Let's send financial assistance to our Greek brothers....

[Keukasmallies]

http://www.cnbc.com/id/36897497

 

This link describes a microcosm of the problems in Greece in terms of tax collection. The sad thing is that we'll participate in a bail out if asked.

 

Fess up, posters, how many of you hide your pool behind a high wall?

[finknottle]

http://www.cnbc.com/id/36897497

 

This link describes a microcosm of the problems in Greece in terms of tax collection. The sad thing is that we'll participate in a bail out if asked.

 

Fess up, posters, how many of you hide your pool behind a high wall?

 

What do you mean "asked"?

 

The bailout that was finally agreed to, the one that caused so much angst in Germany, calls for roughly half the money to come from the EU, and half from the IMF.

 

And who is the largest contributer to the IMF?

[OCinBuffalo]

1. There is nothing sad about breaking up government worker's/union control of a country. Clearly, these government workers are part of the problem, if not the central problem itself. Why it's such a surprise to some that creating make-work jobs that promise a free ride for life is a bad idea? Who knows? You would think the idiots would have learned from history by now.

 

2. Problems with tax collection is the effect, not the cause. Out of control government spending on make-work, or, "shovel-ready"(remember that?) jobs that create a drain on society is the cause of their troubles.

 

3. Think about it: if you have a bunch of people that refuse to work more than 4 hours a day, and can't be fired because of their unions/government employee laws....and those people happen to be....tax collectors.....you are going to have a hard time...collecting taxes.

 

4. And the Germans and French, not us, are going to be stuck with this one. EDIT: I guess I am wrong re: the IMF thing.

[KD in CA]

1. There is nothing sad about breaking up government worker's/union control of a country. Clearly, these government workers are part of the problem, if not the central problem itself. Why it's such a surprise to some that creating make-work jobs that promise a free ride for life is a bad idea? Who knows? You would think the idiots would have learned from history by now.

 

Too bad the ignorant public is allowing dirty scumbags to do the exact same thing here in the US.

[Magox]

SOVEREIGN DEBT CRISIS

 

Tier One: Greece, Portugal and Spain

 

These are the countries that are imminently at risk of default, unless they get a bailout from either the IMF or the ECB.

 

Tier Two: Ireland, Italy and France

 

These countries will get dragged down if the European economy falls back into a recession.

 

Tier Three: US, Japan and UK

 

 

The cost of bailing out Greece has ballooned to $150 Billion. Why? Too much government spending, with virtually no prospects of paying off their debt. What's happened? Redemptions in government debt, investors don't feel comfortable holding Greek Debt, which in turn raises the cost of servicing their debt, which then makes it almost impossible for them to maintain.

 

Contagion has spread, and similar fears are playing out in Portugal and Greece. This Sovereign Debt Crisis is like the Ebola virus, any country that is perceived to have too high a Debt to GDP ratio with no growth prospects are being attacked by bond holders. The higher the Bond yield, the harder it is to maintain the debt. So TIER ONE is under attack.

 

Germany, a country that is in an election year (which is important) doesn't want to give the go ahead on the funds until Greece meets all the austerity measures (cuts) that is required, hence all the violence from the communist unions in Greece. Germany has supposedly given the green light, which we will find out tomorrow for sure.

 

However, this is still not enough, yes it does buy Greece a year or two, but what about Portugal and Spain? These economies are much larger than Greece's and the cost of an IMF bailout would most likely be much larger.

 

Just like here in the U.S, Germany is also "bailout" weary. Very unpopular, 60% oppose the Greek bailout, they would rather have them just default and have them dropped from the Euro. Where they could go back to the Drachma and print their way out of it. But ECB members don't want that, stating that the "unintended consequences" would be unthinkable.

 

So if Portugal and Spain require a "bailout", (which they will at some point), who is going to foot the bill? The IMF? Not likely, way too politically unpopular and I'm not sure they have the funds to take on such a burden.

 

The ECB is the most likely candidate, however Trichet and Axel Weber, the two most influential ECB members are adamantly opposed to doing such a thing. Basically what would have to happen is that the ECB would have to print money, and buy Spanish and Portuguese bonds. Trichet stated that the only way they could do that is through the secondary markets, even though today he once again reiterated that they are not considering it, at this point. Axel Weber, a German, is also opposed to such an idea, which is referred to as the monetization of debt through quantitative easing, (which btw, we did that early last year to the tune of $1.55 Trillion, including MBS purchases). The problem is that German monetary policy chiefs such as Axel Weber will most likely be adamantly opposed to it, considering how inflation risks are inherently ingrained in the German economist mind. They've lived through some bad inflationary periods and they are famously known to be extreme inflation hawks.

 

So what the ECB is doing now, is they are urging European countries to make the tough cuts now, because if they don't a bailout will be inevitable. If there is no bailout, and they allow them to default, Europe will most likely go through a deflationary death trap for the next 10 years, which of course would impact us here in the U.S

 

My guess is that at some point, Trichet and Weber will realize that a bailout will be necessary, and the monetization of debt will commence. Which of course would be EXTREMELY inflationary over the medium term. Basically, that would mean that money would be printed to lend to these countries, so that they can spend. If you create more money out of thin air, then the symptom WILL BE HIGHER PRICES.

 

This is just the beginning folks. Don't get me wrong, I believe that a resolution will come about some time soon, but it won't disappear. The problem will still be there, it will just be out of sight for a while, until the next slow down.

 

This is Round 1 of the Sovereign Debt Crisis.

[Magox]

I showed this to Tom the other day, just to get an idea of how interconnected the Banks are

 

http://www.nytimes.com/interactive/2010/05...ew/02marsh.html

 

Here is another good article that shows how it impacts the U.S in ways that most people would of never of imagined.

 

http://www.nytimes.com/2010/05/09/business...9ripple.html?hp

[UConn James]

Looks like the clock is ticking for the euro and the EU.

 

It may come first as booting out Greece, Italy and Spain --- when is anyone's guess. There's emergency meetings over the next three weeks with them and France. Link. Much of Europe will be entering recession soon, and France and Germany will be in 2013.

 

It's stuck together with bubble gum and baling twine. As was said in the '70s into the '90s and into today... you need strong political unity before you have currency unity. According to officials, Germany is now on the line for $1T of liability and does anyone have confidence that the Greeks and others can make good? You can only tighten a belt so far. I can't see how continuing to bankroll their neighbors is going to be tolerable over the forthcoming year for Merkel to win re-election... but then again, there's a different kind of rationality across the pond.

 

The fact that we're in it even to the extent we are through the IMF and our banking is sickening. Is this the point where Obama gets to say, "Gird your loins, gentlemen?" This is all going to end badly.

 

Germany may be the country that brings the euro crashing down

Angela Merkel, facing an election next year, cannot afford to ignore the evidence of the polls – that a vast majority of her people say they have had enough of being expected to bail out their failing neighbours indefinitely.

 

Without question, this is by far the gravest crisis the “project” has ever faced, but one which it has hubristically brought on itself, with all the inevitability of a Greek tragedy, by that gamble it took in the 1990s, to impose a common currency without first creating the political union without which (as was observed at the time) it could not work. As telling as anything in this drama has been the silence of France, under its new president, François Hollande, who, if anything, sides with those who look to Germany to bail them out. The old “Franco-German motor” is dying – and with it the entire project it drove forward for 50 years.

Edited August 19, 2012 by UConn James

[B-Man]

Tricky?

Andrew Stuttaford

August 19, 2012

 

The Economist:

Poland’s entry into the euro is imminent—in theory. With relatively healthy public finances, it should easily qualify. The economy is slowing but it is still the fastest-growing among big EU countries. Germany wants Poland in, at one time even talking of it joining in 2015. Yet Donald Tusk’s Civic Platform-led government has an opaque public line, promising only to join when the conditions are right.

The truth is that Poland faces a tricky dilemma. Mr Tusk has no wish to adopt the euro in its present crisis. But since the likely solution involves greater political and fiscal integration, it could become harder to join later

.

Actually that’s a plus. For Poland to abandon its hard-won democracy (because that’s what those weasel words “political and fiscal integration” really mean) in exchange for a little more infrastructure spending would be a deal so dumb that it would make the sale of Manhattan to the Dutch look like an act of genius.

And then there’s this:

The free-floating zloty was an advantage in the financial crisis. A weaker currency supported exports and foreign investment; it also raised the value of EU funds, which are euro-denominated.

That would be that, you might think, but beneath a skeptical surface, The Economist has a europhile core, and so we read on:

Surveys suggest that the euro crisis has turned Poles from enthusiasts (around 60% backed euro membership a few years ago) into pessimists (only 25% now favour joining, with 68% against). The opposition Law and Justice Party taps this sentiment. It appeals to victims of Poland’s breakneck social change and structural reforms, such as the millions of public-sector workers and the young unemployed.

Translation: only losers don’t like the euro. This was the sort of argument that many in Sweden’s establishment put forward at the time of that country’s 2003 referendum on the single currency (the sensible Swedes ignored them and stuck with the krona, a decision that has worked out very well).

 

The Economist concludes:

A general election is due no later than 2015. The government cannot risk making euro entry part of its programme. Yet unless it joins soon, Poland could be forced into a second-class status in Europe…

Oh come on: “first-class” status would be akin to a first class ticket on the Titanic or, if the Poles are luckier than that, a billet on (looks around nervously to see if Victor Davis Hanson is around) one of the higher benches of a trireme. Either way, it’s well worth missing.

 

In next week’s The Economist: A tricky dilemma: whether to jump into that volcano.

 

 

 

 

 

http://www.nationalreview.com/corner/314402/tricky-andrew-stuttaford

Edited August 19, 2012 by B-Man

[Nanker]

It's a comfort to know we beat the **** out of the Krauts in WWII to keep them from ruling the world.

Looks like it'll be between them and the Red Chinese now, instead of them and the Japanese.