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Ten Unanswered Questions About The Second Greek Bailout

Submitted by Tyler Durden on 02/18/2012 13:28 -0400

Open Europe has published a briefing note outlining the ten questions and issues that still need to be resolved in the coming weeks in order for Greece to avoid a full and disorderly default on March 20. The briefing argues that, realistically, only a few of these issues are likely to be fully resolved before the deadline meaning that Greece’s future in the euro will come down to one question: whether Germany and other Triple A countries will deem this to be enough political cover to approve the second Greek bailout package.

In particular, the briefing argues that recent analyses of Greece’s woes have underplayed the importance of the problems posed by the large amount of funding which needs to be released to ensure the voluntary Greek restructuring can work – almost €94bn – as well as the massive time constraints presented by issues such as getting parliamentary approval for the bailout deal in Germany and Finland. While the eurozone also continues to ignore or side-line questions over the whether a 120% debt-to-GDP ratio in 2020 would be sustainable and if, given the recent riots, Greece has come close to the social and political level of austerity which it can credibly enforce.

Open Europe’s Head of Economic Research Raoul Ruparel said,

“There’s no way Greece can actually ever fully meet the conditions laid down by the EU and IMF – particularly if they keep piling on new demands. The scale of the cuts goes far beyond any fiscal consolidation – successful or failed – that any country has gone through in living memory.”

“The question is instead one of how long the eurozone’s charade of unrealistic conditions in return for more bailout cash can continue. Specifically, will Germany and other Triple-A countries accept half-baked solutions to the big unanswered questions that still haunt the efforts to save Greece?”

To read the briefing note online, click here:

1) Will the Greek centre hold?

Although the EU/IMF/ECB troika has finally managed to pressure former Greek Prime Minister George Papandreou and the leader of centre-right New Democracy party Antonis Samaras into providing written commitments to uphold the austerity plans should either win April’s general election, doubts remain over the strength and the actual relevance of the commitment sought by Greece's public lenders.[1]

Firstly, Samaras has long held ideological objections to the austerity approach and said in his letter that he will seek “policy modifications” in the future – suggesting he may well still try to renegotiate the plan after the elections.

Secondly, and more importantly, are the Commission, ECB and others really liaising with the right people in Greece? Recent polls have suggested that the three hard-left parties would garner a combined 42.5% of support – i.e. potentially more than New Democracy and PASOK together that currently poll at 31% and 8% respectively. In other words even if these two parties entered a coalition, they would still not have a majority in parliament. The Greek electorate is moving towards the extremes of the political spectrum – presumably because Greek voters increasingly see the two mainstream parties as mere executors of the demands of the Troika, Germany, France and others.[2]

Will it be resolved?No. The other parties will never provide a written commitment to austerity, while even if New Democracy manages to lead the next coalition government, Samaras will likely try to renegotiate the plan at some point.

2) Are Greek government commitments credible? Can Greece fill the €325m budget gap this year?

The rise in support for the extreme parties also raises pertinent questions over how much more austerity Greek society can take – and therefore how credible any government commitments to impose further budget cuts are. Greek Public Order Minister Christos Papoutsis said recently:

"Greece has made all the efforts that it needed to do, and the people cannot take any more…The government is making superhuman efforts and we have reached the limits of the social and economic system. From now on, Europe has to take the responsibility." [3]

This is unlikely to change and will probably only get worse. The latest programme commits Greece to 150,000 public sector job cuts over the next three years. Proportionately, as a share of population, that is the same as cutting over 800,000 jobs from the UK public sector, more than current UK plans and at a faster rate. Greek public workers and unions have no intention of giving in without a fight. Meanwhile, the increasing exasperation of the eurozone with the Greek proposals for cutting the deficit will probably lead to an increasing demand for oversight and eurozone control in Greece – a politically undesirable development likely only to inflame the issues mentioned above.

The fine line that the eurozone is treading was further highlighted when Greek President Karolos Papoulias responded angrily to eurozone criticisms of Greece, saying, “We are all obliged to work hard to get through this crisis, but we cannot accept insults from [German Finance Minister Wolfgang] Schäuble. Who is Mr Schäuble to insult Greece? Who are these Dutchmen, who are these Finns?”[4]

The niggling €325m gap in the bailout deal, which the eurozone still isn't convinced Greece can fill, is another indication of how long the road ahead will be. In comparison to the overall package, this is a small amount. However, it marks a clear sign that the eurozone, and in particular Germany, no longer sees Greek government policies as credible.

Will it be resolved?No. Questions over how much austerity the Greek population can bear and corresponding questions over government credibility will linger as long as Greece is in trouble – or even as long as it remains inside the eurozone. The government will commit to the austerity on paper but full and effective implementation seems unlikely.

3) How will the eurozone fund the €94bn needed to get the voluntary restructuring underway?

Over the past week a document on the private sector involvement (PSI) in the second Greek bailout has been circulated.[5] According to the draft the following funds needed for the PSI to go ahead are:

Bond sweeteners - €30bn
Funds to buy back bonds from the Eurosystem - €35bn
Funds to pay off interest - €5.7bn
Bank recapitalisation - €23bn

Total - €93.7bn (out of the €130bn bailout)

This is money needed to make the PSI successful and allow the voluntary restructuring to be completed. Firstly, this highlights that the claims by the eurozone leaders that they could simply push ahead with the PSI without fully approving the second bailout seem to be incredibly misleading. Without this money in place there would be a huge amount of uncertainty on the part of bondholders, particularly Greek banks who would need new capital injections to survive. However, to disperse this substantial amount of money would need full approval from the eurozone and some national parliaments (see below). Given that it is widely accepted that the PSI needs to be put into motion by next week if Greece is to avoid a disorderly default on 20 March, getting this money released could be a huge stumbling block.

Secondly, where would this money come from? The draft stipulates that the EFSF will issue debt to raise these funds (since it currently only has guarantees). However, the EFSF has not pre-funded any of these commitments, meaning that it would have to suddenly flood a subdued market with over €90bn in (possibly non-triple-A) EFSF bonds, with it remaining unclear at what cost the EFSF will be able to borrow. Once markets pick up on this fundamental gap, it could raise doubts about the PSI more generally and trigger even more uncertainty. Taken together, it could be catastrophic for Greece. [6]

Lastly, with new provisions such as €35bn for bond buy backs, will €130bn be enough to fund Greece for three years? We have long questioned whether this was even enough under the original estimates. Now it seems even more unlikely.[7]

Will it be resolved? Probably not. This is a very tricky situation. The chance of getting approval for and raising this amount of funds in the time necessary (a week or two max) seems unrealistic. But it’s also unlikely that eurozone finance ministers will delay the PSI further, simply because they cannot afford to. We would expect the eurozone to push ahead regardless and just try to manage the uncertainty with the hope that the second ECB Long Term Refinancing Operation (LTRO) at the end of February will help smooth the way and boost the demand for EFSF bonds.

4) Will the ECB participate in the restructuring? If it does, will that be enough to fill the €15bn budget gap?

One of the longest running sagas in this debate is the role of the ECB and its holdings of Greek debt. Recent comments by Jens Weidmann, Benoit Couere and Luc Coene, all members of the ECB Governing Council, suggest that the ECB is now willing to forego the potential profits on its holdings of Greek debt (around €15bn). This will likely be done using the €35bn in buy back funding given under the bailout, although the draft document on the PSI suggests the money could be used to purchase Greek bonds currently held as collateral in the Eurosystem, possibly opening up greater savings.

Will it be resolved? Probably. It seems almost certain that Greece will be able to access some savings from the Eurosystem although where, specifically, they will come from is yet to be decided. But whether this will be enough to fill the reported €15bn gap in the Greek budget under the latest debt sustainability analysis, is far from clear.[8]
5) How many private bondholders are still holding out?

Another big question over the PSI is what percentage of private sector bondholders will be involved. This was a huge unknown a few weeks ago which has been overlooked in recent days but without a definite answer ever being provided. Due to the opacity and confusion with the whole process it is hard to predict exactly where some private creditors, in particular hedge funds, currently stand.

Will it be resolved? Probably. The ECB and EFSF participation and huge political pressure may, in the end, sway enough private creditors to take part, in turn allowing Greece’s debt to be written down to the level required for the Troika to deem it “sustainable”. In addition, the recent threat by the Greek government to retroactively introduce collective action clauses – meaning enforced losses on bondholders – is an incentive to accept voluntary losses.[9]

6) Can Greece really achieve its growth and deficit targets?

With the latest austerity programme still hot off the press Greece already finds itself on the back foot. Figures released on 14 February show that the Greek economy contracted at an annualised rate of 7% in the fourth quarter of 2011, worse than expected, after a slowing of contraction in the third quarter. This bodes ill for the already unrealistic projections that Greece will return to growth at the start of next year.

Meanwhile, provisional data for January 2012 suggest that budget revenues were over €1bn short of expectations. Compared to January 2011, revenues were meant to have increased by 8.9%, instead they declined by 7%.[10] Taken together, this massively undermines the credibility of the second bailout package, which in turn will make it difficult to convince politicians from across Europe to continue to support the package, as well as increasing the risk of more market uncertainty.

Will it be resolved? No. These are just examples in a long list of missed targets. We expect this to continue under the latest austerity package and find the hopes that Greece will return to growth next year despite even further cuts hopelessly optimistic.

7) Will Greek debt ever become sustainable under this plan?

As we have consistently highlighted, Greece will still have a debt to GDP ratio of 120% in 2020 – where Italy is today. That is not sustainable. Furthermore, even after the restructuring, Greece’s debt burden will still be around 150% this year. Market suspicions over its sustainability will not disappear with the restructuring and the intense speculation of a Greek disorderly default will continue. Greece will continue to live from one tranche of bailout funds to the next, with questions being asked over the implementation of the latest bailout plan every time there is a review ahead of the release of funding. This is far from a stable or functioning economy.

Will it be resolved?No, this cannot be resolved with the current policy approach.

8) When will the issue of Finnish collateral be resolved?

This agreement has been a mess from the start. Originally agreed on the side-lines of the 21 July 2011 summit, the deal involved the Finnish government – under pressure from its parliament – requiring collateral from Greece in exchange for contributing to the second Greek bailout. This prompted much dispute but eventually got the green light from eurozone finance ministers. The latest plan suggests that the four largest Greek banks will provide €880m in collateral to Finland.[11]

Ultimately though, the structure of the deal was never finalised, mostly due to uncertainty regarding the size of the Finnish commitments to the bailout, and is now creating a circular problem: Finland cannot sign off on the collateral deal until it knows exactly how much it will be committing to the bailout. The bailout and the PSI cannot be finalised without Finnish agreement, but it needs to be agreed before Finland can sign off the second bailout.

Will it be resolved? Probably but given the months of disputes this issue spawned last year it should not be taken for granted.[12] A particular point of contention could be that, since Greek banks are getting a huge capital injection from the eurozone, some of the bailout money (guaranteed by all eurozone states) could actually be indirectly funding the Finnish collateral deal.

9) How much money can the privatisation plan actually raise?

The Greek government owns a huge number of sellable assets – it was expected to raise €50bn by 2015 by selling some of these off under the original plan for a second Greek bailout. This has now been reduced to €15bn, although there are rumours that, internally, the Greek privatisation agency is uncertain that even this lower target can be met. The failure of the programme is an unfortunate mix of many of the problems facing Greece: massive uncertainty over future Greek default, huge implementation and administration problems as well as limited eurozone and global demand due to slowing economic growth and lack of credit.

Will it be resolved? Most likely not. In turn, this is likely to further dent the Greek debt sustainability analysis, making targets harder to achieve.

10) Will the German, Dutch and Finnish parliaments approve the bailout?

The timetable for parliamentary approvals of the second Greek bailout remains unclear, but here is the status of the key countries – the approval will depend on whether a number of the key issues we flag up in this note will be solved:

Germany: The German Bundestag will vote to approve the second Greek bailout on 27 February, according to the Speaker of the Bundestag, Norbert Lammert, though it may ask for more time to consider the proposal – given the numerous delays in finalising the details of the deal – meaning that the vote could be moved. Whether or not German MPs will approve the deal very much depends on the credibility of the guarantees Greece can provide over the implementation of the additional measures. Regardless, expect many dissatisfied MPs from across the political spectrum.

Finland: It’s unclear when the Finnish Parliament will vote on the deal, though the Finnish Finance Minister Jutta Urpilainen has indicated that it may take place at some point next week (the week of 20 February). The opposition Finns Party and the Centre Party could both vote against but they only hold 74 out of 200 seats in the parliament and would therefore not have a majority. Regardless, the Finnish government needs to reach a final agreement on the collateral issue before it can sign off on the bailout.

Netherlands: The Dutch Lower House needs to approve the second Greek bailout package. The Dutch Finance Minister, Jan Kees De Jager, initially said that the Dutch Lower House would vote on 16 February. However, given the absence of a final agreement that will now have to be postponed until a future date, which is yet to be decided. Despite some confusion it is likely that the vote will be binding.

Will it be resolved? Probably. We expect all the necessary parliaments to approve the deal, once it is finalised, although not without raising a political furore and precious time being lost. However, there is still a risk that one of these parliaments does not approve the deal should Greece be perceived as failing to deliver on some additional points. The delays and complexities of getting approval in these countries could further damage the very tight schedule on which this plan is being run.

NOTES FOR EDITORS

1) For more information, please contact the office on 0044 (0)207 197 2333 or Raoul Ruparel on 0044 (0)757 696 5823

2) Open Europe is an independent think-tank calling for reform of the European Union. Its supporters include: Lord Leach of Fairford, Director, Jardine Matheson Holdings Ltd; Peter Cruddas, CMC Markets Plc; Lord Wolfson, Chief Executive, Next Plc; Hugh Sloane, Co-Founder and Chief Executive, Sloane Robinson; Sir Stuart Rose, former Chairman, Marks and Spencer Plc; Jeremy Hosking, Director, Marathon Asset Management; Sir Henry Keswick, Chairman, Jardine Matheson Holdings Ltd; Sir Martin Jacomb, former Chairman, Prudential Plc; Lord Sainsbury of Preston Candover KG, Life President, J Sainsbury Plc.

For a full list, please click here: http://www.openeurope.org.uk/Page/Supporters/en/LIVE

[1] See here for the full letter sent by Antonis Samaras: http://www.forexlive.com/blog/2012/02/15/samaras-letter-text-supports-plan-recovery-a-priority/

[2] Cited by Kathimerini, ‘Poll points to shift in voting intentions’, 7 February 2012: http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_07/02/2012_426628 Results are supported by a poll cited by Bloomberg, see here: http://www.bloomberg.com/news/2012-01-26/greek-support-for-papandreou-s-pasok-drops-to-12-poll-shows.html

[3] Cited by BBC, ‘Greece can’t take any more cuts’, 15 February 2012: http://www.bbc.co.uk/news/world-europe-17037267

[4] Cited by the FT, ‘Greek rhetoric turns into a battle of wills’, 16 February 2012: http://www.ft.com/cms/s/0/78f9f072-5808-11e1-bf61-00144feabdc0.html#axzz1mSTTPX9w

[5] Document published by La Stampa on 13 February 2012, see here: http://www.lastampa.it/_web/tmplframe/default.asp?indirizzo=http://www.lastampa.it/_web/download/pdf/grecia2.pdf

[6] The draft talks about paying the money out in tranches but to us that just doesn’t seem realistic given the situation in Greece post restructuring. Some of the funds could be paid out using EFSF bonds rather than cash, this would speed up the process but would require negotiations with private bondholders and could throw up more disagreements.

[7] Open Europe, ‘Abandon ship: Time to stop bailing out Greece’, June 2011: http://www.openeurope.org.uk/Content/documents/Pdfs/greece2ndbailout.pdf

[8] It’s worth keeping in mind that, given the interaction between this point and other points we raise, the budget gap could likely be even bigger than €15bn. Also some of these funds may go towards providing Greek banks with new collateral, since much of their current collateral takes the form of Greek bonds or bonds guaranteed by the Greek state – all of which will be in default after the restructuring. Therefore, to allow Greek banks to continue borrowing from the ECB, they will need to be provided with some new collateral to hold them over.

[9] That said, since private bondholders would already face 70% net present value write downs, it is not clear how much worse off they would really be under a disorderly default (although the European economy as a whole would suffer more). They would also definitely get paid out on the credit default swaps they were holding as insurance against Greek default.

[10] Cited by Kathimerini, ‘Dramatic drop in budget revenues’, 7 February 2012: http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_25206_07/02/2012_426623

[11] Cited by Reuters, ‘Greek banks to satisfy Finnish bailout collateral’, 15 February 2012: http://www.reuters.com/article/2012/02/15/greece-banks-bailout-idUSL5E8DF2FA20120215

[12] Open Europe blog, ‘Collateral thinking’, 24 August 2011: http://openeuropeblog.blogspot.com/2011/08/collateral-thinking.html

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Sat, 02/18/2012 - 13:33 | 2173008 slewie the pi-rat

11: first, BiCheZ!

Sat, 02/18/2012 - 13:46 | 2173050 BobPaulson

Your mommy will spank you when she finds out you are touching her computer.

Sat, 02/18/2012 - 13:53 | 2173066 slewie the pi-rat

12: would bob like me to tell him about his mom? probably! L0L!!!

13: will any of this ever be resolved? maybe. make that a definite maybe, ok?

Sat, 02/18/2012 - 15:54 | 2173360 trav7777

Greece needs to be just cut loose

Sat, 02/18/2012 - 16:04 | 2173407 drbill

That goes without saying.... Therefore, it won't happen.

Sat, 02/18/2012 - 16:46 | 2173518 DeadFred

Bond sweeteners - €30bn
Funds to buy back bonds from the Eurosystem - €35bn
Funds to pay off interest - €5.7bn
Bank recapitalisation - €23bn

Vs. 14.5bn to just hand them the interest due and kick the can to the next payment. No one is discussing this option but look at what it does for the kleptocracy.

-Those who have been speculating against the EU get their faces ripped off. Nothing like adding some pain to the equation to get the vultures off your back for a bit.

-Those favored ones in the know get to be the benificiaries of that pain by positioning for the short term rip

-The dog and pony show of how things are improving continues for a few more months while they continue to loot.

They can do this again and again as long as they turn Greece into such a charnal house that the PII_S are to horrified to try to extort the same concessions on their bonds.

I wouldn't think this way except NO ONE is talking about this option. It reeks to me of magician's slight of hand keeping us focused on the Bailout versus Default debate while they have Plan B already set.

Sat, 02/18/2012 - 16:58 | 2173546 trebuchet

ive been sayng it in posts for some time... with some much to do and so little time, march 20 is most likely to be a "semi solution"

tomorrows meeting the same.

Sat, 02/18/2012 - 17:15 | 2173590 DeadFred

To the big money players Greece is such a priceless commodity now. They can ramp the currency and equity markets up and down significantly by simply inserting the latest +/- rumor into their wholely controlled MSM outlets. Just look at the EURUSD over the last few months and imagine you have 50:1 leverage and you own the rumormongering news outlets. Why would you ever let this cash-cow go down? Prop it up and keep the game going. Everyone knows the Greek ship is going under but if they can continue the game a few more months they will. Greece will go down when its demise makes them the most money. I suspect that isn't in March.

Sat, 02/18/2012 - 18:56 | 2173774 Element

At least this time Raoul and his Lord-ish buddies didn't just say the European public should prepare themselves to pay Bankster's-Bad-Bets (BBB).

A noteworthy change from their last contribution.

Sun, 02/19/2012 - 00:11 | 2174294 Oracle of Kypseli

Greek default will occur as soon as the war starts. All countries will accelerate printing and the world will reset. When and how, remains unpredictable

Sat, 02/18/2012 - 18:50 | 2173764 Eally Ucked

I agree with that! But not for your reasons.

Sat, 02/18/2012 - 19:45 | 2173842 Matt

trav7777: Greece needs to be just cut loose

The problem is, they can't be cut loose, they can only cut themselves loose. Everything possible is being done to encourage them to do it, but they aren't taking the hint.

Sun, 02/19/2012 - 11:11 | 2174709 The trend is yo...

GREECE: THINK ICELAND

Sat, 02/18/2012 - 13:36 | 2173024 falak pema

Reminds me of an Agatha Christie novel : And Then There Were None (Originally, Ten little Niggers, --sorry it was her title written in 30s--).

Fascinating novel and you have to go to the end to find 'le dénouement'! Comme d'habitude! With Hercule Poirot !

I think TD is playing at Hercule P. And THEY, the "flat-foots", don't have a clue how to solve this "who dun it! "

Hercule Poirot to the rescue!

Sat, 02/18/2012 - 15:55 | 2173365 trav7777

sorry for what?

Sat, 02/18/2012 - 16:27 | 2173481 falak pema

To denigrate the "niggas" like you would, all ten of them, hey Travv??

Man of impeccable colour. White as pristine snow. Agatha Christie wrote that title for a colonial age, that has died. There are still a few stow-aways left, Robinsons of Crusoe Island who have retained their colonial ways and crusty mind sets. Right fella?

Sat, 02/18/2012 - 13:38 | 2173026 lolmao500

Russia Defending Entire World from Fascism (USA)

http://www.youtube.com/watch?feature=player_embedded&v=oOi8ZlSNrn0

Well someone got to do it...

Sat, 02/18/2012 - 14:42 | 2173183 Randall Cabot

Good link but even Russia hypocritically plays the Hitler card-did he forget that Russia teamed up with Hitler to invade and carve up Poland?

Sat, 02/18/2012 - 16:57 | 2173543 DeadFred

Yes, the corruption in the Russian power structure makes the Western kleptocrats look like choir boys. Russia will do what adds to the money and power of those who occupy the Kremlin at any given moment. Currently that means offering an alternative to Western domination.

Sat, 02/18/2012 - 23:57 | 2174258 Element

I've always maintained there are no good-guys, there are only 'leaders' and countries pretending to be good-guys, in order to attack and plunder their nominated bad-guy of the day.

i.e. it's all about audio-visual and narative propaganda, and who has the most compelling mythos.

But the endless competition of State propaganda-ministries and private-actors to construct the best and shiniest new lies, is driving the whole world toward total insanity of intent and action.

It's also very deliberate and rather entertaining, as per Russia's latest bitch-slapping of 'Obomba':

The Insolence of Obama

15th Feb 2012

http://english.pravda.ru/opinion/columnists/15-02-2012/120522-incolence_...

President Obama may be a lot of things but one thing he most certainly is, is insolent. On receiving the Chinese Vice-President Xi Jinping, the man who insulted the Nobel Peace Prize and is now labelled Obomber dared to lecture his guest on human rights. One hopes that Xi Jinping answered him in kind.

To receive someone in your house and to lecture them is perhaps the epitome of insolence. To receive someone in your house and to lecture them not for something they have done, but which the host himself has done, and a lot, is utterly unacceptable and underlines the fact that CIA-toyboy Barack Hussein Obomber is a one-term President about to disappear into the sewer of wannabe failure has-beens perhaps to market the Obama Family Chilli recipe, complete with packeted chilli powder, which he recently disgraced his Facebook account with.

One hopes that the Chinese Vice-President had the guts to respond in kind but one fears that he may have been too polite to answer as follows: Neither does the People's Republic of China opine when the United States of America invades countries illegally outside the auspices of the United Nations Organization, nor does the USA have any right to stick its nose into the internal sovereign affairs of another country, especially when most of the trouble around the world is caused directly by the USA's arming terrorists or supporting internal dissent or else by the imperialist designs of its dearly beloved allies.

I apologise. I replace the word "most" with "all".

One hopes that Xi Jinping told Obama to mind his own (rude word) business and stick his (rude word) nose into his own (rude word) country's affairs.

One hopes that Xi Jinping told his insolent host that China did not invade Iraq after lying at the UN Headquarters about "fantastic foreign intelligence" which turned out to be British bullshit that the Iraqis were procuring yellowcake uranium from Nigeria (when the country producing it is Niger...same difference, they're all dark, eh what?) and a decade-old doctorate thesis copied and pasted from the Internet about what Iraq might have...but didn't.

One hopes he told his insolent host that it was not China that slaughtered up to a million Iraqis, that it was not China that strafed water supplies in Iraq with military hardware, that it was not China that blasted the limbs and faces off children and murdered their families imposing freedom and democracy from 30,000 feet. Overseas.

It was not China that drew up lists of artefacts from Iraq's archaeological sites and handed them to the Vice-President ahead of the invasion, it was not China that totally destroyed a State and the livelihood of millions of people for some energy war and to pander to the whim of the lobbies surrounding the criminal Bush regime.

It was not China that opened concentration camps across the globe, it was not China that approved policies of torturing people, of illegally detaining innocent civilians, of urinating in food, of setting dogs on people, of practising sodomy on prisoners.

It was not China that maintained torture flights and torture vessels across the globe so that CIA psychopaths could have their evil way with terrified prisoners, many of them boys. It was not China that detained people for YEARS, without due process, without a trial, without access to a lawyer, without even an accusation.

It was not China that illegally invaded Libya, illegally armed groups of terrorists in an internal conflict, consorted with groups on NATO's own terrorist lists and murdered civilians, destroying civilian structures with bombs and missiles. It was not China that murdered the grandchildren of Colonel Gaddafi and then sat back with a chortle and insinuated "they shouldn't have been there" as the Israelis say when they attack schools with phosphorous bombs.

It is not China that turns a blind eye to Israel's nuclear arsenal while bellyaching about Iran, it is not China creating false flag events in Syria and itching to conduct a chemical attack to blame on the government in Damascus, it is not China that arms terrorists across the globe and then blames the insurrection on governments unfriendly to Washington's banking, weapons, drugs and energy lobbies.

What was that about human rights, Mr. Obomber? Ah and congratulations on wiping your backside on the Nobel Peace Prize. After all, they considered giving it to Bush and Blair after Iraq, so... What to expect from a....man?....who uses packeted chilli powder in his chilli con carne recipe; and come to think of it, since when does the President of a country present a foreign dish on his website?

Timothy Bancroft-Hinchey

Pravda.Ru

Feeling the love Barry?

Sat, 02/18/2012 - 13:38 | 2173027 spentCartridge

http://www.youtube.com/watch?v=2sy-pk-OoaM&feature=g-upl&context=G23166d...

Sat, 02/18/2012 - 13:41 | 2173032 GMadScientist

11) Spain

12) Portugal

13) Ireland

14) Italy

15) ...

Sat, 02/18/2012 - 23:58 | 2174274 Element

15) Belgium

16) France

Sat, 02/18/2012 - 13:40 | 2173034 The Big Ching-aso

Greeks. They've truly perfected not ever paying the tab while drinking right in front of everybody. Opa!

Sat, 02/18/2012 - 13:44 | 2173046 lolmao500

Good for them since all the drinks are on the banksters tab.

Sat, 02/18/2012 - 13:43 | 2173042 dirtyfiles

another 2x4 will hold it for sometime...

Sat, 02/18/2012 - 13:50 | 2173057 navy62802

The sad part is that they'll be doing this in perpetuity. OK, so let's assume that Greece receives another bailout in order to make its upcoming bond payments. What happens when the next bond payment after that comes due? With an economy that is already contracting at a 7% annualized rate and deep austerity which will likely accelerate the contraction, how can anyone justifiably argue that Greece will be capable of meeting its obligations in the future? So what? The plan is to just continue to bail them out over and over and over again? How long can that last? It just isn't a sustainable course of action. And that's just a narrowly focused analysis of the Greek situation ... doesn't even touch on all of the other crippled economies of the Eurozone.

Sat, 02/18/2012 - 14:02 | 2173086 wiser

Greece is a lifeless corpse..debts will be socialized in the end

Sat, 02/18/2012 - 17:22 | 2173609 _ConanTheLibert...

I didn't know there are living corpses...

Sat, 02/18/2012 - 13:57 | 2173075 Atomizer

It is a slow day in the small Athens city of Greece , and streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.

A rich tourist visiting the area drives through town, stops at the Hotel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.

As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Farmer's Co-op.

The guy at the Farmer's Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.

The hooker rushes to the hotel and pays off her room bill with the hotel owner. The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.

At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves town.

No one produced anything. No one earned anything... However, the whole town is now out of debt and now looks to the future with a lot more optimism.

Sat, 02/18/2012 - 15:56 | 2173367 trav7777

enough of this stupid shit.

The greeks would have taken the money, spent it and then played like they were the victim while they lounged in cafes all day

Sat, 02/18/2012 - 18:54 | 2173768 Eally Ucked

You and your fellow countryman are doing exactly the same, just at much bigger scale. Whats is your plan for tonight? A litlle joint?

Sun, 02/19/2012 - 00:03 | 2174278 Element

Replace the word 'greeks', with 'humans', and you'll get the maximum available points-score for this round of Wheel of Fortune.

Sat, 02/18/2012 - 16:14 | 2173454 trebuchet

Brilliant!!

Now that is how the economy truly works - in a nutshell!! or at least is meant to work

.... prostitute doesnt run ot the hotel owner to pay her bill, buys smack instead, hotel owner desperately goes to the neighbour who gives him a $100 on condition he pays back $120.....

asking for collateral, hotel owner says, well im owed $100 from this woman + i have this new customer who is DEFINITELY going to stay overnight so i'll pay it back in the morning.... when the customer leaves with his $100, hotel owner goes to his cousin and ays look i owe $120 tomorrow morning to my neighbour please lend me the money...

so cousin raids his kids piggy bank and comes up with $30.. says to the hotel owner, pay the interest on the loan we'll find the rest tomorrow, tomorrow is another day....... now that we have $10 left over, lets have a drink....

meanwhile negihbour expecting $120 in the moringin has raided his wifes savings of $50 and gone to the casino with the prostitute only to lose half the money and spend the rest on the prostitute.... who spends it on more smack...

next morning comes... next wife says "where is the svings, i need it for shopping! man says, go to the butcher, ask him for credit.......

Sat, 02/18/2012 - 17:01 | 2173552 DeadFred

Smack dealer is #winning.

Sat, 02/18/2012 - 16:59 | 2173550 sabra1

at the end, the hooker still owes the hotel owner, no?

Sat, 02/18/2012 - 18:31 | 2173722 Shigure

Atomizer

Perhaps the people in your story would have been better off using a local currency

Sat, 02/18/2012 - 19:24 | 2173806 Atomizer

€ 100.⁰⁰Fixed.

Sun, 02/19/2012 - 04:23 | 2174482 Shigure

Er, didn't just mean euros.

1. Maybe the drachma

2. Maybe local exchange currency (like the LETs scheme in my city and others)

Sat, 02/18/2012 - 20:08 | 2173891 Matt

If people all just owed each other, you think they would just have a group debt-forgiveness. Like if Spain owes Italy $40 Billion and Italy owes Span $25 Billion, they should just net it out so Spain owes Italy $15 Billion and that's it.

Sat, 02/18/2012 - 13:59 | 2173078 machineh

'EFSF has not pre-funded any of these commitments, meaning that it would have to suddenly flood a subdued market with over €90bn in (possibly non-triple-A) EFSF bonds.'

You're telling me that we've been talking about Greece's bailout for months, and nobody even thought to check EFSF's bank balance?

* claps hand to forehead *

OMG, what a fool am I! Either this whole thing is a gigantic joke, or else the Troika is about to unleash the greatest, most absurd Ponzi scam EVER.

Because after sticking its toe in the water with a couple of piddling bond issues of €3 billion or so, how in the hell is EFSF going to cannonball the market with a €90 billion flotation, unless the ECB and the Fed stand ready to step in with unlimited back-up bids?

Errrr, uh ... uh-oh, maybe I just answered my own question. Sorry, gotta go, TIMATOV (Think I'm About To Openly Vomit) ...

Sat, 02/18/2012 - 14:10 | 2173088 dracos_ghost

Restructuring Greece to go down to 120% of GDP by 2020. If they are still above 100%, how are they supposed to meet any debt obligation needs without borrowing to pay down their debt, rinse, repeat. I cannot believe the egos of the Euro-Intellectual that they think putting lipstick and a new dress on a pig's carcass, no less, that somehow it justifies their failed social experiment.

Again, we haven't even started with Italy/Spain/Portugal/Ireland yet the perception of an "Orderly Default",whatever that really means, is keeping everyone punch drunk in the equity markets.

Sat, 02/18/2012 - 20:18 | 2173913 Matt

If they are still above 100%, how are they supposed to meet any debt obligation needs without borrowing to pay down their debt,

I think you are confusing Debt and Deficit. If they have a Debt-to-GDP ratio of 120 percent, but a Budget Surplus of 20 percent, they can use the surplus to pay down the debt. The two things that are important are the rate of interest they are paying on their debt, and their current surplus / deficit.

If the federal government takes in 25 percent of a nation's GDP through taxation, and applies 3 percent of it towards interest and 2 percent towards debt reduction, they can pay it down in a timeframe similar to when a private citizen pays a mortgage. This requires average 2 percent interest on the debt.

If the average interest on 120 percent debt to GDP is 7 percent, on the other hand, it will take 8.5 percent of GDP just in interest; over 40 percent of the budget will be paying down the debt. Actually, that is still in line with what a person with a mortgage pays.

The problem is that if federal governments were people, they'd be spending 30 percent of their money looking after their parents, and 35 percent on medical bills for their family - themselves, their parents and children. In this case they could barely afford 20 percent of their budget for the mortgage.

Sat, 02/18/2012 - 14:06 | 2173096 Eally Ucked

To me all those number crunchings are totally out of whack at unbelievable scale, first their GDP is already shrinking, main industry is tourism which can deliver when is heap, staying with Euro doesn't help. In the future situation will get worse because of unrest in the country and probably hostility of Greeks to their European visitors. So the place won't be so nice for tourists any more. Those austerity measures will have big detrimental effect on infrastructure too, another reason why tourism will decline. They want them to be at 120% debt to GDP in 2020? And how Greeks look at situation where they will be beggars for the next 50 years because that 120% won't change anything in their lives.

Sun, 02/19/2012 - 04:22 | 2174287 Element

-7% ... that's like worse than USSA in QTR3 2008 when the bankster whirld was 'ending', and their opportunistic Keynesian flunkeys were screaming out for massive stimulus-spending so that they didn't end up in a great-depression.

T'was vital !!!

But Greeks will be ok with more austerity .... no biggie ... greeks are just whingers who don't like debt slavery.

Sat, 02/18/2012 - 14:14 | 2173116 Sudden Debt

I wonder what this red buttons do....

Sat, 02/18/2012 - 15:18 | 2173242 slewie the pi-rat

panique?

Sat, 02/18/2012 - 14:19 | 2173123 CrashisOptimistic

This series of questions never asked the important ones.

Item: To what extent are the PSI holdouts hedged with swaps? Are they immune to threats and pressure as a consequence of swaps? Do they WANT default to occur because of their swap holdings?

Item: As the "draft agreement" of the PSI "deal" has made the rounds, at no time was there any announcement from the English law bondholders that it actually was agreed on. The draft "agreement" may be an agreement between Greece and Greece.

Item: Putting those two aside, is it possible that without any agreements at all, with Greece voting to default on everything, that the EU would themselves pay the March 20 $14 billion bond payment to buy time, and maybe also make the next payment and the next? Bearing in mind their obvious terror of consequences, one would think so.

Sat, 02/18/2012 - 15:21 | 2173251 kaiserhoff

Good questions, but for once in my life, I'm glad this shit is out of my league and I'm not trying to arb this train wreck.

Sat, 02/18/2012 - 15:52 | 2173139 Zero Govt

'Shock Horror' News

Greece is Broke

The politicos-bankers are so knee-deep in the mire there ain't no saving these muppets

Will not be revived, cannot be revived

Not a chance, dead as a Dodo, toast

Posturing, waffle and endless political clown show aside, they're f**ked

There ain't no coming back, no getting out, never was (a hope)

Are we crystal?

Greece DOA, RIP

Next..

Sat, 02/18/2012 - 15:00 | 2173205 Nobody For President

"Item: Putting those two aside, is it possible that without any agreements at all, with Greece voting to default on everything, that the EU would themselves pay the March 20 $14 billion bond payment to buy time, and maybe also make the next payment and the next? "

That has occurred to me as well. If the 130b bailout is not finalized in time, some sort of 'emergency tranche pending final approval'- God knows what the Eurocrats would call it - to cover the 14.5 and prevent the dreaded credit event seem somewhere between possible and likely. To me, the biggest wild card is what is the total bill if CDS payments are triggered, and who pays it - this seems to be totally opaque, but just suppose some of the finmins have a pretty good read on this, at least for their own countries, and it scares the crap out of them. This means the 14.5 gets paid to prevent default some damn way or another - anything to get the PSI deal done without CDS triggering.

Then they let Greece loose in an 'orderly' fashion...

I'm probably wrong about this. This Euro soap opera has had SO many twists and turns.

Sat, 02/18/2012 - 16:05 | 2173410 machineh

Good thinking, Nobo!

But banksters have an even better idea: make the March 20th coupon payment in scrip, redeemable 'whenever we say so.'

Problem solved: payment made; no default; zero cash outlay.

Think like a criminal -- we're in Ponzilandia, where a sucker never gets an even break!

Sat, 02/18/2012 - 16:19 | 2173465 trebuchet

lol which they can then pledge as sound collateral to leverage into......... oh wait nothing worth buying out there

Sat, 02/18/2012 - 15:06 | 2173218 AndrewCostello

Are the Greeks lazy - yes.

Is the banking system fraudulent - yes.

Are we printing money - yes

Everybody is at fault, because the majority of the world is living beyond it's means.

http://www.amazon.com/Simple-Wealth-Mr-Andrew-Costello/dp/1463523017/ref

Sat, 02/18/2012 - 15:17 | 2173240 GeneMarchbanks

Insightful. Tell us more.

Sat, 02/18/2012 - 17:29 | 2173619 hardcleareye

"Walter, I love you, but sooner or later, you're going to have to face the fact you're a goddamn moron." The Dude, from The Big Lebowski

I think of The Dude as Greece.

http://www.youtube.com/watch?v=7AEMiz6rcxc

http://www.youtube.com/watch?v=SjBBDJ5OiT0&feature=related

Sun, 02/19/2012 - 05:50 | 2174523 Olympia

The greatest private fraud of human history.
Who are the great fraudsters who are becoming the murderers of the human kind? How does the economy "illness" threaten Democracy and the freedom of people?

http://eamb-ydrohoos.blogspot.com/2012/01/global-debt-crisis.html

---------------------------------
By knowing what happened in indebted Greece, where loan sharks created “bubbles” and the current inhuman debt, one can understand the inhuman plan in total ...understand where this plan started just to bring all states at the same end ...understand how this type of plans are established...

Sat, 02/18/2012 - 15:13 | 2173228 loveyajimbo

It is ALL about avoiding triggering the CDS, which would potentially damage the system, crash the markets, take down a few of the big banks in Europe and the US... But a 50% haircut IS a default, the shitheads trying to pass it off as "voluntary" are just using the standard "change the rules" thing... again. Contract law and all law is now a conveinence of the mega-rich.

Sat, 02/18/2012 - 15:17 | 2173234 GeneMarchbanks

I think the Fins are smug.

Sat, 02/18/2012 - 16:04 | 2173396 Zero Govt

i think Papadickopulis (and family) is the smug one

these socialists dug the debt-spending black hole and grew the over-pampered State to the point of killing the private sector in hundreds of dictates

during the enitre fall-out amongst the pawns (Police and citizens fighting on the street) this manicured Trotsky tosser has had not a hair out of place

How to breeze through your family driving an entire country into the socialist sewer without a single crease in your $5,000 suit let alone facing any accountability (like life in jail for treason)

Sat, 02/18/2012 - 16:01 | 2173281 Joebloinvestor

The hilarious part of this whole fiasco is the triggering of the CDS.

The ratings agencies are gonna pull the rug out from everyone when they determine that anything done to current bonds such as: extending maturity or a write down of value or interest is gonna be considered a "credit event".

Then the real fun will begin.

Now the LYING ASS Greeks suddenly found a way to plug the hole:

http://www.bloomberg.com/news/2012-02-18/greece-identifies-eu325-million-in-budget-cuts-papademos-says.html

The Greeks will:lie, promise and pledge anything to get the money.

Sat, 02/18/2012 - 16:02 | 2173394 bluebare

Is there anybody out there?

Sat, 02/18/2012 - 16:06 | 2173416 TigerTrail

a "Black Monday" or a "Black Tuesday" ?

Sat, 02/18/2012 - 17:11 | 2173575 FuentesElla23

a best friend's mother-in-law makes $73 hourly on the computer. She has been laid off for 6 months but last month her income was $14399 just working on the computer for a few hours. Go to this web site and read more .... LazyCash9.com

Sat, 02/18/2012 - 18:17 | 2173696 machineh

You mean running her XXX escort service on Craigslist?

We gather that 'mother-in-law' prolly means YOU, troll.

Sat, 02/18/2012 - 17:15 | 2173591 TigerTrail

The Telegrapgh just confirmed that The German finance ministry is actively pushing for Greece to declare itself bankrupt

http://www.telegraph.co.uk/finance/financialcrisis/9091021/Germany-drawi...

Sat, 02/18/2012 - 18:29 | 2173717 machineh

And a 53-page 'Sovereign Default for Dummies' guide, by Variant Perception, has been posted here:

http://www.ritholtz.com/blog/2012/02/a-primer-on-the-euro-breakup/comment-page-1/#comment-610688

This paper gets right down to the naughty bits: the weekend special session of parliament; the subsequent bank holiday and capital controls at the borders; the stamps you have to get on your euros to validate them as 'temporary drachmas.'

If these rumors are true, Greece won't wait till March 20th ... prolly make the 'surprise announcement' on March 3rd or March 10th, before all the domestically-held capital escapes over the border.

Sat, 02/18/2012 - 19:13 | 2173794 insidious

There is almost nothing about this entire Greek mess that adds up. One incredibly uncredible projection is that the Greek economy will return to growth by the beginning of 2013 - reversing the current 7% decline in GDP while executing extremely regressive finacial policies - including massive layoffs and cuts in retirement payments. A second projection is that the Greek debt to GDP ratio will be a 120% in 2020. No way anyone has a clue what that ratio will be 8 years from now.

Sat, 02/18/2012 - 20:17 | 2173909 snowlywhite

Jeremy Hosking, Director, Marathon Asset Management - that's one of the vulture funds trying to block PSI... great credibility, really...

not that Greece won't default, but that's another story; you still can't complain about msm and have even more pathetic fear mongering than they do(actually a remarcable performance per se)...

Sun, 02/19/2012 - 05:47 | 2174522 Olympia

Loan sharks knew that if they took the dollars printing machines under their control they could suffocate the world ...they could initially suffocate USA and after taking the USA from the Americans, they could move and suffocate the whole world and take the countries from their people.

FED printed cheap money and loansharking multiplied this money in an unnatural way within the American economy boarders and they discarded them abroad so that they did not threaten USA. USA became the first state in the world with artificial “breathing”...

It cannot be possible but just in the USA for only the last year, more than one million houses were seized. It cannot be impossible but the New World has returned to tents and shelters ..has returned to the ages of Columbus. It cannot be possible that we allow to a few loan sharks looting the toils and the assets of people...

http://eamb-ydrohoos.blogspot.com/2012/01/global-debt-crisis.html

------------------------

Global Debt Crisis

Authored by PANAGIOTIS TRAIANOU

Sun, 02/19/2012 - 06:57 | 2174538 Dorky