Is the Euro well and truly buggered?

@Cycloptichorn,

Well, Papandreou will put it to a vote and the Greek will decide what Merkel and Sarkozy couldn't bear to bring themselves to: they will vote to exit the EU.

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@CalamityJane,

Let's hope they don't let the door hit 'em in the ass . . .

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@CalamityJane,

CalamityJane wrote:

Well, I held off long enough and hoped for a decent solution between the EU and Greece, but this non-compliance and defiance is just plain incomprehensible. It's like the beggar negotiating with the Salvation army if he really should take this winter coat handed to him, all the while it's below zero outside.

I love that Merkel and Sarkozy claim to be shocked by this turn of events....what chumps they are, this is how the Greeks roll. The clock is ticking on defusing this bomb, and other than their attempt to bully the Greeks in a meeting set up for Wed it is not clear where they go from here. I am sure that they are tempted to cut Greece loose and have the Germans pay the EU banks for their losses, but there is the very big problem that no one knows how many side bets have been made on Greek debt, how bad a Greek default would be for the global financial system. Governments are in a bind of their own making, they allowed all of these derivatives and allowed them to take place in private outside of public exchanges, so now when they are trying to save the global economic world order they find that there is far too much that they dont know. We dont know how many Euros of loses will result from one Eruo of default of Greek debt....is it one Euro? Is it 100 Euros? Nobody knows.

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@georgeob1,

georgeob1 wrote:

Well soon after they kicked out the Colonels, Greece elected Papandreo pere, a UC Berkeley graduate who quickly instituted give away social welfare programs to his favored voters, thereby undermining what was left of any creative spirit among the ever neurotic Greeks, and putting them on the debt-ridden road they have pursued to its recent collapse...................Equally odd is the anti business, redistributionist rhetoric of the U.S. administration and the occupy movement in a world that continues in the grip of a widespredad financial crisis chiefly created by the foolhardy spending and debt accumulation of governments - in both America and Europe (and possibly China). It appears they arer bashing the only force that can save them.

Agreed with all you say - especially the last sentence; it's a Greek tragedy but the local governments have only themselves to blame. Before the colonels - worth mentioning - the Greek government was headed by Papandreou grand-pere, even more to the left than the pere - that's why those colonels took over in the first place. But I don't know why anybody is surprised, since on August 1st it was already widely reported in the press (this from the FT) that:

Quote:

......Last week, it was announced that Cleary Gottlieb, the New York headquartered international law firm, had been engaged by the Hellenic Republic. I believe this tells us a lot about the direction euro area finance will take… the Cleary team working on Greece will be headed by Lee Buchheit, the partner who has previously represented Iceland, Argentina, etc, etc. Trusted by distressed governments, cursed by former optimists with long positions, his is the mobile number of choice for sovereigns that believe they have unsustainable debt burdens.

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@High Seas,

Up until yesterday the Greeks where telling the Eu what they wanted to hear, while making their plans for what they will actually do. This is not so different than when they told the EU that their debt and spending was with-in EU limits, when of course the truth was far different. How does that saying go.... "fool me once shame on me, fool me twice...?"

Merkel and Sarkozy might want to look into this..

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@hawkeye10,

You don't imagine they employ people who read the Financial Times, do you? I'm sure the lawyer's advice wasn't exactly classified either. Just to add comic relief to the situation the Greek defense minister just summoned the armed forces chiefs of staff and fired them - wonder if they were preparing a coup?

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@High Seas,

High Seas wrote:

You don't imagine they employ people who read the Financial Times, do you? I'm sure the lawyer's advice wasn't exactly classified either. Just to add comic relief to the situation the Greek defense minister just summoned the armed forces chiefs of staff and fired them - wonder if they were preparing a coup?

All the world is now on hold waiting to see what the next government of Greece is, and what they want to renegotiate. Fun times.....

I am particularly loving the EU leaders saying in effect " you promised us that you would make this happen, and now you have betrayed us by saying that you want the people of Greece to sign off on the deal" as if Greece is supposed to be a dictatorship! There might be a wee bit of blow back from that, as other citizens of Europe think to themselves "hey wait a minute, we ARE ALL supposed to be democracies here, do our national leaders not think so?".....

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@hawkeye10,

hawkeye10 wrote:

I am particularly loving the EU leaders saying in effect " you promised us that you would make this happen, and now you have betrayed us by saying that you want the people of Greece to sign off on the deal" as if Greece is supposed to be a dictatorship! There might be a wee bit of blow back from that, as other citizens of Europe think to themselves "hey wait a minute, we ARE ALL supposed to be democracies here, do our national leaders not think so?".....

That's true, but I suspect Merkel & Sarkozy, who put a lot of effort in to getting broad EU agreement to finance a reserve fund to protect their banking systems and make continued payments to the Greek government so it can sustain its deficit financing of a very bloated government bureaucracy , may feel that they have been badly used by the beneficiaries of their actions.

The Greeks are indeed free and entitled to self-determination. They are also equally responsibile and accountable for what they and the governments they elected have done. They are now asking others to enable them to escape the consequences of the past financial profligacy of their elected governments and demanding the unilateral right to refuse after the negotiations are done. In short they should contemplate the possibility their EU partners may wihdraw their offer of assistance.

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@georgeob1,

Quote:

They are also equally responsibile and accountable for what they and the governments they elected have done

That only means squat if the Greeks themselves feel it to be true.....I think what we see here is a repeat of the mistake that the global powers made with China, once you welcome into the club nations that have a long record of not being willing to play be the rules dont get shocked and start whining when those nations later after they are in the club (GASP!) DON'T FEEL THE NEED TO PLAY BY THE RULES!

The Greeks think that they can tell France an Germany to sit and spin only because it always works in their favor...this is how the Greeks have always rolled and it usually works for them. Likewise, don't come complaining about Italy being massively in debt, because they have a multi generational habit of being massively in debt. Europe is in trouble only because they have been willfully ignorant of human nature and of how the different peoples of Europe operate.

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@hawkeye10,

Well, when the EU cuts them loose, the Greeks may finally understand the truth as it pertains to them.

Unfortunately for us all we live in a world in which the irresponsibility of governments in making promises to their citizens which they cannot keep and in accumulating debts they cannot pay is harming us all in manifold ways. Ironically, our current government is blaming the private sector economy and its most productive citizens for the debts it has created. Worse it appears intent on killing the goose that has (so far} provided the golden eggs.

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@georgeob1,

Quote:

Unfortunately for us all we live in a world in which the irresponsibility of governments in making promises to their citizens which they cannot keep

And what of the responsibility banks have to not lend to groups they KNOW cannot pay the funds back? Does that simply not exist?

The truth is that it does exist; and they deserve to be punished exactly as much as Greece is. The bailout that Greece is being asked to accept isn't a bailout of Greece, it's a bailout of French and German banks. Greece will be screwed either way. Why should they protect foreign banks?

Cycloptichorn

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@Cycloptichorn,

The banks would ordinarily fail and their stockholders would lose their investments. However today's world is dominated by banks that loan irresponsibly to governments that with equal irresponsibility make promises they cannot keep. Thus, as a result, the irresponsible governments end up guaranteeing the loans of the irresponsible banks that feed them. Now our (soon-to-be-evicted) government seeks to plunder those who create the wealth they feed on under the false premise that it was they who created the problem.

Your reference to real estate loans is not only irrelevant to the point I made above, but also innaccurate in that you willfully ignore the role of government in encouraging the loans to which you refer.

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@georgeob1,

None of what you wrote there actually addresses what I wrote; for example, I didn't reference real estate loans in the slightest. I would ask you to point out where you think I did, seeing as I didn't write the words 'real estate' or make any mention of it - or our domestic government - at all.

Can you at least try and stay on topic?

Cycloptichorn

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@georgeob1,

Quote:

Well, when the EU cuts them loose, the Greeks may finally understand the truth as it pertains to them.

It was only two weeks ago that Merkel was saying that Greece can not and will not be allowed to leave the EU Shocked

1 Reply

@Cycloptichorn,

Cycloptichorn wrote:

...... The bailout that Greece is being asked to accept isn't a bailout of Greece, it's a bailout of French and German banks. Greece will be screwed either way. Why should they protect foreign banks?

You either never checked the CDS (credit default swaps) rates before writing this - or didn't calculate hedges used by French/German banks. CDS rates:

http://av.r.ftdata.co.uk/files/2011/11/111102-DTCC-Exposures.jpg

Gross notional is value you worry about if your counterparty is about to go belly up (eg MF Global in NY) net notional if counterparty is alive and well.

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@hawkeye10,

Chancellor Merkel said that Greece would receive support in its efforts not to leave the eurozone. Not the EU.

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@High Seas,

What is the point you are trying to make in this post?

Cycloptichorn

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@Cycloptichorn,

Simple - your statement which I quoted is flat-out wrong and the CDS rates (plus accounts of banks) prove that.

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@High Seas,

High Seas wrote:

Simple - your statement which I quoted is flat-out wrong and the CDS rates (plus accounts of banks) prove that.

How do the CDS you posted rates prove that I'm incorrect? Be more specific.

Cycloptichorn

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@Cycloptichorn,

I'll see if I can find report on hedging techniques - am in semipanic as text of this speech was only sent to me in Chinese and I need it for a report. Later

http://english.peopledaily.com.cn/mediafile/201111/02/F201111021459252288842289.jpg

1 Reply

Is the Euro well and truly buggered?

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