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The Math Behind The Greek Myth
Submitted by Alexander Gloy of Lighthouse Investment Management
The Greek (Ministry) Mystery of Finance
- The Greek January – September budget deficit was EUR 19.16bn versus 16.65bn same period last year (+15%). This only includes the central government.
- The initial deficit target for 2011 was EUR 17bn. We blew past that after only 8 months. The revised target (July) is now 22bn (9.5% of GDP).
- Latest estimate from the Greek government: 8.5% deficit (19.5bn) for 2011 (instead of 7.6% or 17bn).
- Here’s a chart of the budget deficit (cumulative):
- You can see that 2011 pans out to be worse than 2010 (dashed line).
- Revenues are negatively impacted by the severe recession. Okay, but what about expenses?
- While 2011 revenues are trending below 2010, expenses are trending higher.
- Despite all the austerity measures, Greece is still spending 150% of its revenues:
- Of course, the Ministry of Finance sees a reduction of the deficit to a miniscule 2.6% of GDP by 2014 as revenues rise and expenses come down:
- How is that possible? Somehow, after spending four consecutive years in recession (2009-2012), the economy will rise like a phoenix and grow by 5.8% in 2014.
- I leave it up to you to decide if this is credible.
- One more thing: interest expenses were 14bn after 9 months = 18.7bn annualized.
- As of June 30, Greek government debt stood at EUR 353.7bn.
- You do the math – Greece is paying an average interest rate on its debt of 5.28% (less than Italian 10-year bond yield).
- If Greece were to pay market rates (let’s be generous and take 10-year yields of 24%), it would spend EUR 84bn on interest.
- This would exceed government revenues.
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Boom.
Looks like OBAMA! took his math classes in Greece.
"Winston, two plus two equals whatever we say it does...."
Does a realm higher than ours exist?
Yes, but the price of Soma is going through the roof....
Just because we built a neo-Federalist corporitocracy, doesn't mean those that occupy those positions are our higher ups. They are considered our employees. Let's treat them that way.
TPTB only look higher up until Dr. Guillotine's famous invention does its work.
Platform-building and popcorn-popping in T-10....
i'm curious. do references like the above and the many others of its ilk count as protected speech? how specific/credible do threats have to be, especially against high rank politicians, to be prosecutable? anyone?
Against which "high rank politicians" do you refer to? King Louis XVI?
example the current president: http://www.zombietime.com/zomblog/?p=621
the figures explain both: why greece desperately needs tanks and guillotines!
As they say, "Want in one hand and shit in the other. See which one fills up first!".
Never mind them, they are considered "propagandist terrorists" under homeland security and will be visited upon by unmanned drone attacks keyed off of their IP address. As you were.
Except the drones have got the flu: http://news.slashdot.org/story/11/10/07/1828220/us-drone-fleet-hit-by-computer-virus
Has to be some overt act in furtherance of a conspiracy, talk is not enough, or the situation has to be exigent, eg,. yelling fire in crowded theater, where listeners would be prompted to action because of the speech without having time to reflect and decide for themselves. At least that is what the Supreme Court said when we were still a country that believed in the rule of law. Now? Who knows. Secret panels, Patriot Act, assassinations, secret prisons, no right to legal representation, no right against unreasonable search and seizures, we live in despotism. USSA is not just a clever joke.
So how can Greece afford 400 tanks, incl. M1A1 Abrams( new or used) at a cost of approx. €3.2 million each, ordered from the USA last week ?
old news maybe ( one week) but doesn't get any answers.
http://www.defencegreece.com/index.php/2011/10/the-u-s-approved-to-grant...
The graphs explains how. Loadsa other peeps money, need some bling to show it off, woot ..
And maybe the financiers rather like an Egyptian Solution to the Greeks not paying and getting uppity and restless, putting The Team in bad standing, giving other people ideas!?
market doesnt give a crap about greece, it gives a crap that the banks exposed to greece are now all backstopped by the governments!!! everybody knows greece is a money pit. everybody knows banks will take at least a 50 pct cut.........it....doesnt...matter....ALL HAIL MORAL HAZARD!!!!!
Exactly.
But this has opened the door on France and Germany.
Even Germany cant backstop everyone.
Will be fucking funny when the EFSF is AAA but its 2 biggest sponsors are not.
Tada! +1 @kito
Would it not be funny if AIG turns out to be The One writer of CDS on Greece?
fucked. face it.
haha. whos fucked? greece--who is living it up like its 1999?? the banks--who will be backstopped and ringfenced?? whos fucked??
Damn near everyone who has a Q in their name not followed by a U....
Well hello there.
Guten morgen....
Zhao an, ni hao mah?
Nicht so schlecht, danke!
Maths doesn't matter. We just need more rumour and markets will up.
Greece is that ADHD "troubled" teenager with a new credit card and rich parents who hide their credit problems so they don't get kicked out of the private country club.
Default bitchez
No worries..we will continue to melt higher.
How is that possible? : It's not.
who worries about billions anymore
Rising expenses, falling revenue. And they aren't permitted to go bankrupt.
What a joke.
"There must be some kind of way out of here."
Said the joker to the thief.
"There's too much confusion, I can't get no relief."
Jokes on US and EYOU. IMF providing 40% of Greek bailout funding. US provides 25% of IMF contribution ergo we 'own' 10% of Greek deficit ( in perpetuity?).
And there we have it; in black, white, blue, red and green-Greece is bankrupt now, next year, and 4 years from now. Presumably the government figures include bail-out loans, actually collecting taxes, and actually reducing government expenditures.
The only question is: who is going to own the Parthenon and the Greek islands? China, the IMF, or the SNB?
"The only question is: who is going to own the Parthenon and the Greek islands? China, the IMF, or the SNB?"
The Greeks.
More good news. The U.S. passed 3 new free trade agreements on Wednesday (with South Korea, Panama and Columbia):
http://thehill.com/homenews/house/187253-president-gets-win-as-trade-dea...
Considering that the U.S. has run a net trade deficit (goods and services combined) every single month since January of 1992, why not sign 3 more free trade agreements...
100% FUBAR!
Good work in presenting the math logically! Really!
But stop wasting your time in explaining. Numbers and logic have no place left in this world unless they are positive and ergo bullish.
yes. as if any chart, any story, any analysis regarding greece will make a difference at this point. beating a dead and insolvent horse. ALL HAIL MORAL HAZARD!!!!!
Nothings fucking changed; anal sex is still called Greek.
Governments should admit the truth and bring in honest accounting. What can any of this do but cause chaos? Of coure it's only a dream but hey if the socialist can do so can I.
Greece is where gay Brits go on vacation
I'm guessing the expected revenues don't take into account past, ongoing and future strikes ....
kenyan math 1+1 =bullshit
S & P 1300 by Oct 17
Can't remember where I heard this:
Greece had agreed to only replace 1 out of 10 retired public workers as part of austerity.
The latest numbers showed they hired 15 for every 10 who retired.
They're not even trying.
They should hire Albert John Dunlap, otherwise known as "Chain Saw Al". This would be a perfect opportunity to use his skills.
in the land of moral hazard, you get downgraded and rewarded by paying lower interest on your bonds....
http://www.reuters.com/article/2011/10/12/italy-bonds-idUSL5E7LC4CM20111012
It's hard to predict the short term, but my take is that the central banks are holding the financial system together with one bailout after another. At some point, they are going to run out of bullets. Greece has not failed yet, and we had a bank failure in Belgium (Dexia). What happens when Greece defaults? And Spain and Italy are starting to see their 10 year bond interest rates rise. Trouble is brewing in my opinion.
I loaded up on FAZ call options today. They expire in Jan 2013. I thought about going out to Jan 2014, but I don't think the markets can last that long without a crash.
Could we get through the next 6 months without a crash? Sure, its possible. But another 12-14 months? I doubt it.
China's growth rate is still strong, but it is showing signs of weakness as they keep building empty apartments and houses.
Oil is not going to drop unless we go into a recession, and if we go into recession the markets are going to get hit hard.
I don't especially like betting against central bankers who can print at will, and thus push stock markets higher. But my gut feeling is that something is going to trigger another stock market melt down like 2008. My advice is to anticipate that event.
One way to anticipate is to save cash for a drop in silver prices. I think we will see silver go down to $25 and maybe 20. I'm going to buy bullion at those low prices.
I think QE3 will come after the markets head lower. We will definately get more bailouts and stimulus. That's all they know.
As for inflation, I don't think we will see high inflation until after deflation pressures ease (and the dollar is de-valued). Look for it in a couple of years. Until then we will see de-leveraging (selling of assets). This will create downward pressure on asset prices, and lower house prices.
www.goldsilverdata.com
So rather than making a decision, Germany is going to continue kicking the can and pissing ANOTHER EUR 8 Billion of taxpayers money down the black hole that is Greece? Never mind that there is not a hope in hell of seeing any of this back again. If I were a German taxpayer, I would be mightily pissed off, but of course our "elites" no longer feel that they need bother represent the wishes of the people. All this to try to shield the banksters from getting what should be coming to them. What a fucked up "System" we have.
The Greek government runs a deficit before even paying any interest on its debt. Therefore the debt write-off has to be pretty close to 100% to break even.
On top of that Greece runs a large trade deficit which acts as another suction cup on the economy.
Is any body willing to bet that the eventual write-off will be limited to 50%? If there is, then I am willing to make a bet with them that it will be well over 50%.
And those rosey 5.8% growth numbers are the sort of thing built into the USA budget projections we're told will turn our deficit frowns upside down. Totally unrealistic.
Should have been titled:
The Myth Behind The Greek Math.
It's the Laffer curve in reverse ... and just as not-funny.
Austerity + tax increases =/= balanced budget.
But it's not really about the budget deficit now is it? After all the ECB has no nominal limit on the check it can write. This is really about hardworking Germans purging Greece of those lazy public sector union leeches. Being from California, I should be sympathetic to the German position but ... this just seems cruel at this point.
Let them default, then they will not have any access to international capital markets, and the public sector bloat will take care of itself. Meanwhile take those giant ECB checks and just recap the banks as necessary. It'll feel better to the Greeks as well: now they will have to raise taxes and cut the public sector because they have no money, instead of because they owe money to / are getting lectured to by Germany.
Exactly. By letting them default they wipe their slate clean but as you said, being cut off from the capital markets will force them to face their own unions, their own lack of tax collection and lack of fiscal discipline. They will no longer be able to ask for handouts.
Then Germany will also have to face the reality of customers that can no longer buy on credit as they previously did.
The USA theoretically is just a bigger version of Greece in many respects, but is endowed with bigger guns and bigger crooks and its own printing press which enables it to kick the can somewhat longer.
Greeks have never been able to raise taxes and they certainly do not intend to begin now. The Greek people will do fine in a default, the Greek unions, The public service and what not will do fine, a.k.a. as usual: They just run more bills over the black economy, bribes increase a bit, smuggle more stuff from Tangier and whatever business they always did.
And they get away with it all, which pisses the Germans off no end. They already have to work to pay social security for millions of Arabs and Turks - and now Greece - and the Banks too ...
you know what would totally solve this? more leverage.
deleted
Presenting, the new Greek National Anthem:
http://www.youtube.com/watch?v=T4QNuQzMLFA&feature=player_detailpage
For those who can't get out ... well, it's probably Mad Max time.
http://www.youtube.com/watch?v=pL14AQPSKb4&feature=player_detailpage
<Somehow, after spending four consecutive years in recession (2009-2012), the economy will rise like a phoenix and grow by 5.8% in 2014.>
Even though the Mayan Calendars end in 2012 I wonder what will happen in 2013?
i wonder if the Mayans knew about derivatives
When your Finance Ministry closes for 9 days as its workers go on strike - ye knows ye be stuffed like the thanksgiving turkey
Greece, October 13 2011
What’s Up in Greece on Oct 13?Please send some Euros, soon.
Should be do able Step 1. Leave Euro, throw out central bank and Greece prints and controls their own Drachma. Step 2. No step 2, it's done.