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Revised Troika Forecast Sees Total Greek Debt-To-GDP Peaking At 186%: Here Is What Happens Next
Back in May 2, 2010, when discussing the first failed Greek bailout (still to be implemented) we made the following observation: "Ignore for a second the sheer lunacy of anyone who thinks that the Greek government can grow GDP and decline the budget deficit in a straight line now that the country will see crippling strikes and rolling riots (not to mention blackouts) on a daily basis. But do note the black line, which shows the projected Debt/GDP ratio for the country as part of the bailout package. In essence Greece will go from having "only" a 133% Debt/GDP ratio to an insane 149% in 2013 before presumably dropping to 144% lower in 2014, still a good 11% higher than currently. Greece just got bailed out so it can get into even more debt! What psychopath of the Keynesian school thinks that this unbelievable trajectory is anything but a complete and utter waste of money? German, and US taxpayers, are merely giving Greece money so it can increase it debtor status with French and a few other European banks. To say that this is a viable solution is something that only those who bow at the altar of Alan Greenspan can do." And so once again, in the endless battle between common sense and Keynesianism, it is former 1 - latter 0, after the Troika yesterday released its revised projections for total Greek debt/GDP, which has just been hiked from 149% to 186% by 2013! Said otherwise, Econ 101 textbook insanity just cost the Greek people roughly half their entire GDP in incremental debt (which they will never be able to repay anyway), however in the process they kept French banks alive and well as a Greek default in May 2010 (the only real option) would have not only destroyed a failed economic monetary union, but blown up the entire French bank system. Fair trade off in that other endless battle, between the 99% and the 1%.
The chart below shows the relentless negative revisions in the Greek catastrophe. The longer a default is delayed, the worse the total debt-to-GDP will be:
And as for reality which is slowly returning, perhaps if Greece and Troika had read the following Citibank report, instead of threatening to sue as we reported, it would have realized that sometimes a calculator is your better friend than lawsuit threats. Recall this piece: "Citi Expects A 76% Haircut On Greek Debt (And 95% If Country Waits 4 Years) For Debt/GDP Ratio Back Down To 60%" which came out months before the July 21 proposal came out with a 21% haircut idea. Obviously the reason why nobody took the 21% haircut seriously at the time, or ever, is that it was a total mockery. Sure enough, it only took the Troika half a year to understand simple math, and even so it still has a way to go. From the just released report: "The results show that debt can be brought to just above120 percent of GDP by end-2020 if 50 percent discounts are applied. Given still-delayed market access, large scale additional official financing requirements would remain, estimated at some €114 billion (under the market access assumptions used). To get the debt down further would require a larger private sector contribution (for instance, to reduce debt below 110 percent of GDP by 2020 would require a face value reduction of at least 60 percent and/or more concessional official sector financing terms). Additional official financing requirements could be reduced to an estimated €109 billion in this instance. Of course, it must be noted that the estimated costs to the official sector exclude any contagion-related costs."
In other words, even the "Ostrich with its head stuck in the sand" known as Europe, finally did the math on both Bailout 1 and Bailout 2 and realized they don't work. But at least it is a start. Of course, between May 2010 and October 2011 the market had countless ramps on expectations that the "Bailout would work", confirming yet again that the market is now completely irrational, inefficient and broken. But we all knew that...
Alas, as we have reported, having actually done the math, the EFSF plan will also fail. But it will take Europe, the Troika and the market about 16 months to fully comprehend that. In the meantime we will see ever more violent rallies and plunges as the market's optimistic cognitive bias, and its recurring clashes with mathematics, come into full view, over and over.
Next Steps
And now that even France appears ready to admit defeat and accept a 50% haircut on Greek debt, here is what happens next. Every PIIGS country in Europe will demand the same treatment: in fact we expect Ireland and Portugal, followed shortly by Italy and Spain, to pull a Greece and report worse economic data than actual, just to attract the bond vigilantes attention, have their spreads blow out, becoming the next Greece in the process and getting a "half off debt" blue light special. In fact, the faster the better, as there will likely not be enough firepower for the last of the 5 PIIGS. Of course, by then French banks will be thoroughly undercapitalized, needing well more than E100 billion of the allotted capital, and France will long have been downgraded from AAA, forcing the EFSF to be the sole burden of Germany, which will have to pledge anywhere between half and 133% of its GDP, to keep the EUR and Europe solvent. Good luck with that.
But yes, there will be a short and sweet rally in the EURUSD... Until the reality predicted above once again defeats all the temporary insanity that is now the only upside catalyst of modern 'capital markets'.
Full Troika revised admission of failure below:
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"Strictly confidential"... BITCHEZ!
"The results show that debt can be brought to just above 120 percent of GDP by end-2020 if 50 percent discounts are applied. Given still-delayed market access, large scale additional official financing requirements would remain, estimated at some 114 billion (under the market access assumptions used). To get the debt down further would require a larger private sector contribution(for instance, to reduce debt below 110 percent of GDP by 2020 would require a facevalue reduction of at least 60 percent and/or more concessional official sectorfinancing terms). Additional official financing requirements could be reduced to an estimated 109 billion in this instance. Of course, it must be noted that the estimatedcosts to the official sector exclude any contagion-related costs.
"(1) The ECB does not agree with the inclusion of these illustrative scenarios concerning a deeper PSI in this report."
Pricesless!
Prepare for the -50% PSI scenario to be announced and the Greece Bailout II total to be EUR 114 billion (What will be Eurozone vs. IMF share?)
I am personally rooting the oh-so-tough -60% PSI discount and EUR 109 billion, as that would maintain the illusion that this was all pre-planned already in July 2011 when the EUR 109 billion was announced and now cleverly maintained.
I believe it’s time to get this economy sorted out once and for all. It’s time we called a G8 meeting, so that world leaders can devise a plan for coordinated and aggressive fiscal policy. And it’s not just up to politicians - central bankers across the world also need to get serious with regards to monetary policy. This crisis is too big for countries to act alone. This economic crisis is not going to be solved without groundbreaking advancements in global economic governance. Together we are stronger, so let’s get together and TAKE ACTION.
All of your posts read like nonsense. It is like you have no idea what math is.
The arithmetic is irrelevant to anything other than helping to create the illusion that someone actually put some numbers together and wrote a report. The only thing that is important is this:
If/when the "markets calm down" and return to "normal" it will be a lot easier for GS and company to off-load the toxic shit onto the sheeple/clients and then the real bailout of the elites will have happened. Just the fees for pulling this off will be serious gas money for the mega yacht crowd.
There is a theory which states that if ever anyone discovers exactly what the Universe is for and why it is here, it will instantly disappear and be replaced by something even more bizarre and inexplicable.There is another theory which states that this has already happened.
Douglas Adams
What you are describing has a name. It is called TARP.
It results in high unemployment and stagnation because markets can not clear. But it also results in political fortunes, high lawyer and consulting fees, significantly expanded government power, bank rewards and other rent seeking beyond all knowing.
So we have that going for us. Which is nice.
We must join hands between the conservatives and liberals of the nations of the world under the flag of Soros to bring this crisis to solution. I am with you, brother.
How about a different idea. How about we give up central planning. How about we quit indenting the citizenry against their will to fund these grand Keynesian schemes? I know, snowball's chance in hell. So how about a halfway solution? Every central planner who votes for this stupidity has to put up a proportional amount of their own money? If Greek bonds take a 50% haircut, then the planners do too. If the Greeks default, then the genius planners get to rejoin the middle class and poor, too. It would stop this stupidity in a heartbeat.
I am a libertarian but this is true class warfare. It is not the rich vs the poor like the moronic leftists portray. It is the political class versus citizens everywhere. This is exactly how we all become debt serfs to governments and businesses connected to government.
The reason the EU fails is because:
http://www.youtube.com/watch?v=F-QA2rkpBSY
agree 100%; it's a silent coup.
Minister Maxime Verhagen here (Netherlands) transferring souverignity without admittance he's doing this. These politicians honestly think that this is going to work in the long run (doing away with political structures and checks and balances for some vague unchecked invisible powerbase in some other part of the continent (Brussels)).
Honestly; if they (EU Commission) have messed up so far, what's the prognosis for them, mending their ways, and dealing with the corruption?
How about this powerbase not having ANY control over the citizenry in the decades following the (inevitable) financial collapse? How about the whole thing turning into chaos at some point? That's what these politicians are aiminig for. They're aiming for 17 Papandreou type failures. Because that is the world they live in themselves.
The european union can ONLY work when there's an equality between commercial and non-commercial (humanitarian) interests. Otherwise it's just figments of megalomaniac imagination and doomed. NO empire ever survived or thrived when it's powerbase became too centralised. Therefore I see a bleak future for europe if the democratic checks and balances are done away with. Just like the USA a federal government with too much power has no feedback from citizens and local business, and will be a terrible incompetent but threatening structure. It will inmediately spawn local (provincial) governement to grow stronger, as every action has a reaction (enlargement of scale, evoces a vacuum in local powerbases). The problem is then, this will lead to a fractured rivalling continent (and economy) and a breakdown in international business after a decade or so.
Fools!
I think you are on the right track. The problem is always centralization of power. It gives the power of gods to a small handful of men who fancy themselves gods. Power corrupts. Let me leverage your idea and consider this: Central planning itself is a form of conceit. Conceit begets arrogance. The arrogant ignore all those feedback mechanisms you mention.
I have a new theory I am exploring. The idea is this: You cannot have a democracy and a powerful central government. It is not just the simple equation that powerful governments by nature usurp freedom. It is more subtle than that. The genius of a weak central government is that it takes away the power of each of us to fiddle with the other. Regulations are written by people who absolutely nothing about what they are regulating...but suppose they do. The other part of the problem is Greece. Politicians lied and said you can retire at 50, have two months of vacation per year and get all sorts of free stuff in perpetuity. Politicians lied, the bankers financed it and the people said "Sign me up for that!" and kept them in power. It could never have happened if the government did not have the fundamental power to redistribute wealth and indebt people without their express permission. The electorate was bribed with their own money! The debt was the difference between what cowardly politicians extracted in taxes and the true cost of all the freebies.
The socialist-redistributionist-collectivist-statist keynsian endgame is here. It will not be pretty. We have all jumped off a 100 story building and Greece is just the first to hit the ground as we congratulate ourselves on being so much smarter. America is just 40 stories behind.
Cue "LetThemEatRand" to chime in and accuse you of being "unfair" and "heartless" for speaking the Truth!
May be I am not bright but, Greece lied, cheat, and didn't work hard and their bankers knew about it and still loaned them money, why somebody else should pay for their bailouts?
I see no reason for to pay so somebody else stupidity, incompetence, theft, and uncontrolled gread!
I agree with you but I think it is more than simple greed. See my post above yours. We all are suffering the same problem and will meet the same fate...without some sort of correction, at least.
They had that. It's called Bilderberg.
The groundbreaking advance in global economic governance is happening now.
All world citizens will receive a digital stipend much like crew members on the USS Enterprise.
Materializers shall provide food and drink.
Unless we have a war in which case you may have to report to a Liquidation Station.
I got it figured that MDB is Obama's speechwriter. MDB generates lots of words but almost no real meaning. Perfect for a demagogic politician skilled at creating illusions.
So you're saying the wordcloud for all his posts would be dominated by "WE" and "YES" and "CAN" and "CENTRALLY," among other buzzwords?
there will be no concerted plan as long as there are US oligarchs who are in total denial...they want to kick the can for here to eternity...i hope you saw the film...it was another age...when the USA had right and might on their side...
AMEN brother!
God bless the G-8 ministers, and the countries for which they stand.
I KNOW you all will join me in praying that the Lord just gets out of the way so our wise, and forthright leaders can get on with correcting our mistakes.
Thats right mdb, the elite will save us, they love us really
ROFL!!!!! I'm busting a gut laughing MillionDollar!
What Greece and the rest of the insolvent PIIGS countries need to do is follow Iceland's example; vote out the existing criminally degenerate government IMMEDIATELY, select new leaders from within the population IMMEDIATELY, declare a default IMMEDIATELY, and give the banks, and the IMF the middle finger thereby preventing any further defaulted private banking risk to be transfered unto the backs of taxpayers. That is the example to follow. It is the only way to make the bankers pay for their reckless behavior and to inject some needed discipline into the banking system.
"The results show that debt can be brought to just above 120 percent of GDP by end-2020 if 50 percent discounts are applied...."
And what currency will this debt down to 120% of GDP be in? Euro2s, Euro3s, Worldos, Universos, olives, figs, basebal cards...
'Going Greek' used to mean taking it up the poop shoot..... I guess it still does.
On it! Thankx from China!
To me that is Greek in plain English. Thanks.
In plain engwish... EVERYBODY WANTS TO BE GREEK so ZE GERMAINS CAN BAIL ZEM OUT
but isn't obvious yet that the goal is to do the same thing to Germans and Americans that has been done to greeks? we all will owe our first born children to the satanic cabal before too long...
I think of us as more paganical than satanical. Call it "theater" if that makes you feel better. I have noted only dogs come and lie down next to our fires.
a swift's euphenism =`s "a modest proposal", how delicious,... but has the cabal lost its appetite for a pound of flesh?
In plainer English: Everybody is about to get Greeked with a broomstick. The fundamentals never work until they work, and then it is owch my aching arse.
This has gotten utterly ridiculous
Just how deep are they willing to let this rabbit hole go.
There is a bottom
for as long as they want I guess, shorting and now selling or closing your accounts are strictly verboten!
They've Just discovered a whole new layer of lunacy:
Eurozone leaders seek foreign money to boost bail-out fund
Discussions have turned to using the €440bn (£383bn) European Financial Stability Facility (EFSF) as bulk insurance for another fund backed by private investors.
This second "special purpose vehicle" (SPV) would be used to buy new and existing eurozone sovereign debt, with a particular focus on Spain and Italy. The EFSF would provide blanket first-loss protection to the second fund, which the authorities hope could top €2 trillion.
http://www.telegraph.co.uk/finance/financialcrisis/8843333/Eurozone-leaders-seek-foreign-money-to-boost-bail-out-fund.html
The plan is to so saturate the media with this constant blabber that no-one gives a fuck what happens, just as long as we don't have to hear about it.
"expect Ireland and Portugal, followed shortly by Italy and Spain, to pull a Greece and report worse economic data"
The way this whole CF is playing out, I expect to wake up spooning with Taylor Swift before THAT would ever happen.
http://www.google.com/imgres?q=taylor+swift&hl=en&sa=X&rlz=1T4GGHP_enUS4...
"There is a bottom."
Yes they will dig till they reach China.
Nuh-uh. It's a wormhole....
And not the kind dug by fish-bait.
How bad do things have to be to allow this to happen? People aren't retards. There must be something cataclysmic around the corner. It must be just insurmountably bad.... Maybe there will be a new Dark Age, or worse yet, cats sleeping with dogs.
If cats are laying with dogs, then surely, pigs can fly! I'm looking forward to that for some time now.
[There must be something cataclysmic around the corner. It must be just insurmountably bad.... Maybe there will be a new Dark Age, or worse yet, cats sleeping with dogs.]
What's coming is a 10 to 20 year rolling global civil war as the sheep slowly learn they are being buggered. The collosal debt means indentured servitude for your children and younger generations, there is no way that can be left standing. That which cannot be, cannot be. Here is a whole book on what this civil war will look like. http://www.futurnamics.com/civilwar.php Occupy Wall Street and the Tea Party are just the canaries in the gold mine. (pun intended)
The Germans have been revising down their economic future at a rate of knots this week (one already suggesting they were already in recession)
Perhaps they will beat the rest to it and be the first in with the begging cup
Germany will return to the Mark shortly... Problem solved for Germany, but the rest of the EU is screwed... This is the only way out for Germany and the longer they wait the worse the train wreck.
Its insanity of an "exponential" dimension as only the Troika could dream up, and foolishly convince others the mirage is indeed reality. I dont believe the market will play along much beyond the "sucker's" rally.
Rocky & Bullwinkle - Election Parody - YouTube
well, well, well,
here it comes....
collaspse....hope you guys are ready....from what im hearing, it should start this week...
we shall see...
Jenga!
Again!
Maybe!
GDP = C + I + G + NX
Decrease G => decrease GDP => debt/GDP increases.
The real ridiculousness is that in addition to demands that G be cut, they also demand debt be increased. How anyone who comes out publicly and states that such a plan will suceed in preventing default/bondholders from suffering massive losses and is not laughed at is beyond me. Nevermind that there are zero examples in history where such a plan has succeeded.
You still don't understand swaps.
thats the price for marrying a beautiful wife...you don't want to swap! You never learn swaps until she waps you with a divorce for cheating, ie : selling her short without a derivative play to insure her future or her immediate satisfaction.
Classic!
There is one easy and very ovious solution:
Give the EFSF a banking license and allow them to sell CDS on EURO-Bonds as well as the Bonds themselves!
See? Fixed!
Not to worry... :o)
Eurozone leaders seek foreign money to boost bail-out fund4:37PM BST 22 Oct 2011
Telegraph
Aldrick and Waterfield in Brussels
http://www.telegraph.co.uk/finance/financialcrisis/8843333/Eurozone-leaders-seek-foreign-money-to-boost-bail-out-fund.html
Eurozone leaders are hoping to tap the world's largest sovereign wealth funds for hundreds of billions of pounds under revised plans to boost the single currency area's bail-out scheme. Discussions have turned to using the €440bn (£383bn) European Financial Stability Facility (EFSF) as bulk insurance for another fund backed by private investors.This second "special purpose vehicle" (SPV) would be used to buy new and existing eurozone sovereign debt, with a particular focus on Spain and Italy.
= = = = =
Which "sovereign wealth fund" anywhere on earth would even lend a dime to euroland??
Ha! A new meaning to Enron shell games.
Some Arabs might, if the Europeans sell them parking meters. We did it in Chicago with tremendous success. Just think of all the things that can be sold off to secure those loans. I'm sure it will all work out swimingly.
I am sure Saudi Arabia will be willing to take the Eiffel Tower and the Louvre as collateral on a nice investment in the ESFS SPV. Why didn't Sarkozy think of this first?
I'm hoping to buy German roads. I've got some great plans for a few houses and hotels. I can't wait for this sale. I just landed on Greek oil terminals and bought one. Does anyone want to trade or buy?
We can fix this with my 999 plan
To make an apples to oranges comparison, we will print our way out of this and apples and oranges will be 999 cents each.
Then we can use my ring fence approach and isolate the PIIGS with not only an electrified ring fence but we will also build a moat with alligators to make sure no debt can escape to our borders.
Debt to what GDP ... Current or projected. they are asking 700,000 (35 million pro rata if in America ) people to take a 40% pay cut and be put on stand by to be sacked within the next 12 months there will be very little ecconomic activity going throught the books.
The end is "riots in Paris." nothing less...nothing more either.
France had a lot of revolutions in the XVIIIth and XIXth century.
I think they have a lot to catch up!
Weekend Current Events Quiz:
In International Finance, the term Merkosy often refers to:
A - A chimpanzee act
B - Two of the dumbest white critters in Christendom
C - Failed leaders of fucked up welfare states
D - All of the above
As usual, extra credit for sarcasm and/or biting irony.
Thank you for the summary. I went to public schools an dneed very simple explanations.
off topic again..
Watch: The Great Silver Debate
The dwarf has worn his black tie. He must be pounding his child size fist into pig face Merkel right now.
"dwarfs have rights..including the right to be tossed. I will defend your right Mr Dwarf! I will defend you!"
Its not the tossing that matters its the where and the how.
Or who:
www.youtube.com/watch?v=DxWTwB0NdNo
Thanks, Keiser!
Thank goodness Naked Shorts have been banned in Europe.
I have a question. Ive had it for a long time and can't seem to solve it.
So i pose it to those brighter then i.
Why (not how ) does the the world work as well as it does today?. Yes just today as the world works; for today.
I've been asking myself this question for years.
All the accounting, logic, reason, law and humanity says the world should not work. But so far so good says the man as he passes each window after he stepped off the ledge of the 89th floor.
"The world will work untill it stops cold. Like the heart in the man who walks off the leadge of the 98th floor window."
Is that it. The answer. Finish the game.
There must be a first to call the bluff, or cash'n the chips at the table.
Something or someone must give, call it a night.
Who, what, and where will this moment be?
I dont know; but this day the world works, so; so far so good as we pass this window i will wave to those working inside.
PS: If you could make the coment font the same size as the origanal text that would be nice. The smaller font of the comment window increase the typos.
"it's not the fall but the landing" I'm told. Well...looks like an overloaded A380 with three engines out and you're the "man in the control tower." Go easy on 'em.
LOL. If it was as clean a landing as a rock from space i wouldn't be half as worried as i am. An, a380 is a good aircraft even with two elephents as pilots. Its the landing without fuel in the ocean. "as the man in the control tower." You know they are out of fuel and are not going to make the run way, the pilots have hope that they can cost on in.
Its your call.
Is the A380 really Pan Am flight 103, or Iran Air flight 655? The navy can take care of it.
A stealth fog bank is heading west at approximately 8.7 knots. As needy financial institutes seek new revenue streams to offset present EU liabilities, OWS (Obama's Welfare State) commotion will ripen new wealth transfer opportunities.
The Whinety Whine Poorcent
Must watch and ask yourself, is this not all planned? Turn up the volume!
Ministry - The Land Of Rape And Honey
I don't get how their projections skyrocket until 2013 and just goes down afterwards, shouldn't it keep going up?
Same logic as that used by our USA govt in their plan to "tackle the deficit"....i.e. total hogwash.
European governments will be dragged kicking and screaming to the solution - default by all the pigs and bankruptcy for their banking system.
The PTB hope to kick the can until a miracle happens and everything is ok. That's the whole plan.
INFINITE QE AND OTHER ASSET BUOYING ACRONYMS = DOW 30,000
Y U NO WANT DOW 30,000?
YOU MUST HATE AMERICA.
Akashic,
Your posts on FDIC receivership came up under Reggie's latest article.
Question for you on FDIC receivership. If BofA declares bankruptcy prior to FDIC implementing receivership then don't bankruptcy laws supercede FDIC regs?
Thus dervivative counterparties would go to the front ofthe line.
Thus, if BOA declares Bankruptcy we know what game has been played.
If they go into FDIC receivership without declaring bankruptcy, we'll
have to suspect they made the FDIC an offer they couldn't refuse.
Me no understand, didn't Soros say that Europe has to have a common treasury and a fiscal union in order for the Euro to survive and isn't Soros always right?
Maybe if they started with a Supreme Court and good old "up yours phucker" from The Nine and they'd get their mojo back.
this is enough to drive someone to drink ... dont worry the can will be kicked ..
Right now they're playing hacky sack.
The goal isn't to solve the problem---which at this point is a mathematical impossibility----it's to postpone as long as possible the implosion of the system that has made a few people very powerful.
You forgot to add "for now."
Countries around the world are taking on more debt without any fruitful attempts to curb their expenditures. This has resulted in a much more fragile and artificially held up financial system which is on a much shaky ground than it was in 2008. In 2008 companies failed due to excessive leverage and debt and now countries are likely to default because they took on the same bad debt on themselves. The borrowing costs or bond yields for these countries are again at record highs for the year due to their deteriorating financial condition.
A single currency for an economy as strong as Germany on one hand and relatively weaker economies like Greece or Ireland on the other is not sustainable in the long run. The idea of the stronger countries in the Euro zone to keep on bailing out the weaker ones repeatedly will be a difficult one to sell to the citizens of the economically stronger countries. Their is no practical way to save the Euro, the only thing that the politicians can do is to lavishly spend tax payers money towards bailouts which creates a much bigger crises a few months down the line but does not solve anything.
http://www.marketoracle.co.uk/Article24581.html
Does it matter really? What's the difference for the average guy when your country is 150% in debt and 200% in debt? None.
Well, it does matter when the 'average guy' is rapidly becoming someone who's on food stamps.
100% of all countries who have surpassed 90% debt/GDP have collapsed.
Fact.
gasp... you mean this situation is NOT sustainable?
NOT FACT.
The source for this number is Reinhart and Rogoff. Maybe you should read it.
They said 90% is the level at which debtors typically get in trouble. But in the past, both the US and Britain peaked above 100% of GDP without defaulting. FACT.
The US did default and the UK did defult, in gold.
Now they can't even pay nothing without loseing everything.
Japan was doing fine at 126% But they made / produced shit unlike US.
They are indebted to themselves.
It makes them stronger.
Did it take long?
Welcome to the Western World.
the culpable price of guilty procrastination...the government leaders caught with their pants down...
Under MMT, yes it should. Regretfully, a new game changer is in town. They are in an accelerated mode to implement the two tiered society on a global scale. Many experts think they have developed the ultimate recipe to make this new world a success. I wonder if the MSM will cover the roundup of these think tank individuals? I'll bet they beg & plead just like Gaddafi did. Funny how history always repeats itself.
They can obviously grow their way out of all this debt, no problem at all.
/s
http://confoundedinterest.wordpress.com
1987 Was Last Year When Wages Exceeded Inflation (Social Security Payroll Data) - And It's Getting Worse!
Look at my chart!!!! We ARE Greece!
The fog of war...
"When it becomes serious, you have to lie” - Jean Claude Juncker, chairman of the Eurozone finance ministers.
Is it Serious?
Ok, so they take the hits and get debt to GDP down to 60%..
How do you get them to keep it going up from THERE??
Ireland will be first in line to restructure its debt, they would be crazy not to!! This is the last thing they need to help them on their way back from the brink. Remember, their tax rate is 12.5% for corporations and they took a lot of painful steps already , way before anyone else in the Euro zone.
Ireland already looking to transfer some of debt issued to recapitalise banks into EFSF/ESM. Makes sense. For the above, you're assuming the GDP trajectory is correct. Who knows maybe it will be higher in 2020. Anyone who feels they can forecast out there needs their head examined. If they can get Greeks to pay taxes all these numbers will be wrong.
Ireland already looking to transfer some of debt issued to recapitalise banks into EFSF/ESM. Makes sense. For the above, you're assuming the GDP trajectory is correct. Who knows maybe it will be higher in 2020. Anyone who feels they can forecast out there needs their head examined. If they can get Greeks to pay taxes all these numbers will be wrong.
I wasn't trying to forcast but simple stating that Ireland has made great strides in correcting the imbalances, private and public, while stilling having a great tax system to attract global corporations. Also, they are not falling into complete chaos on the streets like Greece.
"Blue light special". Does that mean I should sell my gold now.
the tragicomediy of greece has absolutely nothing to do with economics - keynesian or otherwise....the drama of greece is all about subjugation, enslavement, and occupation....
greece is to become a vassal state of the banksters who see its strategic position as great advantage....the economy is as close to an outhouse as you can get without actually being in one. the government is more corrupt than richard nixon's white house.....greece is to be enslaved - the banksters will have their way unless the people burn them....
Let them eat yoghurt.
The Spartans used to be pretty bad a-s.
Maybe it's time to go back to their roots.
Reneg and default. Look at Iceland. It's the only global market that has stood a snowball's chance in hell this year until the hopium fumes have once again overwhelmed any shred of common sense.
Greece's problem is not Keynesianism, it's the Euro, if it could devalued like Iceland it won't be facing the problem it's facing now, so stop this non-sense about Keynes, it says nothing about adopting a currency which you have no control over and issueing debt with it. That's what the nonsensical thing is here, not Keynes.
50% haircuts?
What a joke. There won't be any haircuts. Bankers never take haircuts.
It'll be silent behind-the-scene 50% principal payoff ... from American taxpayers of course.
There's no problem in the EZ, Bernanke will print all the money they need, $2 trillion, $3 trillion, whatever, no problem.
The Dutch are having a parliamentary debate on this issue, the last time they held on on a saturday was, wait for it, WW1.
I guess they think it;s serious :roll eyes:
Aslo, you negelected to mention that one of the reason for the growing debt/DGP ratio is because of AUSTERITY, cut gov't spending in time of a recession only makes it worse, which is exactly what Keynes says. But the problem with Greece is it doesn't have control over the Euro, it can't devalue to make it easier to pay back the debt and make Greek goods cheaper compared to others. You may say it's because of Keynes that got Greece in this mess to begin with, but that's just not true. Greece got into a spending binge because it was able to borrow money at the rate Germany was paying after it joined the Euro, that's not Keynes' fault is it?
This was funny from reuters today...
http://www.zerohedge.com/news/revised-troika-forecast-sees-total-greek-debt-gdp-peaking-186-here-what-happens-next
So this guy walks into a bar...
that's priceless.
All in favor of me being a millionaire say aye. Motion passed. Now when will this happen and who will give me the money?
an episodic travesty___it is spoken that a procrastinator only hastens his death, but, only on borrowed time,... be it tomorrow's morrow, whilst thou is still but of the walking dead, who's eulogy was that of yesterdays' long past
just musing about tyler, this story is in the final chapter one hopes
I am going to radiacally simplify the situation.
Many countries have borrowed far too much,Much of this debt is held in about 25 of the largest European banks.There are a large amount of credit default swaps written and bought on this debt.Europe is at the best entering into a low growth period with increasing demands by ageing baby boomers.The US,Great britain and Japan are also encountering demands by their ageing population and these three all have lareg amounts of debt currently.China sells a lot to Europe and the US and is consequently concerned about their largest export markets growing very slowly at best.The Federal Reserve,true to REAL values wants to make sure that the biggest US banks do not renege on any creditor obligations.
The banks because of their political power in thier respective countries want their countries to bail them out of the foreign debt that they hold.Some of the countries in turn want to create the charade of a pan Eurpean financial agency.But this is just a charade as it comes down to the fact that any obligations of a pan european agency are just obligations of the individual countries which have agreed to make contributions.Some have also called for an IMF contribution.The US which contributes about %20 of the total and would have to borrow this money or make some sort of gurantees.Nonethless more debt for the US
The idea behind a pan european bank is that interest rates would be lowered closer to that of Germany and that it would buy time.But during the next 10 years things are probably not going to get a whole lot better;in fact with their ageing populations it will probably be worse for all of the western industrialiized countries and Japan
So any rational person who can add 1+1 =2 and not 1+1=5,will come to the conclusion that much of the debt can not be paid off.It will either be inflated way or defaulted upon.The hope by the FEd is that they will be able to create a small of inflation and lowering the stadard of living slowly.This policy will just not work in the Us or in Europe as the debt is just too large.At rates of infaltion of around 5-10%,it might just work,but would inevitably result in a quicker decline in the standard of living for the average AmericanAt higher reates of inflation >%10,it would work ,but the probable result would be the the overthrow of the government .this overthrow of the goverenment is exactly what is occurring in Greece and will eventuall spread to other countries.If the countries absorb the debt held by the banks through a pan european agency ,then France and even possible germany will join the ranks of countries having massive social and political trouble in a few years.
The bottom line is that there is no gentle way out of the current situation,outside of quick,~5% real growth.If the banks remain in control and are bailed out then ,it will be the major countries in Europe which undergo social. upheaval.if there is an actual writeoff of European debt without any pan European agency being involved,all of the major banks will be insolevnt and will have to be nationalized.At east in that situation the shareholders and bond holders will lose their investments and pay for investment bankers will pplummet to more realistic levels.Theis will result in a finacial panic,but better that than complete social upheaval.
The western countries can choose their Treatment,either a very painful series of the equivalent of chemo,or the the later more risky treatment of a transplant.
Things appear to be shaping up nicely at the eurozone emergency summit:
Telegraph
8:30PM BST 22 Oct 2011
"It was grim. The worst mood I have ever seen, a complete mess," said one eurozone finance minister.
A new bombshell hit as a joint report by the EU and the International Monetary Fund (IMF) warned that, without a default, the Greek debt crisis alone could swallow the eurozone's entire €440 billion bailout fund - leaving nothing to spare to help the affected banks of Italy, Spain or France
http://www.telegraph.co.uk/news/worldnews/europe/belgium/8843652/Eurozone-summit-despair-and-backbiting-in-the-corridors-of-power.html
That chart is reminiscent of the one used to sell stimulus in the US
Paradox of thrift meets the hard unforgiving wall called aggregate insolvency.
More first loss mezz, anyone?
Outcome:
(delusion of risk-free environment + delusion of a repercussion-free loan) / (time ignoring the problem * time perpetuating the problem)
= Keynesian Creative Destruction
Moral Teaching:
Math are like gravity, they both hurt at the end.
I beleive we have no choice but to let the great economic minds of our times like Ben Bernanke, Tim Geithner, George Soros, John Paulson, Bill Gross, and Warren Buffet along with our great president Barack Obama to just sit down and come up with a plan that just works. Because you know they all truly have our backs and best interests at heart and afterall they know what's best. And they all love the America people so much and especially 99.999% and not to mention their loyalty to America that you know whatever they come up with you'll love it. An unimagainable happiness will rush across the land from all the death through starvation, disease and absolute ahniliation.
["In essence Greece will go from having "only" a 133% Debt/GDP ratio to an insane 149% in 2013 before presumably dropping to 144% lower in 2014, still a good 11% higher than currently. Greece just got bailed out so it can get into even more debt! What psychopath of the Keynesian school thinks that this unbelievable trajectory is anything but a complete and utter waste of money"]
Uhhm, this is exactly the opposite of Keynesianism, which is about countercyclical policy (even a cave zerocrat could understand..) What happens in Greece is that policy is strongly pro-cyclical. And it ain't working.
Who are all these people, who know all the answers, on the weekend? I'm coming back on monday...
The solution(s) is(are) not to give Greece any more money. Use that money to recapitalize the banks owning a big slug of Greek debt. Sure the shareholders will get diluted, but less for those who were more prudent, and a lot more for those not so.
Let Greece out of the EU and let it default (again!) and quit this charade. Giving the money to Greece is a waste and you will still have to bail out the banks when they default later.
Only once they have no credit will they be able to stand up to the unions and government workers and (non) taxpayers and restore a semblance of reasonable economic order. [Yada, yada, yada, riot, riot, riot, but finally some sense.]
SP500 weekly chart shows megaphone wedge and looks bullish.
Market consensus became clearer on Friday so back to the original bullish analysis and SP500 weekly chart reverts to bullish/neutral.
More info:
http://stockmarket618.wordpress.com
To think how strong the German mark and French Franc would have been had they not messed with the euro. Now, both countries have been made significantly weaker as a result of dumping bad money after bad money into the Euro toilet to bailout country after country, bank after bank. There again we see "too big to fail" coming to bite them in the arse just as it has bitten the USA in the arse. With the exception of pegging to the Euro, Switzerland got it right. Switzerland minds their own business, they retained their CHF, they don't fight wars, they don't believe in one world currency and as a result have one of the strongest currencies on the planet. All these countries including the USA need to end the idea of monitary meddling all the way from the FED and Treasury up to the concept of the EURO. Its done nothing but create catastrophic hardship for the rest of the world. Progressive thinking my arse!
http://fertilizermarkets.tumblr.com/
The Troika - Economic Angels or Financial Demons?
Great article on the Troika and Greece debt crisis.