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"Someone Has A Problem"
Excerpted from the latest letter to clients by IceCap Asset Management
Someone has a problem
- When you owe someone $340, it is YOUR problem.
- When you owe someone $340 BILLION, it is THEIR problem.
As of today, Greeks everywhere – all 11 million of them, owe the rest of Europe $340 billion. Considering that over half of this debt was forced upon them by Germany and the IMF, and also considering that their economy is -25% less than it was 5 years ago, and not forgetting that Brussels controls all Greek tax rates, pensions and government spending, it’s very clear that the $340 billion is Europe’s problem.
And if this isn’t enough to worry Germany, one should also know that as of January 25, 2015 – there is a new sheriff in town, they are called Syriza and they were elected by the same 11 million Greeks with the mandate to change the terms of the $340 billion debt owed to Europe.
Ever since Greece revealed in 2009 that with help from Goldman Sachs, it had been fudging its wealth, taxes and debt numbers for over 10 years, Europe stepped in and called the shots. The reason for this fond concern for Greece wasn’t due to Germany’s fondness for sun, sand and ouzo, but rather it was due to Germany’s concern that if Greece defaulted on its debt, then German and European banks everywhere would tumble like a fig into the Aegean Sea.
Since then, the entire European charade of countless bailout funds, countless austerity decrees, and countless threats of economic doom have all been structured to keep the European banking system together. In its current state, Greece has debt that will never be repaid. It will literally take several generations to repay the loans forced upon them. And this is assuming the country can miraculously start running budget surpluses and then avoiding the temptation to spend the surpluses.
The situation between the Greeks and Brussels is fluid and is changing by the hour. While we fully expect Greece to leave the Eurozone, we have no idea when it will occur. In fact, we’re pretty sure Brussels, and not Greece, will blink and offer up some kind of debt extension. After all, at this point it is Europe that has everything to lose and not Greece. Europe’s fear is that if Greece leaves the Eurozone, the seal will have been broken and no one knows what the reaction will be in Italy, Spain, Portugal, Ireland and France. Bank runs are a real possibility, and so too will be the 1000s of protesters in the local squares – clearly not an ideal situation for politicians who want to be re-elected. In short it can get really messy, really quickly. And that’s just the short-term fear. The long-term fear is one where Greece leaves the Eurozone, suffers greatly for a year or two, but then suddenly returns to prosperity.
Either way, the gig is up. The most important point to understand about Europe is that any change that occurs is a result of the people standing up to the current status quo. The situation is extremely interesting. We’ve discussed it inside and out and suddenly financial markets are moving in the direction which we expected to occur. And should the debt crisis in Europe escalate further, we expect the investment world to be turned upside down. Those investments that are considered safe will be risky, and those that are considered risky will be safe.
What goes up can also come down
Whether unknowingly or not, the media and the investment industry has created an information gap wedging the 2008 debt crisis with today’s debt crisis. Chart 4 (next page) shows the difference in debt outstanding from 2008 compared to today. The Public Sector consists of government and tax payers, while the Private Sector is made up of individuals and companies.
Notice the enormous gap that has developed between the two groups over the last 6 years. This is the part that isn’t talked about by the big banks, fund companies and advisors with their clients. The debt crisis was never really resolved. Instead, governments decided to simply transfer the debt problem from the private sector to the public sector.
This is important as it is one of the key reasons for the current crisis.
As a result, capital markets were never allowed to reset. Instead, our governments and central banks have created a financial environment where traditional savers receive little to no interest on their cash deposits, and an economic environment whereby sophisticated investors are slowly withdrawing investment.
This combination is creating deflationary trends around the world, and it is causing the Velocity of Money to plummet. Ironically, this central-bank induced economic combination, is causing central banks and governments to do even more of the same. Insanity at its best.
At some point very soon, this financial-spin-top will lose a few riders and the key one to watch is the government bond sector. Chart 5 illustrates the size and difference between the bubbles in our all too recent past. And as they say in California – the next one will be a big one.
As the bubble in government bonds blows higher and higher, the following investment groups will become considerably risky:
- Government bonds
- Bank & insurance stocks
- Pension funds
- Target Date Mutual Funds
Practically every investor in the world has exposure to the bond market, as well as bank and insurance stocks. Some investors have little exposure while others have a lot of their eggs in this seemingly low-risk basket.
Much more in the full note below (link)
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Smells like German retreat as the Greek side insist that the problem can be solved mostly politically, not only financially.
"She is made of iron, sir. I assure you she can and will sink. The pumps buy you time only, nothing more."
You mean Maggie? She is dead.
Rust in peace.
EU loses. Greece loses. Global bankers win.
What half of you on here seem to forget, is that Greece would have never had this problem in the first place if they were not a gigantic entitlement state.
Aapl should buy Greece to build their I van..?..still have 450 billion to spare
34,000 Euros per citizen. No big deal. A couple years of fully employed income per person. Including the old and decrepit and the young and uneducated. What's the prob? /sarc off
well, if the Greeks start chopping people's heads off then obama will give them jobs.
voila! Economy saved.
pssst...hey...Greece...start with the bankster's heads first.
Let's ship them some nail guns.
Create a ‘gofundme’ account for Greece… to raise an Army.
When is the Euro scenario going to start playing out here in the US? Which states send more to the federal government than they get back? Are we going to then kick a state or 2 or 3 out of the union?
Well, how about Detroit for a start?
Are we here watching the early stages of planned economic meltdown before we get a single world currency?
Gold maybe. Kind of difficult to manilulate that.
I disagree, and I will use the same reasoning you have for your speculation: kind of difficult to manipulate gold.
No. The process is out of control as evidenced by the many bubbles.
This current EU shit show demonstrates how quickly nationalism becomes a factor when the economy is not going so well.
EU was a stupid idea from day one.
exactly. and why people were not up in arms at the mere mentioning of the euro makes me depressed.
Will we be supporting air strikes for moderate Greeks?
nah that would be asuming that they had the sense to fight in the first place.
I think the single currency window closed a little while ago...the EU was to be the shining model and, well....
While these are certainly macro themes, the even larger macro theme occurring is a wholesale crisis of legitimacy. And historically you're watching the standard feedback loop that exacerbates that crisis:
Power loses legitimacy as new info technologies exposes its corruption...
Power reacts with force and hubris rather than pragmatism and humility...
The loss of legitimacy exponentially grows until collapse.
Are we here watching the early stages of planned economic meltdown before we get a single world currency?
it sure seems odd doesn't it? BLAME GREECE!! 'if only they had just accepted more debt' or maybe 'if they only had paid their bills'
...... kind of like:
the dockworkers locked out but the blame is on them. When the recessionary figures start to be released because they cannot be hidden anymore we have our scapegoat: UNIONS! because everyone knows the market was soaring because the economy was so strong as the MSM, FED and gov't keep jawboning.
When the scapegoats start getting blasted over and over in the MSM, you know its close.
Even JC Collins over at philosophy of metrics is starting to think WWIII may happen first..
I still cannot believe xenophobic, exceptional American would go along with a world currency,
and the MIC certainly won't.One way or another, the MIC has to go as a prerequisite to that
outcome.
No plan survives first contact with the enemy.
Default.
Syriza is no sheriff, but a bunch of clowns, that will be not around for long. Regime change is under way already. Just whatch and have a good laugh.
That's why they need to quickly and decisively. They are done by March 1 if they have not exited.
One thing the US and EU excel at is illegitimate coups. I'm sure they are plotting one for Greece right now
Well, you won't give them any more free money. That's fine, and fully understandable.
Then they'll stop paying their debts back. Which is natural, since they'll have no Euros (they cannot print Euro).
Then, we'll all watch in delight the mushroom clouds forming in places where European banks used to be. I have this gut feeling that Douche Bank will make the biggest one...
As in "The Day After", there is that (short) delay between the sight of the mushroom cloud rising and the moment its shock wave hits, when everything is beautiful and quiet...
I believe they can print Euros.
They won't have the authority to do it, and ECB won't accept them...
Hasbara Alert! Hasbara Alert!
A Zionist Chosenite can't stand anyone saying "no" to them, so they go round chucking bile at a Democratically Elected Group.
Typical.
Go on banksters, keep throwing wood and gasoline on that pyre you are building for yourselves and everyone else.
" bugger me---Iceberg---- STRAIGHT AHEAD" !!!! -- some guy in some movie
https://www.youtube.com/watch?v=2TAX0bgWIps
Does anyone know if the math on Greece works if they are NOT servicing backbreaking debt that they could never pay back? The debt that required them to buy military equipment they could not afford in order to get it? That debt?
Those junk bonds at 5% were probably a bad idea . / not sarc
I am beginning to think earth will suffer a major meteor hit before any of the bubbles burst.
"Followed by meteor showers and tidal waves.
Followed by fault lines that cannot sit still.
Followed by millions of dumbfounded dip shits"
Allways loved that last line...
yeah...better learn to swim
Tool kicks ass!!!
What a ToolTM
Under Pressure-- David Bowie
Umm boom bah day
umm boom bah bay
umm bah boom bah bay day
Pressure, pushing down on me
Pressing down on you, no man asks for
Under Pressure
That burns a building down
Splits a family in two
Puts people on streets
Umm bah bah bay
Umm bah bah bay
Ea day da
Ea day da
That's okay!
It's the terror of knowing
What this world is about
Watching some good friends
Screaming let me out
Pray tomorrow takes me higher
Pressure on people
People on streets
Day day day
Umm... Buh da bah bah bah
O-kay!
Chippin' around
Kick my brains 'round the floor
These are the days
It never rains but it pours
Ea doe bay dup
Ea da doe bah bup
Ea doe bup
Bay lup
People on streets
Ea da dea da day
People on streets
Ea da dea da dea da dea da...
It's the terror of knowing
What this world is about
Watching some good friends
Screaming let me out
Pray tomorrow takes me higher-higher-high...
Pressure on people
People on streets
Turned away from it all
Like a blind man
Sat on the fence but it don't work
Keep coming up with love
But it's so slashed and torn
(Why, why, whhhhhyyyy??)
Love love love love
Insanity laughs under pressure we're cracking
Can't we give ourselves one more chance?
Why can't we give love that one more chance?
Why can't we give love give love give love?
Give love give love give love give love give love
Cause love's such an old fashioned word
And love dares you to care
For the people on the edge of the night
And love dares you to change our way
Of caring about ourselves
This is our last dance
This is ourselves under pressure
Under pressure
Ice Ice Baby
They were merged in my head when I posted that because of the post about the arctic weather.
No worries. 31,000 in debt per capita could be paid off in a few hours of working online for one of the spammers who posts here if the whole country pitched in.
From what I have read, those are all "From your own home".... so people out in the street can't chip in. May take a little longer.
A few hours? Less than 30 minues since I have this new job at www.worksevenbetter700.cum ;)
Listen, I don't know what those spammers are doing to earn that money, but I'm pretty sure I don't want to see millions of Greeks start doing it, whatever it is...
Greece should quarantine itself as far as "high finance" is concerned for a couple of years, and give itself a rest. Just work on being a great tourist destination for now, until they get back on their feet. Then they can reassess their situation, and see what kind of economy they can actually support with what they are earning.
There's no reason any Greek should be homeless, or starving, if they put all their GDP towards domestic expenditures. It means a much smaller economy, but so what? In a smaller economy, they CAN reduce pensions and other entitlements without the kind of pain they get trying to do so in an artificially bloated one.
Cutting a pension in half can work quite well if the overall economy reduces to where the people can actually support themselves on it. And if you can demonstrate this to people, most would be willing to give it a shot.
It's the fear of having to use that reduced pension in the oversized economy that scares folks, and with very good reason.
I live in the US, and will (supposedly) collect SS in a few years, SS I have paid into for decades. But I'll tell you all here, I'd give it up, all of it, AND accept a 75% reduction in my home's value, IF this economy deflated to something resembling a normal economy. If it DID that, I could easily manage without needing any 'entitlements', or any artificially-inflated asset prices.
Trouble is, TPTB only want to downsize on one side, not the other. They want folks like ME to rein in our expectations, but refuse to rein in their own by letting the market decide what shit is worth.
Just like the Germans want the Greeks to live austere, but refuse to accept that the loans they made are NOT worth what they want them to be worth.
Take money creation away from banks and give it back to the people and all this shit will go away.
Oh bullshit. Nothing was forced on them. They scammed their way into the Euro union so they could borrow more money easier. They borrowed it and spent it, and now that it is time to pay it back, all of a sudden they are the ones being cheated.
Everyone knows they aren't going to pay any of it back. The only question is does the whole scam blow up today, or will Germany lend them even more money they will never pay back?
PS The leftists want to borrow and spend, the right wants fiscal independence. As long as the free money was flowing they were leftists, now it is time to pay it back they are on the far right. What a crock.
Don't loan money to folks you know can't pay it back.
This is like subprime. You fix up how the borrower's books look, give them a loan, then pass it on into the market place as if it is a performing financial product. EU and mortgages, same formula.
Goldman Sachs cooked their books, got them the loans and membership into the EU, and shorted them ALL AT THE SAME TIME. GS profits coming and going.
Nothing will get better until formal or informal prosecutions take place...Bitchez...or should I say Muppetz...
Goldman Sachs Western Civilization.
...and rapes, pillages and plunders us, too...
Lending to countries is the biggest banking scam in history. Countries don't flee, rarely disappear into the night with all their belongings, countries are easy to control by allowing its leaders to skim off the loans, countries don't need tangible assets as collateral when the land and the people on it is collateral.
From 1998 to 2009, Goldman Sachs pumped Greece with untenable loans and more by making false reports to the EU.
"In one deal, Goldman channelled $1bn of funding to the Greek government in 2002 in a transaction called a cross-currency swap. On the other side of the deal, working in the National Bank of Greece, was Petros Christodoulou, who had begun his career at Goldman, and who has been promoted now to head the office managing government Greek debt." - Source The Independent
If that wasn't enough, in 2011, an unelected Goldman Sach alumni, Lucas Papademos, was installed as Prime Minister of Greece and became instrumental in the austerity/debt program that followed in 2012 that added even more.
If that isn't forcing the Greek people into beggardom, then I don't know what is. It isn't a fucking coincidence that Mario Draghi, the head of the European Central Bank is a former managing director of Goldman Sachs International.
if i borrow a little bit of money and don't pay, i'm fucked
if i borrow a lot of money and don't pay, you're fucked.
-Donald Trump
there, fixed it for ya.
Technology is great. It's made corruption more corruptible.
He who controls the (gold) USB drive is the king of X's and 0's.
Yes, a big problem, due to ass impalement comming. BBC: says it, see min. 5:20
The Super-Rich and Us BBC Documentary 2015http://youtu.be/8Xa8b9bm45M
Youtube is mis-spelled. Thats why I didn't click on your link...
People miss the point which is stated in this article that Greece with the help of Goldman manipulated the books to make their financials look great even though they sucked. Let me sum up. During the global boom, Greek finances SUCKED to the point where they wouldn't have been allowed into the EU. Goldman helped manipulate the Greek numbers during the boom time and Greece still needed a waiver to get into the EU. Let me sum up again. Greece NEVER EVER had the proper finances. This time is different???
The Reinstag has the largest Greek exposure. Somewhere between 45-60 billion euros..
France and Spain are chomping at the bit over a Greek <> Troika forbearance deal.
The EU is locked in a dark room with 4' midgets wielding axes.
I forgot to mention Italy. France and Italy are bankrupt!
So if Goldman was complicit, they should pay half.
$340 Billion.
That's $31,000 for every Greek man, woman, and child.
Compares nicely with the US per capita debt. Maybe that is the plan -- to bring in lots of illegals and 'reduce' the per capita debt by increasing the population!
they arent that smart
That certainly puts the $56,000 for every US man, woman, and child into perspective, doesn't it? (And that's just official on-the-books US Debt, not unfunded obligations.)
If you’re an American, your share of U.S. Government debt is higher than that, and the vast majority can’t pay theirs off either.
Full disclosure, I’m already planning to default on my share.
I traced mine all the way to a tile in the lobby of the Goldman Sacks lobby.
Maybe someone shouldn't lend 340 Billion to begin with....
Maybe someone shouldn't [print 340b out of thin air] to begin with then get all upset when they can't profit from interest payments for not doing a fucking thing.
Maybe they need to go back to making ACTUAL bagels instead of digital ones.
Great long term thinkers... http://ow.ly/JlGOE ...but they have dropped the ball!
The verbal sparring between Greece and Germany is interesting. I thought the negotiations were between Greece and the EU/ECB/IMF. Certainly Germany would agree to whatever the Troika would approve???
European aparatchiks have a serious problem because whilst Samaras was working for the banksters benefit and to the detriment of the Greek people, Tsipras and Varoufakis are working only for the Greek people.
Merkel hasn't been working for the German people either because she's shifted the banksters debts onto German taxpayers.
When the German population finds out, as they surely will when Greece defaults, Merkel and her minions will be toast.
Maybe I'm wrong but pretty sure that EU was aware of the Goldman facilitated Greek Debt Swap. This was done to get the deficit under 3% GDP and EU was fine with it. The EU didn't just believe that the Greek stats miraculously improved.
It can get really messy, really quickly. I been hearing it for last 16 years when world was about to collapses in 1998 russia, 2000 millenium, 2008 crisis or 2012 end of calendar, 2013 Korea or 2014 ukraine "nuclear war scare tactic". Actually world since like forever was about to collapse, 1962 Cuba, 1971 Bretton Woods. World didn't end it is still turning, and sun still sets up everyday. Also every few months some prophet predicts end of world trying to earn some cash. It was always messy, and bloody and since forever lots of ppl were killed and will always be the same. Still current problems seems extremaly pathetic comparing to 1918 flu pandemic 100mln ppl dead 1/3 of population ill. Black death in 1350 killed 25% of all ppl alive. Think about it, something kills 1.500.000.000 ppl. Punny economic collapse, nuclear wars, laughable, totally irrelevant.
an economic collapse could actually kill a few billion people and you flippantly compare that to a rat disease 800 years ago?
Personally, I am in no hurry to see that shit show...but no doubt we are in peak debt and there's no way out of it short of solent green. The balloon will be deflated at some point and 99.9 percent of the world has not one fucking clue.
Germany wants Greece to go.
Greece wants Germany to go.
The only people who have any stake in perpetuating Greek debt slavery are the rotten-to-the-core Anglo-Zionist banking Axis!
You mean the one that started fermanting before 791 A.D.?
http://ow.ly/JlGOE
OXI!
Its amazing how it got to 340 million....who was the idiot who passed the 100 millin mark..I wonder if he thought that was a good deal or not...I am sure a hefty commission was paid for it though...
All in US dollars: Debt per capita source Bloomberg 2014
Greece $38,000
USA $59,000
Japan $100,000
It would appear a small group of creditors have a problem, and this whole idea that one can owe money to ones self is insane.
That's what you get when currency is issued as debt. And as Commander Montgomery Scott said, "the more you add to the plumbing, the easier it is to stop up the drain".
$340 billion? what do they mean by "$"?
When you print $340 billion, and loan it out, you have created a problem for the millions you stole it from, and a problem in keeping your head when those millions find out.
The banksters need to repay us.
I'm telling!
Sounds sensible to me!
So, we're either waiting for a Black Swan, or a White Whale.
Look! Thaaaar she blows!
Should I paint my guillotine "black" or "white?"
The banksters need to repay us.
I know a nice Greek island for Germany and the IMF and it's called Icaria ;) http://en.wikipedia.org/wiki/Icaria
so, who thinks that Spain will pay the whole Government debt? How late or soon is never?...
http://www.gurusblog.com/archives/deuda-publica-espana-2014/17/02/2015/
It is the western society that is rotten. Not the 1% super rich, not the politicians. It is the 99% of ordinary people blindly buying into this ponzi scheme. Haveing their pensions, health care, Krippenplätze, jobless insurances and public funded school from kindergarden up to university. The politicians were giving it to them, the financial industry created the paper, and the 1% spotted opportunities and enriched themselves.
The 99% ordinary people instead were haveing a huge party time from the fall of the wall in Berlin up to 2008. It's over now and I am happy for it. Every single social economic group that benefitet out of pure "because it makes sense" from massive public spending will get its cut. And finally the true and unaffordable cost of our sexy and urban living here will be unveiled. I am easy with politicians, I am easy with banks, I am easy with big corporate. They come and go. I am happy for the current western society ends. I am happy for all what became important the last 25 years will be unveiled as utterly expensive rubbish. Reset it, take a breath and retry again. Finally.
Reset it, take a breath and retry again.
Its going to be that pleasant? Just take a little breath?
Yes, if people spot the chance for emancipation and move onwards. What do yo expect? Civil war? the poor vs the rich? Lynching politicians? It is, after all, just money. Wealth can be restored and maybe it is better for this world when the rich (the west) falls down rather than trying to lift the poor up, economically.
"It is the western society that is rotten. Not the 1% super rich, not the politicians. It is the 99% of ordinary people blindly buying into this ponzi scheme."
I must respectfully disagree.
I have studied much history, especially hyperinflations, and I can assure you that the sheeple usually don't have a clue as to what is really happening.
The blame for the sheeple lies in having faith, and obeying the criminals. But that does not relieve the plundering, and criminal, pols, crats, funcs, and banksters.
Additionally, the tyranny of the pols and crats is nothing without their tyranny being carried out by willing funcs, thugs, in the streets, and homes, of the sheeple.
"Forgive and educate the sheeple, guillotine the criminals."
The banksters need to repay us.
Greece to Troika ' I've , had the time of my life and i owe it all to YOU '.
Extend and Pretend is of crucial importance to the EU. It allows the Troika to maintain the illusion that they, the Euro, and all EU nations are financially sound. Notice that the key demand made by the Troika to Greece now is that Greece accept more loans from the Troika. As David Stockman and others have pointed out, that makes no financial sense at all.
The key to understanding the EU demand that Greece continue to Extend and Pretend lies in the fact that the EU has long passed the point at which financial facts are the key to dealing with the EU's economic and financial problems. The problems are political - how do the politicians and the EC maintain the illusion that all is under control?
The debts of the PIIGS nations are far beyond their ability to ever pay them off. Worse, their debts continue to increase.
The Euro has become a trap for the less-competitive members of the Euro zone, and a boon for the more competitive. Germany runs huge trade and current account surpluses with other Euro nations, but those other nations cannot devalue their currencies or adjust interest rates to adjust for their trade account deficits or for their lower competitiveness.
The adoption of the Euro, and the fact that no individual nation could print Euros or devalue its currency, removed the exchange-rate risks formerly faced by banks lending to the countries of southern Europe, which had formerly had poor credit ratings and therefore faced high interest rates on their borrowings. The banks of Germany, Italy, and France went on a lending spree to Greece, buying Greek government bonds and lending money to Greek banks. The lending banks enjoyed an implied guarantee from the European Central Bank and EC that no lender would suffer in a default on Euro obligations by any Euro nation.
After the EU caught contagion from the US financial meltdown of 2008, it became clear that the Greek bonds and IOUs from Greek banks were worth little. The "bailout of Greece" in 2010 was actually a bailout of the German, Italian, and French banks. The Troika bought the worthless Greek bonds and Greek bank IOUs, and gave a bit of money to Greece while forcing Greece to accept new budgetary rules that prioritized debt payment above all else.
The same pattern was applied in Spain, Portugal, and Ireland.
Austerity has not produced economic growth to any extent. The people of Greece, Spain, Portugal and Ireland live in straitened circumstances with high unemployment and lowered living standards.
BUT the balance sheets of the banks that lent to the PIIGS nations have been made to look good. The unpayable debts of the PIIGS nations and their banks are now held mostly by the Troika.
Greece's new government is demanding the removal of the austerity rules, and a write-down of the debts, and threatens to default if no new deal is given. The Troika fears that other PIIGS nations may echo Greece's demands. Since the bonds held by the Troika can never be paid off anyway, what does it matter if Greece repudiates the bond debts?
Repudiation by the Greeks would have effects having more political than financial importance. First, repudiation would expose the reality of the worthlessness of the Greek bonds, and force the holders of those bonds to write down their value on their balance sheets. That would immediately expose the shaky nature of the Troika's balance sheets, and shake market confidence in the Euro. Any success by the Greeks in renegotiating their bailout/austerity will embolden other PIIGS politicians to try the same.
EU politicians would face the wrath of their voters when it became clear that each EU country that contributed to the bailout funds would not recover the lent money, and would have to contribute even more to make up the losses of the Troika, under the European Financial Stability Facility (EFSF). This appears to be why Merkel is so adamant that Greece not be allowed any adjustment of its "bailout" deal of 2010.
An analysis of the EFSF shortly after it was introduced exposed its frailty. Under the EFSF, each EU nation guaranteed the debts of the others. But in case of a default, fewer nations would be left with the obligations of all, tending to lead to further defaults as the next-weakest nations defaulted on their share of the accumulating costs of meeting guarantee obligations. The inevitable result is a cascade of defaults, with the stronger nations eventually being left owing all default bailout obligations, and perhaps going under themselves.
Enter Super Mario Draghi with his QE bond-buying program. The ECB will buy sovereign bonds and even corporate bonds. Effectively, this gives each Euro nation a printing press to print Euros, up to whatever amount Draghi will allow the ECB to buy in bonds from each nation. For now, he says the ECB will not buy Greek bonds, but that may change during negotiations. The QE would allow all EU nations to create new Euros out of thin air, perhaps issuing bonds with zero interest rates and near-infinity terms, easing any concerns about having to meet obligations under EFSF guarantees with new taxes or money borrowed in public or commercial markets.
In other words, the ECB QE program is part and parcel of the Extend and Pretend game.
Agree, people are giving 50% chance Greek exits euro, but think it's more like less than 1% or any. It will definitely be some form of extend and pretend.
Okay, one more time. Draghi's QE which our masters complained was too small was three times the value of Greece's entire debt. Greece could sink beneath the waves and Europe would be out a few percent of GDP at most. Angela, François et al. would borrow the money at near zero interest for a million years and that would be that.
This isn't about the money. It's about power. This is about Tsipras and Varoufakis insulting the Germans by having the cheek to actually take their people's side in negotiations of their fate. They're really, really not used to someone who doesn't have nuclear weapons standing up to them.
Credit Default Swaps.
It is about money, money someone promised, in the event of a credit event. If they all need it at once, it ain't there, for sure. And in some cases, I bet it isn't there, anyway.
Bail-in legislation passed in Canada,where do these guys hide?
OK, so if the debt is transferred to the public sector then each individual is assigned a part of that debt. If these individuals basically say, "Fuck you, I'm not paying" through the political mechanism, then doesn't the debt return to being the problem of the bank (i.e. the private sector)?
Greece has two good choices, Brussels has none.
If Brussels caves, it writes off tens of billions of euros, encouraging the rest of the SPIGot to do the same.
If Brussels doesn't cave, Greece Grexits, to be followed by the rest of the SPIGot countries. A trillion euros of losses, maybe.
"Or maybe the bald guy dies of acute lead poisoning." Somebody MUST be thinking that by now.
Mr. Varoufakis, please, please have excellent security at all times.