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As goes Greece, So goes ………

8:48 pm in Uncategorized by cmaukonen

Athens Greece - Brooklyn Musium / flickr creative commons

Ives Smith reminds us in her current critique of Martin Wolf that the situation is deteriorating still in Greece and even the IMF says that austerity is the worst measure they could take now.

Wolf then proceeds to tell us that the Eurozone continues to be a resolute practitioner of austerity policies. Readers may recall that there was a huge kerfluffle in the economics-related media when the IMF admitted it was all wrong, that the fiscal multipliers in the Eurozone had turned out to be larger than one. In econ-speak that means you can’t starve your way back to health. Cutting fiscal deficits results in an even greater economic contraction, resulting in even worse debt to GDP ratios. But the rest of the European officialdom seems to be in shoot-the-messenger mode.

So bad that people are now metal scavenging industrial sites and even the infrastructure

The thieves are accused of stealing industrial cable, power-line transformers and other metal objects – triggering blackouts and massive train delays. The profile of the metal thief is also changing, authorities say, from gypsies and immigrants living on the margins of society to mainstream Greeks who have fallen on hard times. A group of men were caught trying to take apart an entire bridge and droves of immigrants can be seen pushing shopping carts around Greek neighborhoods looking in recycling bins.


Athens’ nine-year-old light rail system has been a prime magnet for metal robbers, with at least five major disruptions reported in the past six months due to cable theft that forced passengers to hop on and off trains as diesel replacements were needed. The trend has had lethal consequences: In early January, the body of a 35-year-old man was found near Athens beside the tracks of a suburban rail system that services the capital΄s airport. He had been electrocuted while cutting live cables, police said.

Barter has become typical and medicine scare and hospitals reusing old sheets etc. As anyone who recalls their history knows, it was this kind economic situation that enabled Hitler to come to power. And now it has been helping Greece’s Golden Dawn Nazi party to rise in popularity as well.

But Golden Dawn is not just a gang of radical right-wing thugs. It is now the fourth-largest party in Greek politics. In elections this year, it won 18 of 300 seats in parliament on an explicitly anti-immigrant platform. Its growing constituency includes many ordinary Greeks who fear that waves of impoverished foreigners are draining the state’s dwindling resources and taking their jobs in a country where nearly a quarter of the population is unemployed. And as the country’s economy continues to collapse, Golden Dawn is becoming increasingly entrenched in the mainstream of Greek political life.

It is not inconceivable for them to win the next election or at least become a very important player. And why is this so ? Well can’t you guess ?

So why are the periphery countries suffering this level of unproductive pain? Because the countries aren’t making the decisions. It’s powerful local politicians who are selling out their countries, working in cahoots with Eurozone technocrats. And I can assure you none of them are sharing in the suffering of periphery country workers.

It’s strangely ironic that the one country pushing the hardest for austerity of the Eurozone countries is the one country that should be painfully aware of the consequences of this.



Eurozone and Greek financial crisis…Day 2

7:09 am in Uncategorized by cmaukonen

50 Drachmae - seriykotik1970

Hi Pups. Well here we go again and I bet you thought this was all taken care of. HA…silly you. But anyway here are the new links to the continuing stories and updates to this situation. From The Guardian and The Athens News.  The questions of the day are, Will the Syriza head Alexis Tsipras be able to form a coalition government and will Greece eventually leave the Eurozone ?

From the Guardian’s blog :

2.52pm: The global market rout of the past couple of days is continuing in America now Wall Street has opened.

The Dow Jones Industrial Average is down 106 points in early trading – another fall of almost 1% – and so there is no impetus for a recovery in Europe. The FTSE 100 is currently down 56 points or just over 1%, France’s Cac is 1.2% lower and Germany’s Dax is down 0.6%. The Athens market is getting off comparatively lightly, down just 0.25% but Spain is really feeling the pain – the Ibex is off 3.2%.

As well as the uncertainty over Greece – will it get a government? will it default on its debts? will it leave the euro? – the state of Spain’s banks is also causing concern to investors.

The Spanish goverment was expected to announce plans to support its banking system on Friday, but the country’s ABC newspaper is reporting [in Spanish] the bailout of Bankia – the third largest bank in Spain – could be announced this afternoon. The report says the government will convert the €4.5bn or so it has pumped into the bank into shares, giving it around 45% of the bank.

Read the rest of this entry →

Eurozone crisis solved. Greece Offers to Repay Bailout with Giant Horse

10:00 pm in Uncategorized by cmaukonen

From the Borowitz Report :

In what many are hailing as a breakthrough solution to Greece’s crippling debt crisis, Greece today offered to repay a bailout from the European Union nations by giving them a gigantic horse.

Finance ministers from sixteen EU nations awoke in Brussels this morning to find that a huge wooden horse had been wheeled into the city center overnight.

The horse, measuring several stories in height, drew mixed responses from the finance ministers, many of whom said they would have preferred a cash repayment of the EU’s bailout.

But German Chancellor Angela Merkel said she “welcomed the beautiful wooden horse,” adding, “What harm could it possibly do?”

There was no comment from Ben Bernanke at the Federal Reserve however when CITI Group chairman Richard D. Parsons offered to repay it’s loans with a 20 foot high rubber skunk.

Whats next for the Eurozone ? With Update

3:22 pm in Uncategorized by cmaukonen

With Greece still edging toward the financial abyss despite all the political maturations.  Now Italy – as has been predicted – is now hurling toward the inevitable default. Even though Italian prime minister Silvio Berlusconi’s promise to step down.  Now Barclays says Italy is finished as well. Courtesy of Zero Hedge.

Euphoria may have returned briefly courtesy of yet another promise for a resignation that will likely not be effectuated for weeks or months, if at all, and already someone has done the math on what the events in the past several days reveal for Italy. That someone is Barcalys, the math is not pretty, and the conclusion is that “Italy is now mathematically beyond point of no return.”

Summary from Barclays Capital inst sales:

1 ) At this point, it seems Italy is now mathematically beyond point of no return
2 ) While reforms are necessary, in and of itself not be enough to prevent crisis
3 ) Reason? Simple math–growth and austerity not enough to offset cost of debt
4 ) On our ests, yields above 5.5% is inflection point where game is over
5 ) The danger:high rates reinforce stability concerns, leading to higher rates
6 ) and deeper conviction of a self sustaining credit event and eventual default
7 ) We think decisions at eurozone summit is step forward but EFSF not adequate
8 ) Time has run out–policy reforms not sufficient to break neg mkt dynamics
9 ) Investors do not have the patience to wait for austerity, growth to work
10 ) And rate of change in negatives not enuff to offset slow drip of positives
11 ) Conclusion: We think ECB needs to step up to the plate, print and buy bonds
12 ) At the moment ECB remains unwilling to be lender last resort on scale needed
13 ) But frankly will have hand forced by market given massive systemic risk

The whole report [PDF] is available here. And now Reuters is reporting that both France an Germany are talking (how seriously I don’t know) about a break up of the Eurozone to contan only them and a few others who are still financially stable.

German and French officials have discussed plans for a radical overhaul of the European Union that would involve setting up a more integrated and potentially smaller euro zone, EU sources say.

“France and Germany have had intense consultations on this issue over the last months, at all levels,” a senior EU official in Brussels told Reuters, speaking on condition of anonymity because of the sensitivity of the discussions.

“We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don’t want to be part of the club and those who simply cannot be part,” the official said.

French President Nicolas Sarkozy gave some flavor of his thinking during an address to students in the eastern French city of Strasbourg on Tuesday, when he said a two-speed Europe — the euro zone moving ahead more rapidly than all 27 countries in the EU — was the only model for the future.

Well mostly stable since France has not been looking too healthy lately. And now Merkel’s CDU is suggesting ways that countries could leave the Euro.

Merkel’s Christian Democratic Union party wants to make it possible for European Union members to exit the euro area, Handelsblatt reported in a preview of an article to be published tomorrow, citing unnamed participants in the discussion.

A commission within the party, that is crafting a framework to be presented at a party meeting, has proposed allowing a euro member who doesn’t want to or isn’t able to comply with the common currency rules to leave the euro region without losing membership in the EU, the newspaper said.

Which of course is sending the markets into a nose dive. Especially the financials. Oh well…easy come, easy go.  And how does one say “Turn the lights out before you leave.” in Portuguese ?

All of this will naturally throw a major monkey wrench into a lot of peoples economic policies.  For starters you can kiss goodby to any thoughts of making the Euro a reserve currency and attempting to solve our deficit problems by having the dollar devalued.   This wild ride has just begun and a lot of people will like get tossed off in the process.

Update from The Guardian:

Fears that Europe’s sovereign debt crisis was spiralling out of control have intensified as political chaos in Athens and Rome, and looming recession, created panic on world markets.

Reports emerging from Brussels said that Germany and France had begun preliminary talks on a break-up of the eurozone, amid fears that Italy will be too big to rescue.

Despite Silvio Berlusconi‘s announcement that he would step down as prime minister once austerity measures were pushed through parliament, a collapse of investor confidence in Europe’s third-biggest economy sent interest rates in Italy to the levels that triggered bailouts in Portugal, Greece and Ireland.

Italian bond yields surged through the critical 7% mark, at one point hitting 7.5%, amid concern that the deteriorating situation had moved the crisis into a dangerous new phase.

In Athens talks to appoint a new prime minister to succeed George Papandreou were in deadlock, and will resume on Thursday morning. The Italian president, Giorgio Napolitano, sought to reassure the markets by promising that Berlusconi would be leaving office soon.

Angela Merkel said the situation had become “unpleasant”, and called for euro-members to accelerate plans for closer political integration.

“It is time for a breakthrough to a new Europe,” she said. “Because the world is changing so much, we must be prepared to answer the challenges. That will mean more Europe, not less Europe.”

Looks like it’s gaining speed.

Greek/Eurozone crisis. What’s next. – Update

12:43 pm in Uncategorized by cmaukonen

After pulling his punches on the referendum, Greek Prime Minister George Papandreou now faces a no-confidence vote in parliament.  This is to be held at midnight Greek time (5:00 PM Eastern).

From the Guardian..

The main opposition New Democracy party which withdrew from parliament at the start of the confidence debate has said it will return for the vote expected to take place at midnight.

The excitement should build up to 11pm Greece time (9pm GMT), when George Papandreou is expected to take the stand.

We reported earlier that Papandreou’s own Pasok MPs have told him that to win their votes tonight he must pledge to step aside.

Will he utter the words “resign and national unity government?” If he doesn’t you can expect the bloodletting to begin within Pasok….

And if he loses then snap elections would be held in as little as 30 days.   However this would not guarantee a  majority government – one that would hold a mandate. If he wins he would try to form a coalition government with opposition conservatives.

From CNBC.

The most likely scenario is that of Papandreou’s party — angered by his shortlived plan to put the bailout to a referendum — backing him in the confidence vote on the understanding he makes a face-saving exit later.

Government sources have said Papandreou had struck a deal at a cabinet meeting on Thursday under which he would stand down after he had negotiated a coalition agreement with the conservative opposition, provided he survives Friday’s vote.

Some of his own supporters have hinted at this, saying they will back him at Friday’s vote as long as he begins talks with the opposition on a cross-party coalition government that can ratify the euro zone rescue plan and then resigns.

Several lawmakers in the ruling Pasok party have already said they are in favor of such a “national unity” government and Papandreou himself has said he is willing to begin talks with the New Democracy opposition party on the issue.

Former European Central Bank Vice President Lucas Papedemos has been cited as a potential candidate to lead such an interim government of technocrats.

One potential sticking point between the two sides is on how long a coalition government will be in charge.

New Democracy leader Antonis Samaras wants a transitional government that ratifies the bailout and proceeds immediately to elections — in as little as six weeks — while a Pasok party official has suggested holding elections in March.

If those talks fail, the ensuing chaos would mean the country heads to snap elections sooner or later.

Whether Papandreou wins or loses the no confidence vote, he is likely out as Prime Minister and party leader.

And either way Greece will likely leave the Euro, which would not upset the vast majority of Germans who wish that it would. Even Germany’s Merkel now thinks that is a likely outcome.

From the Guardian.

Before things get too heated in Greece, let’s post this jolly tale from David Gow:

The “live ticker” on has made a wonderful contribution to German-Hellenic understanding by quoting at length Uli Hoeness – remember him England? – now the president of Bayern Munich, on the debt crisis.

“Wir Europäer sind nicht schuld an der Krise der Griechen. Und wenn sie unsere Hilfe nicht wollen, sollen sie es bleiben lassen”, sagte er. Zumindest aber sei ein “Dankeschön fällig. Ich bin eigentlich gewohnt, dass man sich bedankt, wenn man Hilfe angeboten kriegt”, sagte Hoeneß: “Wenn sie die Hilfe nicht annehmen, wird es zappenduster.”

Roughly: We Europeans are not to blame for the crisis of the Greeks. And if they don’t want our help, they should drop it. But at the very least a thank you is long overdue. Actually, I’m used to people being grateful when they get offers of help. If they don’t accept the help, then they’re in real shtuck.”

That comes on top of German polls showing 90%-plus want Greece out of the euro and tabloid headlines. Perhaps the Germans have yet to forgive one of their own (Otto Rehhagel) for managing Greece to victory in the European Championships in 2004.

Along with all of this, there are still massive protests in Athens as being reported by the BBC and others.

From BBC Live coverage.

1916: In the debate, Environment Minister George Papaconstantinou has told MPs that “the widest possible agreement in the political system is needed” to ratify the EU bailout, AFP news agency reports. “The bailout deal requires this… that is why the government asks for a vote of confidence,” he says.

1912: @Inflammatory in Athens, Greece tweets: Protesters in #Syntagma reportedly plan to stay until parliament talks come to an end tonight.

1905:One protester at the communist rally in Athens says: “Only one thing should concern the Greek people – how they can intervene drastically into [these] developments with organised political action, and overturn Papandreou and the policy that he expresses.”

1900:There are now thousands of people massing in Syntagma Square near parliament in Athens, many of them waving communist party flags.

All of this could take weeks or even months to sort out no matter how it goes.  Then there is also the matter of Italy and Spain and Portugal to deal with. Assuming the Euro lasts that long. Personally I’m not holding my breath. Especially since the latest G20 conference accomplished absolutely nothing.   This roller coaster ride ain’t over yet.

Update: From the Guardian:

10.53pm: Papandreou has won. By 153 votes to 144.

Just when you thought that the European Debt Crisis could not get any more bizarre…

8:46 pm in Uncategorized by cmaukonen


[Ed. Note - photo from The Guardian removed. Only your own produced images, or images with a license to share, such as from flickr or wiki commons, may be used here. No copyrighted images allowed.]

George Papandreou suggests holding a referendum on the latest proposal. From the Guardian.

The Greek prime minister, George Papandreou, stunned Europe‘s leaders on Monday after he proposed that his country should hold a referendum on the landmark European debt deal reached last week.

A Greek vote against the deal could scupper weeks of negotiations over how to rescue the country’s economy and prevent a debt crisis to match the Lehman Brothers crash of three years ago.

Stock markets, which have rallied in recent weeks after a sustainable deal looked more likely, reacted immediately to the news with a sell-off of shares. In New York, the Dow Jones index of leading companies fell sharply as Papandreou’s plan was revealed. The euro fell 2% against the dollar and the US Volatility index – the so-called “index of fear” – climbed 22%, its biggest one-day rise since mid-August.

Papandreou gave no date or other details of the proposed referendum, though the interior minister, Haris Kastinidis, said it would most likely be in January.

And of course we all KNOW how that would turn out. And what if Italy and Portugal and Spain get the same idea ? Talk about the European Dept Commission sounding like a chorus of scorched cats.

Greek government survives confidence vote

7:00 pm in Uncategorized by cmaukonen

Here it is.  Though I’m not so sure this is a good thing. It may intensify the people’s outrage.

The Greek government has won a critical vote of confidence in parliament as it struggles to win support for extra austerity measures and avoid a default.

Prime Minister George Papandreou’s new cabinet was approved by 155 votes to 143, with two abstentions.

MPs will now be asked to approve 28bn euros (£25bn) of cuts, tax rises, fiscal reforms and privatisation plans.

Eurozone ministers say the legislation must be passed to receive a 12bn-euro loan Greece needs to pay its debts.

Earlier, thousands of people gathered outside the parliament building in Athens to protest against both the austerity measures and politicians in general. Many chanted: “Thieves! Thieves!”

“I believe we should go bankrupt and get it over with. These measures are slowly killing us,” Efi Koloverou, a 22-year-old student, told the Reuters news agency. “We want competent people to take over.”

Mr Papandreou reshuffled his cabinet and replaced his finance minister last week after weeks of demonstrations against his handling of the crisis.

And as the man says, it ain’t over till it’s over.

Greeks See The Bankers as Typhoid Mary

6:05 pm in Uncategorized by cmaukonen

Economic and political discontent – like the common cold – can be quite contagious.  Especially when the carrier knows no geographic boundaries.  The Greeks have been give another bail out.

“We have agreed today that the contribution (of the private sector) must be voluntary, but … Greece also has to deliver.

“If you aim for a voluntary private contribution you can’t fix what size it must be beforehand. That also has to be discussed with private creditors.

“We very much depend on Greece’s parliament passing all bills and we will discuss more about the role of private creditors at the beginning of July, but the role will be voluntary and we will have to check whether Greece will by then have fulfilled its obligations.”

But the Greeks themselves are not impressed. In fact they are angrier than ever since they do not see why they should shoulder the burden of a situation they did no cause.

For more than three weeks protesters have occupied the square opposite the Greek parliament. They have pitched their blue and grey tents and hung their slogans from the orange trees.

“We got the solution. Revolution,” declares one poster. “Rise up people of the world,” urges another.

Inspired by the Arab uprisings, they have dug in to oppose further spending cuts in exchange for a second bail-out by the EU and IMF.

The encampment, however, hardly crackles with revolutionary fervour. It has the feel of an anti-globalisation village, nestled in amongst Africans selling handbag copies and bright-rimmed sunglasses.

The Greek Prime Minister George Papandreou is depicted as riding the CIA/IMF plane. He is portrayed as a capitalist stooge.

And they are not alone in this.

Tens of thousands of protesters converged on central Madrid Sunday as the so-called May 15 movement pushing for political and social change in Spain again took to the streets.

Madrid’s was the first major demonstration of the day and drew some 37,000 people, Spain’s state-run news agency reported, citing a consulting firm it hired to estimate the size of the crowd.

Protests were planned in 55 other Spanish cities later in the day and had gotten underway in Barcelona, Bilbao, Valencia and other cities, Spanish media reported.

The protests focused again on Spain’s 21% unemployment rate and on the government’s economic austerity measures. But on Sunday, they also rallied against European Union efforts to stabilize the euro, with many protesters worried that could lead to more austerity measures across the EU.

The problem there as here is forced austerity measures on the working class even with unemployment skyrocketing.

This is the real crisis in the eurozone. A young generation lost, without work. The figures are staggering.

In Spain unemployment for 16 to 24 year olds is running at 43%. In Italy it is more than 25%. In Europe millions of highly educated young people are being denied the opportunity of working.

The eurozone has proved a terrible trap for so many countries. The low interest rates, the easy money led to property booms, speculation, and piles of debt. Reducing the debt is now exacting a terrible toll on a generation.

In Spain they called themselves the “indignants” but no-one knows what this generation will do with their anger.

If this all sounds too familiar, it should.  There is a kettle on the stove and the fire just keeps getting turned up. One of these days it will blow. Will it also blow here ? One can never tell but everyone has a breaking point.