Less Than Two Months Ahead Of The Greek D-Day, Rogoff Says "Europe Is Clearly Not Ready For A Greek Default"

Tyler Durden's picture




 

It is less than two months until the Greek March 20 D-Day past which there is no more can-kicking? Check. Creditor negotiations which are going "so well" they may collapse at any given moment, have had their deadline extended indefinitely just because, and in which hedge funds now have every option to put the country into bankruptcy? Check. You would think Europe is prepared for this contingency right? Wrong. Per Ken Rogoff (who together with Simon Johnson are two former IMF chief economists who have become some of the biggest bears in the world - what is it about not being shackled to one's salary, that allows one to speak the truth), Europe is "clearly unprepared for a Greek default", less than two months from the day when it very well may finally occur. He adds: "there's going to be an endgame to this and it's not going to be pretty.... If you are just printing money and you are not making fundamental change you either lose money and you will have to recapitalize with the ECB or you will get inflation." And it gets worse: "it's not just Greece. You are going to see other restructurings before this is over." He ends with what we have been saying since mid-2011: "Once you set the precedent then say Portugal are going to say 'hey, look how much you gave Greece. How come we don't get the same?'." Unfortunately, the fact that Portuguese bondholders are far more protected than Greek ones will make an in kind restructuring virtually impossible. Which is something else for Europe to ponder as it prepares for the only key catalyst event between now and March 20 - the February 29 LTRO, which as Credit Suisse already suggested could be up to a ridiculous €10 trillion to firewall not only Greece and Portugal, but all the other PIIGS. Intuitively, this does make a lot of sense.

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Wed, 01/25/2012 - 11:19 | 2096208 GOSPLAN HERO
GOSPLAN HERO's picture

Printing is the end game.

Wed, 01/25/2012 - 11:23 | 2096222 Chump
Chump's picture

No way.  Printing makes existing debts payable by the peons.  Can't have that, can we?

Wed, 01/25/2012 - 11:25 | 2096229 spiral_eyes
spiral_eyes's picture

Ja. Stern teutonic monetarism strikes again. I hope they don't print and let the system collapse. Unfortunately Lagarde's comments suggest that that won't be the case.

Have to wonder if Iran will "black swan" the world out of the ongoing rumblings and ramifications. Nothing like a war to "boost aggregate demand". 

Print weapons, bitchez.

And all the shit that actually matters, like, oh I don't know, NASA goes to the dogs cause it just isn't as important as bombing Iran, or bailing out too fucked to bail financials.

http://azizonomics.com/2012/01/24/americas-wilting-ambition/ 

Wed, 01/25/2012 - 11:45 | 2096285 GOSPLAN HERO
GOSPLAN HERO's picture

Obama implied a war with Iran is a definite option. We heard a partial declaration of war on Iran at least, last night, right? Obama wants a "Gulf of Tonkin incident" to start the bombing campaign.

Wed, 01/25/2012 - 11:58 | 2096292 Badabing
Badabing's picture

This is the same bullshit that happened with AIG the TBTF/PTB will not let it go down.

The bad bet they made will bankrupt the ponzi system, this is a power check to see if they can control the EU.

 


It will not be the end of the world just the beginning of the end of the big banks!

Wed, 01/25/2012 - 11:50 | 2096307 SheepDog-One
SheepDog-One's picture

Should be easy enough for the US/Israel to do another USS Liberty or Tonkin style false flag on ourselves to create another diversion and reason for war.

Wed, 01/25/2012 - 11:27 | 2096231 clones2
clones2's picture

Printing doesn't go to the peons....

Wed, 01/25/2012 - 11:36 | 2096255 Chump
Chump's picture

Then it's irrelevant, and deflation gobbles us up anyway.

Wed, 01/25/2012 - 11:29 | 2096237 GOSPLAN HERO
GOSPLAN HERO's picture

Inflation is the cruelest tax for the plebes.

Wed, 01/25/2012 - 11:46 | 2096291 Chump
Chump's picture

True and it would hurt, but in a raw printing/hyperinflation scenario, I would suddenly be able to pay off my mortgage with roughly the same number of dollars as it would cost to buy a loaf of bread.  The logical creation of various black markets and the forced return to local agrarian economies would far outweigh the absolute destruction of all bank balance sheets.  Yes, I understand they're insolvent as is, right now, but printing as the end game means it's out in the open and they lose...hard.

Wed, 01/25/2012 - 12:12 | 2096382 chubbar
chubbar's picture

Well, perhaps we are missing what their end game is? If they literally own everything now, or could if they wanted it, perhaps they really just want to re-order the world into something they feel they would like or control better? First, a new reserve currency that they fully control would be nice (for them). Whatever else is on their agenda completely escapes me but I'm sure it'll be obvious after the fact. Depopulation seems to be a meme that pops up frequently these days, so who knows?

Wed, 01/25/2012 - 12:25 | 2096436 Honey Badger
Honey Badger's picture

Don't stop your thought experiment there.  Under the hyperinflation scenario, your taxes on your house would also go way up, and at the same time that you lost your job. Your savings would be worth zero and your expenses to live would go through the roof.

Wed, 01/25/2012 - 13:11 | 2096601 catacl1sm
catacl1sm's picture

To further the thought experiment, you can't pay taxes on your home, now it belongs to .gov, which auctions it off and it is bought by a banker. You can't afford food and clothing along with millions of other people. Rioting, 'protesting', and crime go through the roof. More and more people die, marshall law is declared. They win, you lost.

Wed, 01/25/2012 - 12:57 | 2096553 SeattleBruce
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It was the unsettled transition time that caused the most pain for the masses in Weimar.  This will be no cake walk for most folks, and there may be many that die in the chaos.  Of course that's no concern to the bankstas/elitists...

Wed, 01/25/2012 - 11:49 | 2096300 Shocker
Shocker's picture

Inflation definately hurts..

Wed, 01/25/2012 - 11:28 | 2096239 redpill
redpill's picture

Ah see but it's like controlling how much they are bleeding.  The banksters want to be extracting maximum wealth from them at all times.  Too little printing, they just default and you have an Iceland scenario where they get their freedom - can't have that!  Too much printing and it makes it too easy for them to pay off the debt with devalued currency; sure it ruins their economy in the meantime, but long term they'd again be free.  The only way to keep them in the chains of debt slavery is to do just barely enough printing to keep them from defaulting so that they are being bled of every last ounce of wealth and labor in perpetuity.  Endless debt slavery.  It's the model for the 21st century, and after the Iceland failure, the Greek experiment is working out comparatively better for the bankers so far.

Wed, 01/25/2012 - 11:42 | 2096277 Chump
Chump's picture

Good post and I see how a balance must be struck.  However, if we're talking about the end game I don't think straight printing is an option.  It would solve nothing, allow the plebes to pay off their debts with devalued dollars, and destroy the value of all banks' "assets," whether they're marked to market or fantasy.  I just don't see it happening.

Wed, 01/25/2012 - 12:06 | 2096335 dwdollar
dwdollar's picture

You assume the majority of plebes acknowledge their debt slavery and want to end it. Big mistake. If the majority of plebes were aware, a rebellion would happen today, and a sound currency would be established tomorrow.

Wed, 01/25/2012 - 12:30 | 2096463 swmnguy
swmnguy's picture

Excellent post.  I read a great analogy somewhere else; I don't remember where or if I've got it exactly right, but here goes:

The banksters are vampires.  They could slit our throats and drink our blood right now but that's only a few quarts and we'd be dead.  If, however, they drink us down to unconsciousness and then hook us up to a precise IV drip, they could keep us barely alive though unconscious, our bodies would make new blood to replace the old, and they could feed off us indefinitely.

I'm guessing they go for Option #2.  And if anything arises to jeopardize that plan, they'll change the rules midstream, if not retroactively, to keep things tilted in their favor. 

Greece needs to default?  No way.  That would trigger the CDS's etc.  So to get anything, you have to take your haircut and agree that CDS's aren't triggered.  Still don't agree?  Then you have to accept some bogus "rolled-over" certificate that you have to hold for a minimum length of time and then can only redeem in exchange for an agreement that CDS's aren't triggered.  Or something like that.  They've got your money, so they've got all the time in the world to horse around with the rules.  They don't really care if you agree or not; it's going to come out in their favor.  Enjoy the IV drip, suckas.

At least that's how I think when I'm being pessimistic.

Wed, 01/25/2012 - 13:16 | 2096617 catacl1sm
catacl1sm's picture

I'm thinking of moving to Iceland. I expect them to get through this rather unscathed.

Wed, 01/25/2012 - 13:50 | 2096753 Ghordius
Ghordius's picture

They don't, that's why they are preparing to join the eurozone.

Wed, 01/25/2012 - 11:38 | 2096261 Calmyourself
Calmyourself's picture

Good point, but fairly easy to index all debt but sovereign, see how that no rule of law stuff works..  You slave / me master, get used to it.

Wed, 01/25/2012 - 11:50 | 2096305 Chump
Chump's picture

You bring up a good point.  I'm not considering the effect of fluid "laws" and their interpretations.  All of a sudden my 2-yr ARM with the credit union with a 1% max adjustment turns into a wheneverthefuckwefeellike-yr ARM with a whateverthefuckwefeellike% max adjustment.

Gah, I hope at that point we're finally hanging bankers and politicians, because that is an ugly future.

Wed, 01/25/2012 - 12:47 | 2096510 Calmyourself
Calmyourself's picture

How else can it happen?  They will have to fully or partially index, becasue they have to print and yes they also learned lessons from Weimar etal.. I can see the perfectly reasonable explanation now: 

" We must adjust obligations to our current paradigm in order to mitigate the effects of the failure of capitalism among all beneficiaries while maintaining gov services to those most in need"

Translation:bend over because this is nearly inevitable at this point..

Wed, 01/25/2012 - 13:03 | 2096571 SeattleBruce
SeattleBruce's picture

Right - as to paying off mortgages with devalued dollars (hyperinflation), people had better have a fixed mortgage to do so, and that would presume they wouldn't just pass some law declaring all fixed mortgages now float, due to 'the national emergency' - or some such bull as that.

Wed, 01/25/2012 - 12:45 | 2096503 Silver Dreamer
Silver Dreamer's picture

It depends.  Are you going to pay off a mortgage or buy food?  Most will be buying food even if it costs them thousands.

Wed, 01/25/2012 - 13:35 | 2096674 catacl1sm
catacl1sm's picture

That's why I'm stockpiling food.

Wed, 01/25/2012 - 11:31 | 2096245 e2thex
e2thex's picture

<Printing is the end game.>

No. They are going to string together twenty cans on a rope and tie it to the back fender of a Mercedes SEL600.  The chauffeur is going to be the IMF.

It's your tax dollars at work.

Wed, 01/25/2012 - 11:19 | 2096212 NEOSERF
NEOSERF's picture

Rogoff and other continue to miss the point...printing money is all you need to do because time is what heals all financial wounds.  In an election year time is ALL that matters and the tranche will be granted...guaranteed...

Wed, 01/25/2012 - 11:49 | 2096301 Sabibaby
Sabibaby's picture

Time will also clean your dishes and do your laundry. If you give anything enough time it will be fixed.

Wed, 01/25/2012 - 11:38 | 2096213 TruthInSunshine
TruthInSunshine's picture

Watch the imbecilic developed nations of the earth (i.e. nearly all of them, with their fractional reserve banking jackals doing heavy lifting) ratchet up the pressure on Germans, even stooping so low as to bring up Hitler & WWII references (directly or indirectly), in an attempt to shame Germans into abandoning what is now a completely rational position that the Eurozone, as it is now structured, is mathematically, economically and socially unsustainable, and that any investments of time or capital in an effort to maintain the status quo is time and capital flushed down a ginormous black hole.

Germans, we urge you to allow the ECB to print to infinity and beyond, destroying the value of the EUR, destroying your standard of living, and destroying your national and individual savings - in an attempt to bail out the profligate and irresponsible members of the EU (so they can continue to be profligately irresponsible, thus necessitating even more sacrifices of you and your children in the future). Hitler was German*. You owe us.


*Hitler was actually Austrian, in reality, FWIW. But who's counting?

 

Wed, 01/25/2012 - 13:01 | 2096564 Instant Wealth
Instant Wealth's picture

The correct answer would be:

 

1. Hitler was Austrian

2. Goebbels was a banker before he joined politics

3. We owe you nothing, so funk off

Wed, 01/25/2012 - 14:00 | 2096791 Ghordius
Ghordius's picture

Don't worry for the Germans, they have studied the game and are playing the cards the way they are dealed to them. They know they have to lift more of the weight as others, but they also know that most of the propaganda you are hinting of is coming from London & NY.
Lately, even Poland asked for more "German Leadership"!
Losing two world wars makes you less trusting in goldilocks scenarios than winning two of them...

Wed, 01/25/2012 - 21:00 | 2098323 StychoKiller
StychoKiller's picture

I learned long ago that the ONLY person that can make me feel guilty is ME!  So bite my splintery, wooden @ss!

Wed, 01/25/2012 - 11:20 | 2096215 SheepDog-One
SheepDog-One's picture

OH now 'Greek D-Day' is 2 months off....wasnt that supposed to be about 4 months ago? Nothing but a can-kicking crock of shit.

Wed, 01/25/2012 - 11:37 | 2096258 francis_sawyer
francis_sawyer's picture

All it basically means (in practical terms), is that we get to watch yet another full season of American Idol & DWTS...

Wed, 01/25/2012 - 12:04 | 2096348 BandGap
BandGap's picture

No a crock of can kicking shit. Or shit the crock of can kicking. Or crocking the living shit out of the can kicking. Great oogledeboogledy, this just means more time to prepare.

The SOTU speech last night put my mind at ease - I bought a .308 and more silver rounds. Good Lord, I have friends telling me what a great speech that was last night.  Time to sheer soon.

Wed, 01/25/2012 - 13:39 | 2096701 catacl1sm
catacl1sm's picture

You need new friends. Preferably ones with a reading comprehension beyond 8th grade and capable of analytical thinking.

Wed, 01/25/2012 - 11:21 | 2096217 Cognitive Dissonance
Cognitive Dissonance's picture

Rogoff Says "Europe Is Clearly Not Ready For A Greek Default"

And I'm clearly not ready to be butt raped. But that won't stop Bubba from trying.

Is it time to panic when Bubba shows up in my cell or should I wait until I'm really sure of his intentions?

Wed, 01/25/2012 - 12:50 | 2096524 Silver Dreamer
Silver Dreamer's picture

Bring out the Gimp!

Wed, 01/25/2012 - 11:22 | 2096218 ZeroPoint
ZeroPoint's picture

Is there ever a good time to default? Just make sure the Greek version of EBT cards keep working.

Wed, 01/25/2012 - 11:35 | 2096251 slaughterer
slaughterer's picture

There is only one good time to default:  when the "fire wall" is big enough and when the big players will profit from the default.  

Wed, 01/25/2012 - 11:22 | 2096219 GeneMarchbanks
GeneMarchbanks's picture

Ken Rogoff is severely over rated as an economist and part of the problem.

Wed, 01/25/2012 - 14:05 | 2096805 Ghordius
Ghordius's picture

I also get the impression Ms. Reinhart did his heavy lifting in their bestseller "This time is different".

Wed, 01/25/2012 - 11:24 | 2096226 sangell
sangell's picture

Going to need an Official Sector Involvement (OSI) for Spain and Italy and it will be huge!

Wed, 01/25/2012 - 11:24 | 2096227 pnfteixeira
pnfteixeira's picture

Forget Greece; it’s Portugal that’ll destroy euro Commentary: One default is an accident; two is a systemic crisis

http://www.marketwatch.com/story/forget-greece-its-portugal-thatll-destroy-euro-2012-01-25?link=home_carousel

Wed, 01/25/2012 - 11:38 | 2096244 Mercury
Mercury's picture

The Greek government will not repay it's debt or pay interest on it much longer. Period.

So, once everyone who is able to has withdrawn all -or as much as they can- of their money  from Greek banks (in Euro cash) then the Greeks will be ready for default.

Europe will be ready for a Greek default as soon as they have taken action to prevent this from happening.

Wed, 01/25/2012 - 11:51 | 2096310 PontifexMaximus
PontifexMaximus's picture

Exactly, but for whatsoever reason they haven't done it yet, it's just a steady sloping down curve, but not a falling of the cliff

Wed, 01/25/2012 - 11:32 | 2096246 Everybodys All ...
Everybodys All American's picture

If the game plan is to throw millions upon million at the problem then you would have to admit that inflation will eventually go through the roof. Hence the Sor(os)ryass comment will come true of tanks in the street because of unrest. Being as well connected as he is you would have to also conclude (no surprise) that this is the course chosen.

Wed, 01/25/2012 - 16:02 | 2097356 SeattleBruce
SeattleBruce's picture

"throw millions upon million at the problem"

Or billions and billions, and in the case of the ECB - trillions and trillions...

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