neg Am Arms - with the 4 choices
If this flys - this is a Resounding Bell WW III has officially started because Greece knows they will never pay and will
be making the minimum payments....then when the War fireworks begin and Greece has to take sides - they wont be paying the EU.....
Buy as much stacking metals as possible - this is the Ringling Brothers of Ponzi Schemes...
So will they puss out on new sanctions Vs Russia too?
Who farted?....
Looks like these cowards are going to fold-em. I must say that I mis-read this one. I thought....finally there is a Nation that is going to stand up for their people! I guess the newly elected all met at the local pub for beers and realized just how much they could fleece their citizens for in a relatively short period of time.
This could very easily be a financial Trojan Horse......using a Good Greek Bad Greek technique
If Greece got a 100% write off, would they not still have an annual deficit?
Is it not true that you or a country have to have a positive, or at least neutral, cashflow otherwise you or the country end up in debt again?
In other words, writing off the current debt does not fix anything if the entity is drowning in future liabilities.
As a matter of fact, without interest payments on the debt, the government of Greece is actually runniing a surplus. The new government wants to reduce those interest payments and use the cash for their own people.
Sorry Lads and Lasses. But I warned some days ago.
Baroufakis (Paraphrasing his name to mean he is talking shit) as the Greeks in the know call him, is the favourite boy of the TPTB in Greece.
He was a close associate of the so-called Left Wing, Papandreou Family and Kyriakos Mitsotakis (son of Former Prime Minister Konstandinos Mitsotakis) of the Right Wing. Therefore he cannot be accused of NOT having association with Both Wings of the Same Rotten Bird of Polics. IT IS JUST BUSINESS.
Tsipras was paraded through the Brookings Institute and in Texas to satisfy the Top Eschelon of the TPTB.
Just to be on the safe side Lazard Brothers was hired to do the Cooking of the books, as they have PRIOR KNOWLEDGE of the CRIME , with the PREVIOUS Administration PASOK.
Now if you think that USA is going to let Russia get a stranglehold of the Eastern Mediterranean without Armagedon you are very much mistaken.
Apparently they are prepared to put $35 Billion in the enterprise. They only put $5billion in Ukraine.
As long as the bond markets accept yields far below 2 % I think that it shouldn´t be too expensive to somehow cap the interest rate Greece pays at, let´s say, 2 %. And then no hair-cut would be necessary. That should enable Greece to reduce its national debt to about 100 % of GDP over a 20-year period.
In return for that Greece should accept minimum levels for the annual debt service and minimum levels for the tax-to-GDP ratio. It is not fair that countries in Northern Europe with higher tax-to-GDP ratios than Greece should subsidize Greece even more while Greece has a substantially lower tax-to-GDP ratio. Without EU subsidies from Northern Europe, the living standard in Greece would probably not have been higher than it is now even with a national debt to GDP ratio significantly below the 100 % mark. Greece annually gets more than a €5 billion net subsidy from other members of the EU. Greece has an economy which rather resembles Middle Eastern and North African economies than for instance the German economy. You can also compare the Greek economy to the Thai economy because of the great dependence on the tourism industry. Tourism usually depends on low wages. That makes it hard to raise the Greek GDP by other means than artificial methods like excessive borrowing or subsidies from other countries, which is exactly what has happened ever since Greece joined the EU. Greece has also benefited tremendously from the target 2-mechanism which means that Greece can run trade deficits perpetually. Without target 2 and net subsidies from the rest of the EU I guess that the Greek economy would be back where it was 30 years ago even with a debt-to-GDP ratio substantially below 100 %.
One problem is that people in Greece have been taught that they are entitled to a living standard similar to the Netherlands just because they are members of the EU. That´s the way the EU membership has been sold to the electorate in Southern and Eastern Europe. And the means to accomplish that should, according to EU-leaders, be subsidies from other EU members, not to derive advantages from a nice climate combined with a modern European infrastructure, sufficiently attractive business legislation and a bureaucracy that works. I think that Southern Spain and Greece could have become attractive places for people to live and work, just like California. Many successful people from Northern Europe live in southern Spain after having an early retirement. My impression is that European talent and venture capital now prefers California to Europe, to some extent. I think that a Silicon Valley in Spain or Greece should have been better for Northern European tax payers than pumping up the living standard by artificial means in Southern Europe. At least if we are talking about subsidies on the scale which currently are the case. What the EU membership meant to Sweden was drastically cut pensions in order to be able to subsidize an increased living standard in Greece and Spain which had substantially lower tax-to GDP ratios. Thereby, leading EU politicians could get rock solid support for the EU in Southern Europe. In Sweden, support for the EU was secured by media brain wash and not telling people about the net contribution to the EU and the reason why pensions had to be cut so drastically in Sweden.
I think that a more sustainable solution than perpetual net contributions to southern Europe should have been a Silicon Valley in southern Spain and a big shipyard in Greece that could compete with the Hyundai shipyard in South Korea. If labour costs in Greece could be kept at the same level as for South Korea I think that should have been a feasible solution.
Which just goes to show, talk is cheap.
The Greek finance minister has a 60d sized forehead - maybe someone pointed this out to him.
If you by chance don't know what a 60d is Lowe's sells them for $.22 each - I don't know how many drachma that would be - maybe $75 million .
http://www.lowes.com/pd_69591-1278-60HGC550_0__?productId=3353684
Hope and change has arrived in Greece. Suckerrrrrrzzzzzzzzzz !!!!
Told you right away. This communist criminal scum or the conservatives or the socialists before them, all this cretins are a pleague.
Only Golden Dawn can save Greece and expell the Zionists once and for all from this historic land.
so much HATE!!!!
were you an extra in 1984's "2 minutes" scene?
i don't think the guy told tsparis he killed the troika. i think he told him the troika will kill him.
the greeks have lazard representing them. lazard will not be a party to destroying the system. lazard is the liaison for compromise. a wise choice for both sides if greece wants to stay in the system.
i think the germans would agree to a jubilee-lite plan if they are allowed to run greece.gov and collect the taxes.
Athens would burn without debt spending. It about did when Greece was threatening social program cuts. The new guy only threatened not paying the EU. It never changed the fact that Greece is broke but still wants what they can't afford. He never had any economic vision that would actually help Greece.
Let's call them OPAH bonds (outrageous pray and hope bonds)
Let's call them OPAH bonds (outrageous pray and hope bonds)
Seems to me that the NEW GREEK GOVERNMENT is using the New Language that the FED and Central Banks have Created. This said maybe the pen is mightyer that the Sword. Time will tell how the Government makes out keeping promises to the People and others in the EU. The system that is manipulated presently is only a guess on the outcome, proven to fail yet they continues to funnel moneies to the bankers and the elite who have prioity trading some based on insider information which continues to rape the general public. How Dare They.
remember this?
Vladimir Putin, quoting Oliver North's lawyer, Brendan Sullivan at the Iran-Contra hearings, indicating his sincere interest in preventing the Greeks from coming a cropper.
"Debt Exchange"
The Far Left using language to control the narrative of the Left. Now this is rich indeed.
Deficit = 15% of GDP
Greek voters are about as smart as American voters
When these guys were running for office they said they were going to roll back austerity.
Pay raises for everyone, more government jobs, restore pensions.
Did anyone ask?
Where will you get the money to pay for these things?
Well, where will they get the money to pay those unpayable debts?
Seems to me if they are gonna throw what little money they HAVE at something, it should be their own people before foreign bankers.
Think cash flow -
They have not paid anything in principal or interest on the loans - all they do is roll them over into a bigger loan and then borrow 15% of their GDP on top of that.
The debt is not causing them any pain - zero - not even a factor.
The foreign banks are not taking their cash they are giving them cash.
The loss of the ability to borrow means a 15% cut in spending (most likely even more as the reduced spending will slow economic activity)
Think of it like this -
You have no steady job - you have a $500K mortgage you have not paid a dime on in 5 years - you are living from a few odd jobs - plus using your credit card to buy food.
Your choice -
Have the bank write off the mortgage - you must leave the house - and no more credit card
You agree to a $750K mortgage (that you will make no payments on) and you keep the credit card with a larger credit limit.
What do you do?
Pack up your family and live on the street?
Sign the larger loan and keep your home & credit card?
Which of these two options has the greater level of austerity?
Do you understand the options Greece is facing better now?
But in your scenario, the bank can foreclose, and send police to throw me out of the house.
You aren't going to DO that with the entire nation of Greece, so it's a poor analogy.
The Greeks have options as a nation that an individual debtor does not.
Then why have they not just defaulted?
Their options are to
Keep running deficits - go deeper into debt
Live within their current revenue
What other options do YOU see?
Which option causes more pain for the Greek people?
curious
No one has ever heard a verbal Trojan Horse before.
Yanis Varoufakis is in the process of offering the EU deals which he knows will be refused.
So that when the Feburary 28 deadline rolls around and he makes a deal with Russia, nobody can say he didn't try.
He will do to the EU in Athens, what the EU did to Russia in Minsk.
It's as simple as that.
didn't you see this on zh earlier?
http://www.zerohedge.com/news/2015-02-02/greece-changes-strategy-no-long...
I have a feeling the Greek are about to learn the hard way that you don't get to be socialist unless you have a national balance sheet in the black, or a shitload of natural resources to barter.
Let me get this straight. They're going to swap their worthless debt for more worthless debt. What are they hoping to accomplish?
Told you! Soros at work. The System works perfectly.
"The first type [of new bond], indexed to nominal economic growth..."
Oh, that should be a great investment. Where can I get in line to buy a bunch of those?
Someone with a printer could "buy" them. And put it on their balance sheet too.
I have what I think is a different take, though I did not read all the comments.
That meeting he had with Osborne, I wonder who all was there?
I wonder if there is a "truth" they are not telling all of us. When the new FinMin sees it, he shits a brick. Then the issue becomes how to keep the financial system standing (my bet is it is teetering on collapse and it really is fucking scary, not just to those in power, but it would be disruptive of so called "civilized life") and save face and try to look like he is fulfilling his party's campaign promises.
Fellow Bitchez, I think it's that bad out there. They walked him through the collapse of western civilization. Once Spain decides to default too, then Italy, then....EU breaks up. But then what also happens? TBTF banks fail anyway because there is no story you can tell to prop it up once the dominoes start to fall. CDSs get triggered. Then the real fun begins. You think the Baltic Dry Index is lower than it has been in 29 years right now? That shit will grind to a halt, no one will trust any one with letters of credit to be paid on arrival.
I can go on and on.
And they may know even more than we at ZH know, about just how bad it will get. Could have freaked Varoufakis out, who then went and told Tsipras, "We done stepped in it, bad."
I think you hit the nail on the head. From my understanding there are about $70 trillion in derivatives associated with the Greek debt. A write off of any of the Greek debt would constitute a default triggering claims on those derivatives which would probably sink the biggest EU banks, which would likely create a domino effect around the world, collapsing the global financial system. If that is true, it shows how fragile the entire system is.
I am sure that Osborne pointed out that possibility to Varoufakis. I suspect that Varoufakis is a practical guy and formulated this new plan to get around the derivative issue. I agree that the new plan looks good on paper but it will not work. If Greece goes ahead and leaves the EU and returns to the drachma, the only solution to avoid worldwide collapse is to turn on the printing presses and pay off the debt with worthless drachmas.
The Central Banks are omnipotent, due to control of the supply of fiat currency, which allows them and their bought polititians to do as they please, and continue the status quo. The debt under discussion was created out of thin air. The CBs hold enormous amounts of debt securities (mortgage-backed securities, government bonds, etc.) where the principal can never be repaid with money actually earned through productive use of labor and materials. At some point in the future, all debts will have to be forgiven/written off. The financial-political system needs to be reset. A proper reset would involve the elimination of all CBs. Whatever the new system is, it must be formulated/developed without the involvement of the current group of banksters/oligarchs/politicians. The reset awaits the proper catalyst; the wait may be long.
"The financial-political system needs to be reset."
You may be right. But without any meaningful action taken to prevent governments from creating an identical debt mess again in the future, the political elites will just begin the whole process over.
The power of government to tax/borrow/print/spend as it sees fit has to be curtailed once and for all.
smacker, do you have any idea how "imperialist" your words sound?
why don't you begin with your government, instead of proposing something that includes all governments?
your gov, the UK's, could, following your logic... well, join this set of treaties: European_Fiscal_Compact. Is this what you are advocating?
Ghordius, I used the plural only because they're all at it. That is, spending is out of control. This applies especially to the socialists running European countries and the EC which has not had its annual accounts signed off by auditors for more than 8 years. Neil Pillock Kinnock was sent over to sort it out but he failed.
https://www.youtube.com/watch?v=NJ6xBaZ92uA
SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN SPAIN
Intuitively it looked from photo ops like Yanis was injected with an Archon infection in France. Or swallowed it, or somehow unprotected from a nasty vector.
It does seem like the Russian's and Chinese have a better balanced healthy personae. They are probably using some of the old time remedies the AMA made sure were supressed in the West.
Greece's first hurdle will be the elimination of Greek Hairdressers And Masseurs Can Retire At 50 With Full Pension Benefits because those jobs are "hazardous to their health."
Don't feel bad, Greeks.
Americans just gave a landslide victory to the Republicans. And the first order of business for them was to back-stab their voters and conspire against their interests.
He seems like a sharp dude. Maybe he has a trick up his sleeve.
Dave Hodges interviewed Joshua Coy about why the bankers are being killed in record numbers as the seeds of civil war are certainly being formed certain.
http://www.thecommonsenseshow.com/2015/02/02/finally-reason-bankers-killed/
How do you say New World Order bitchez.
Guess this means Greece isn't going to default eh?
When Syriza started blaming Germany for their problems, rather than the banksters who are responsible for the Greek tragedy it set off the alarms. If Syriza did not even understand what had happened how could they hope to fix it?. Now it is becoming clear that not only does Syriza not understand how Greece was screwed by the banksters but they do not have a plan to fix it. What they need to do is go after Goldman Sachs, get out of the Euro, cancel all their debt and start again with state issued money. Anyhing less and the Greek tragedy will not end.
They are not blaming the citizenry of Germany, rather the corrupt political and banking systems of Germany. The whole "Greek loans" were just a way to launder tax payer money in order to reanimate the rotting carcass of Deutsche Bank.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
The awkward moment when every political representative realises that beyond the posturing, they are ALL in thrall to the markets, the hedge funds, GS and the FT.
The Greeks are now looking to get the rich to pay their way.
The Laffer curve demonstrates the difficulties with this.
But .....
There are things the rich can't hide to avoid tax, i.e. land, property and assets
They need to return to older forms of taxation the rich can't avoid.
It is already decided. This will play out for a few weeks more and then Greece will jump, dump the €uro and pivot EAST to sanity. The Deutsche Bank is wobbling and when it collapses in a pile of excrement the entire €urodollah petroscrip IOU "economy" will implode from Washing town to the Brussels politburo.
Last chance for the neocohen slash bankster undead to get the Ukraine bonfire decoy burning higher and peddle their Jim Rickards's toilet paper BIS SDR'S before the Ponzi sewer on Wall St blows up the Potemkin Village of Merca itself.
Varoufakis folded like a cheap suit. Everyone had such High Hopes for this lad...
We'll see if Russia wants to enter the fray.