http://www.zerohedge.com/news/it-begins-spanish-region-catalonia-demands-bailout
Submitted by Tyler Durden on 05/25/2012 08:32 -0400
http://globaleconomicanalysis.blogspot.com/2012/05/what-if-tsipras-is-not-bluffing-who.html
Does that sound like a bluff or a raging madman as some make him out to be? While anyone can agree or disagree with his views I suggest his positions are carefully crafted. From the sounds of it (not that anyone can trust any politician), he seems reasonably sincere. Moreover, bear in mind the "Greek Choice". Citizens can vote for New Democracy or Pasok, two parties that had a major hand in destroying Greece, or they can vote for a fresh face that tells them what they want to hear.
Is that politics by Tsipras or does he believe what he is saying? Does it even matter?
I suggest it doesn't matter. Voters are fed up with lies and hypocrisy of the previous leadership and want a change. New lies (if they are lies and not genuine beliefs) are no worse than old lies.
Greek Poll Shows Syriza Gaining Support Before June Vote
Shortly after the last stalemated-election, polls showed support for Syriza rose to a commanding lead. Then following a fear-mongering campaign from Germany, mainstream media, and other places, New Democracy went back into the lead.
Now, in a see-saw battle, Greek Poll Shows Syriza Gaining Support Before June Vote.
Is that remotely possible? Technically yes.
There is no provision to kick any county out of the eurozone and no process that allows it to happen either. However, nothing can stop a country from exiting. Nothing can stop a country from defaulting either.The key factor is that as the budget sits now, Greece will run out of money without aid. Were that to happen, the only way Greece could pay bills is by returning to the drachma (assuming the Troika does not blink).
However, what if Greece could balance its budget? Then what?
Such a scenario, however remote, is technically possible and it probably has the ECB and banks scared s***less.
What is Troika's Biggest Fear?
Contrary to widespread fear-mongering campaigns by Merkel and mainstream media including Bloomberg (see Greek Voters Need to Look Beyond the Lies of Bloomberg, Merkel, ECB, IMF, Ekathimerini; Greece Nightmare Coming or Already at Hand?) the big fear of Troika is not that Greece implodes in the wake of a eurozone exit, but rather that it doesn't!
Indeed, what if Greece defaulted on debt and recovered à la Iceland?
While I do not think that is likely (before massive multi-year pain), it is theoretically possible.
Regardless, and without a doubt, if Greece would implement genuine work-rule and pension reform following a default, it would recover faster than if it sticks to the Troika plan. Given Tsipras' stated positions, such a course of action is highly unlikely to say the least, but Tsipras may very well implode within a year, and followed by someone who does get the job done.Who Holds the Upper hand?
The above discussion should make it very clear. Tsipras has nothing to lose and everything to gain and the Troika knows it. All that remains to be seen is whether Greek voters snatch defeat from the jaws of victory on June 17.
Once again, I have no love of the leftist policies of Tsipras. However, it is in Greece's best interest to exit the eurozone and default on debt. To that end, I hope he wins the election on June 17.
and....
http://hat4uk.wordpress.com/2012/05/25/euroblown-why-im-betting-that-germany-will-leave-before-greece/
It Begins: Spanish Region Of Catalonia Demands A Bailout
Yesterday we mocked the fact that the Bankia's bailout costs are doubling with each passing day. Today, things just got "Messi-er":
- SPAIN'S CATALONIA REGION NEEDS GOVERNMENT HELP, RUNNING OUT OF DEBT FINANCING OPTIONS-CATALAN PRESIDENT - RTRS
So... if broke Bankia can rehypothecate Ronaldo, can Barcelona demand delivery of Messi and pledge him as ECB collateral too?
http://globaleconomicanalysis.blogspot.com/2012/05/what-if-tsipras-is-not-bluffing-who.html
Friday, May 25, 2012 2:47 AM
What if Tsipras is Not Bluffing? Who Holds the Upper hand? What is Troika's Biggest Fear? Can Greece Possibly Stay in the Eurozone After Default?
I have read countless articles over the past few week stating a belief that Syriza party leader Alexis Tsipras is bluffing in his threat to stay in the euro but default in debts.
Is it remotely possible to default and stay in the eurozone?
Since this is a multi-part question, let's first address the question "is this a bluff?"
A few snips from Der Spiegel article Tsipras Says Berlin Must Back Down on Austerity may help you decide.
Is it remotely possible to default and stay in the eurozone?
Since this is a multi-part question, let's first address the question "is this a bluff?"
A few snips from Der Spiegel article Tsipras Says Berlin Must Back Down on Austerity may help you decide.
Alexis Tsipras, the leftist leader who could hold the whole of Europe to ransom if he wins the Greek election on June 17, breezed into Berlin on Tuesday to tell Germans they don't own the euro zone, and that they will endanger the whole currency block if they insist on stringent austerity for his recession-hit country.
'With Austerity, Greece Will Soon Need a Third Bailout'
"We all have a duty to prevent a catastrophe," he said. "The possibility of the dissolution of the euro zone is not a temporary storm, it would be a historic, very negative development for the entire world.
"If Syriza wins the election on June 17, it won't mean we will leave the euro, on the contrary it offers a big chance for us to save the euro. If the austerity continues, Greece will need a third bailout in a few months, and a further debt restructuring, and that could enforce a return to the national currency.
"We are proposing a way to save the euro. Our possible election victory offers the prospect of stabilizing Europe, not causing more instability as feared," Tsipras added.
'High Hopes Regarding Break of German-French Axis'
He left no doubt that if he wins in June, Greece won't quit the euro without a fight. "The euro zone has no owners or landlords, we're not tenants in the euro zone, we're equal partners, and no one should take on the role as owners," he said, in another apparent swipe at Germany. "The treaty says no country can be evicted from the currency union.
'With Austerity, Greece Will Soon Need a Third Bailout'
"We all have a duty to prevent a catastrophe," he said. "The possibility of the dissolution of the euro zone is not a temporary storm, it would be a historic, very negative development for the entire world.
"If Syriza wins the election on June 17, it won't mean we will leave the euro, on the contrary it offers a big chance for us to save the euro. If the austerity continues, Greece will need a third bailout in a few months, and a further debt restructuring, and that could enforce a return to the national currency.
"We are proposing a way to save the euro. Our possible election victory offers the prospect of stabilizing Europe, not causing more instability as feared," Tsipras added.
'High Hopes Regarding Break of German-French Axis'
He left no doubt that if he wins in June, Greece won't quit the euro without a fight. "The euro zone has no owners or landlords, we're not tenants in the euro zone, we're equal partners, and no one should take on the role as owners," he said, in another apparent swipe at Germany. "The treaty says no country can be evicted from the currency union.
"Austerity has evidently failed because Greek society has been destroyed, the production base has been dissolved. Our country has been in a deep recession for the fifth consecutive year, this has never happened in Europe in peacetime."Does that Sound Like a Bluff?
German taxpayers were having their money thrown "into a bottomless pit" in Greece, he said -- because bankers were getting most of it, and the Greek people weren't seeing any benefit.
"If we had had a different bailout program from the start that wasn't based on strict austerity but on growth and job creation, the Greeks could get back on their feet and pay back the debt," Tsipras said. "If you're giving a patient a drug that's making him worse the solution isn't to increase the dosage but to stop giving the drug.
"If the patient can't be cured the disease will spread to the whole of Europe and we all carry a historic responsibility to prevent this."
Does that sound like a bluff or a raging madman as some make him out to be? While anyone can agree or disagree with his views I suggest his positions are carefully crafted. From the sounds of it (not that anyone can trust any politician), he seems reasonably sincere. Moreover, bear in mind the "Greek Choice". Citizens can vote for New Democracy or Pasok, two parties that had a major hand in destroying Greece, or they can vote for a fresh face that tells them what they want to hear.
Is that politics by Tsipras or does he believe what he is saying? Does it even matter?
I suggest it doesn't matter. Voters are fed up with lies and hypocrisy of the previous leadership and want a change. New lies (if they are lies and not genuine beliefs) are no worse than old lies.
Greek Poll Shows Syriza Gaining Support Before June Vote
Shortly after the last stalemated-election, polls showed support for Syriza rose to a commanding lead. Then following a fear-mongering campaign from Germany, mainstream media, and other places, New Democracy went back into the lead.
Now, in a see-saw battle, Greek Poll Shows Syriza Gaining Support Before June Vote.
May 24, 2012
A Greek opinion poll showed the Syriza party, which is opposed to implementing Greece’s international financial rescue, building on its lead in voter support ahead of elections to be held June 17.
Syriza had 30 percent support, compared with 28 percent a week earlier, according to a Public Issue poll presented on Athens-based Skai TV today. That was ahead of pro-bailout party New Democracy, which had 26 percent support, up from 24 percent a week earlier, according to the survey.Survey Results Show Greeks Want to Stay in Euro but Change the Terms
European leaders meeting in Brussels tied their next steps on the financial crisis to the outcome of the bitterly contested Greek vote. The six-hour summit ended early today with an exhortation to Greek voters to elect a pro-austerity government that will make the budget cuts needed to keep the financially ravaged country in the group that uses the euro.
The poll showed 85 percent of Greeks wanted to keep the euro, compared with 12 percent who were opposed to retaining the currency. The survey also showed 62 percent against the terms of the bailout and 28 percent in favor.
Is that remotely possible? Technically yes.
There is no provision to kick any county out of the eurozone and no process that allows it to happen either. However, nothing can stop a country from exiting. Nothing can stop a country from defaulting either.The key factor is that as the budget sits now, Greece will run out of money without aid. Were that to happen, the only way Greece could pay bills is by returning to the drachma (assuming the Troika does not blink).
However, what if Greece could balance its budget? Then what?
Such a scenario, however remote, is technically possible and it probably has the ECB and banks scared s***less.
What is Troika's Biggest Fear?
Contrary to widespread fear-mongering campaigns by Merkel and mainstream media including Bloomberg (see Greek Voters Need to Look Beyond the Lies of Bloomberg, Merkel, ECB, IMF, Ekathimerini; Greece Nightmare Coming or Already at Hand?) the big fear of Troika is not that Greece implodes in the wake of a eurozone exit, but rather that it doesn't!
Indeed, what if Greece defaulted on debt and recovered à la Iceland?
While I do not think that is likely (before massive multi-year pain), it is theoretically possible.
Regardless, and without a doubt, if Greece would implement genuine work-rule and pension reform following a default, it would recover faster than if it sticks to the Troika plan. Given Tsipras' stated positions, such a course of action is highly unlikely to say the least, but Tsipras may very well implode within a year, and followed by someone who does get the job done.Who Holds the Upper hand?
The above discussion should make it very clear. Tsipras has nothing to lose and everything to gain and the Troika knows it. All that remains to be seen is whether Greek voters snatch defeat from the jaws of victory on June 17.
Once again, I have no love of the leftist policies of Tsipras. However, it is in Greece's best interest to exit the eurozone and default on debt. To that end, I hope he wins the election on June 17.
and....
http://hat4uk.wordpress.com/2012/05/25/euroblown-why-im-betting-that-germany-will-leave-before-greece/
EUROBLOWN: Why I’m betting that Germany will leave before Greece.
Yesterday in Brussels, Herman Van Rompuy opened the anarchic proceedings by saying he sensed “a strong will to compromise”. Something of a surreal soundbite and, as usual with the Nipponese Bard, completely wrong.
The popular maverick site Zero Hedge referred to this week’s Euro-bunfight as ‘yesterday’s dismally predictable non-event summit’ last night. They’re right on the money about it being just as unproductive as advertised – but actually I think it was highly significant for any number of reasons.
First off, it’s abundantly clear the eurogonks clearly have no idea which way is up either socially or economically. As the ZH piece noted, when citizens start taking money from the banks, the game’s up. When sick people can’t get medicines, the party’s over.
Second, as I posted yesterday, the maths show conclusively that the ‘honour thy debts’ strategy was so hopelessly misconceived, everyone has paid a mountain of money, at the end of which we’re all €20bn worse off than we were two years ago. I have no quarrel with the argument that says avoiding responsibility is wrong, but there are and always have been degrees of wrong: it is just as much the responsibility of bankers to tot up the numbers and say, “They ain’t gonna pay, let’s write it off”. Instead, what they do – always and without exception – is start The Hunt for the Last Resort Paymaster. And they whine and bitch and threaten to leave the planet and all the other sh*t these cannibals think is appropriate….and scared politicos fall for it.
The bad news is that, after the Greek ‘bailout’ aka insolvency fiasco of March, the very devious behaviour of the eurocrats and the ECB has destroyed the EU’s bond market for the foreseeable future. Fitch’s report of earlier in the week showed foreign investors had fled Spanish and Italian debt in huge numbers. Letting Greece off much earlier (and then demanding new rules) would’ve have cost – take a deep breath – over €400bn less. That’s because not only would we not have bailed the Greeks out, (€220bn and counting) we would not have the debt either (€220bn and counting). The banks would’ve had to to take the hit. Some would’ve blown over, but all of them would’ve learned a lesson.
Cowardice, my friends, is a very expensive weakness. The aftermath of most of Europe becoming insolvent would’ve been, in the medium term, an end to deficit economics for good, strict rules on sovereign borrowing and lending, and the collapse of the globalised banking system. All these would be an excellent idea, because they are all stupid ideas, and dysfunctional in practice. The irony of the whole shebang is that it was set up to fail by bankers….and these same bankers warn of Armageddon if and when it does fail. So we’re screwed if it doesn’t, and dead when it does. Such is banker logic.
But the past is gone forever and cannot be changed. Even Einstein appreciated that. The future, however, is not pre-ordained. Unless you’re Mitt Romney, that is, in which case you know when Jesus is coming back, and where. For the rest of us mere mortals, history is there to be made. Not, however, by the folks at the Summit.
Third, it is blindingly obvious that a mad form of austerity economics as practiced by Merkeschäuble and the Friedmen has the Germans in thrall, and an outmoded form of Blairite ‘Third Way’ socialism is suffocating the southern brain in the form of Mr Blancmange & the Keynsians. Fear not, I won’t harp on about debt forgiveness again – my point this time is far more significant than even that one: nothing is going to get done as long as this situation pertains, and the situation will pertain unless something deservedly ghastly happens to the Merkeschäuble.
Do not doubt that oxymorons will proliferate as more and more Sprouts try to square the circle: but as long as there are only two opposite ideas, nothing will get done. Surrounded in Brussels and threatened at home, Angela Merkel’s days of driving a tank over everyone else are over.
Finally – and this is the last time I’ll say it – Greece isn’t going to leave the eurozone: Draghi won’t let them, the Greeks themselves are wrongly terrified by the idea, and anyway a more pro-bailout Party line-up will emerge after the June 17th elections. Somehow in some way, there will be a compromise at the end of a long stand-off.
In short, it’s a shambles: such market confidence as is left (and I couldn’t find any this week past) will evaporate, and reappear over Spain, Italy and France in the less than ethereal form of further bond spikes. The eurozone – as this and thousands of other commentary sites have been predicting for two years – is finished. And my own view goes further: you can’t break up a currency area (with all the bitterness such would entail) and keep the EU going. It doesn’t work like that: the 67-year achievement of keeping France and Germany happy is about to end. It may take five years or five months, but it will end for this, and many other, reasons.
Everything from here on (bank-runs, pharmacy riots, coups et al accepted as possible) will be driven by events in Germany. As the dominant power – with a powerful banking community and an unforgiving electorate – it could not be otherwise.
I can tell you, following a few conversations yesterday afternoon, that the German banking community is exasperated beyond belief by yesterday’s truncated session in Brussels. Der Spiegel has already adopted a Grecophobic tone along with Bild Zeitung and several influential tabloids. The one thing bankers and voters have in Germany today is a fear of Germany beink pulled down by all ze uzzers who are just lazy schweinen loafink around in die strink vesten. Above that convenient bigotry – among the older professional – there remains a national obsession with the ever-present spectre of inflation. All these worrying factors are only going to get worse as the European Committee Car’s gearbox remains jammed in neutral. Look, it was a tank, now it’s a car, OK? This isn’t mixed metaphor, it’s events dear boy, events.
Germany only has one logical option now, and that is to get out of the euro. I also believe it is far further ahead on this project than anyone else in the eurozone, and – being Germans – they would run the operation like clockwork.Blitzausgang could begin at any time. One felt yesterday that this was clearly on the cards. The second Hollande started talking about eurobonds – which the French leader rightly considers a start along the road, if nothing else – Merkel said, “I believe that they are not a contribution to stimulating growth in the eurozone.” End of. The reality is that Berlin equally rightly fears eurobonds would only result in German taxpayers permanently underwriting the public finances of the entire eurozone.
“Italy can help persuade Germany to support Europe’s common good”, said Italian Prime Minister Mario Monti, once the memory of Merkel’s implacable features had faded slightly. Common good, one suspects, does not play well in electoral politics. But will Merkel ever accept the death of the euro?
The economic decision for Berlin sounds easy, but it isn’t: although they’ve enjoyed seven years in the last ten of strong export growth thanks to an artificially cheap currency, it’s easy to tot up the benefit, but not the likely cost. With at the very least Spain and Italy to come, the expense could easily blow Germany away.
The political decision for Merkel is also a complex one, and not getting any easier. To leave the eurozone would be seen by her opponents (and her own Party) as a crushing defeat for her Weltanschauung. But if couched in bellicose terms – suitably sprinkled with appeals to the Fatherland alongside more denigration of lazy spendthrift latins – it would also be seen as decisive leadership. It would further, I suspect, put the Opposition SPD on the back foot.
It’s very finely balanced, but perhaps geopolitics will tip the balance in favour of exit. When Berlin finally rejected Geithner’s amputation plan for Greece, my view was that the Bundesrepublik’s leaders were putting Germany first, not Europe. As the leading European power, she would have by far the most to gain from keeping Greece’s potential wealth out of American hands. Schäuble in particular is paranoid about US foreign policy aims, and Merkel has an instinctive dislike for Flash Tim and his leveraged bazooka: she regards the American view of borrowing to maintain debt (as do I) as certifiably insane. America may have bet the farm on Germany, but it’s going to have to find a new ally in Europe – and the Germans won’t let it be Greece.
No, I rather fancy Germany will leave the eurozone before Greece does.
and...
http://www.athensnews.gr/portal/11/55800
| Monti says Greece will probably keep euro | |||||
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Greece will probably remain in the eurozone, Italian Prime Minister Mario Monti said on Thursday, but demands made of the country by its partners had been unrealistic and far reaching economic reform could take decades to achieve.
"Anything can happen, but I think the most probable outcome is the one which is most positive for Greece and for all of us," Monti said on an Italian television talk show, when asked if he believed Greece would stay in the currency bloc.
Greece's eurozone partners had been wrong to insist on a process of reforms and fiscal adjustment which was too fast for the country to withstand, Monti said.
"Europe has to learn how to not take too much of a short-term view," he said, adding the reforms needed in Greece would take a generation, rather than two or three years as its partners had demanded.
"Greece has lost its sovereignty; it's under the instructions of the IMF, the ECB, the European Commission. Having the others tell you, 'here is the money but I'm deciding,' must be a terrible, terrible humiliation."
He earlier told a news conference that he did not expect it would be long before European countries were ready to introduce common eurozone bonds.
"Italy is very much in favour of the creation of euro bonds when the time is right, and we do not expect it to be too far off," Monti said during a news conference. (Reuters)
and....
http://ekathimerini.com/4dcgi/_w_articles_wsite2_1_25/05/2012_443811
Europe slowdown adds tension to Greek drama
So far, the 17-nation euro zone's downturn has been confined mainly to its periphery, but an index measuring broad economic activity across the monetary union in May showed its weakest outcome since mid-2009, during the global financial crisis. The composite PMI on Thursday indicated core nations such as Germany and France were being caught up in the downturn, even as they made contingency plans to deal with financial and economic turmoil in the event Greece quits the euro. The commodity predicted to rocketDownload FREE ReportItaly, which could be on the front line of speculative attacks on euro markets if Greece went back to the drachma, put a brave face on the situation, saying the most probable outcome was still that Greece would remain in the euro zone. "Anything can happen, but I think the most probable outcome is the one which is most positive for Greece and for all of us,» Italian Prime Minister Mario Monti told Italian TV. He said Greece's euro zone partners had been wrong to insist on overly rapid reforms and fiscal adjustment, and that he did not expect it would be long before European countries were ready to introduce common euro zone bonds. "Italy is very much in favour of the creation of euro bonds when the time is right, and we do not expect it to be too far off,» Monti told an earlier news conference. At least half of euro zone governments, as well as banks and large companies, are making contingency plans in case Greece decides to quit the euro. Despite Monti's comments, his deputy economy minister said Rome was ready for such a possibility. Greek voters will signal their intentions at a fresh general election on June 17, a ballot that has turned into a referendum on whether Athens should continue with an austerity drive that is the price of continued fiscal support from its euro partners.
Greece's anti-bailout leftist SYRIZA party is maintaining a lead ahead of the elections, according to an opinion poll on Thursday. Greece held elections on May 6 but that vote left parliament divided evenly between groups of parties that support and oppose austerity conditions attached to a 130 billion euro ($164 billion) rescue agreed with lenders in March.
The Public Issue/Skai TV poll showed SYRIZA leading with 30 percent of the vote, four points ahead of the conservative New Democracy party, which is backing the bailout. If repeated on June 17, this would fall short of enabling SYRIZA to govern alone but give it a decisive role in forming a new government. Greece's deficit means that without the EU/IMF money, which would stop flowing if Athens were to tear up the agreement on reforms, it would not be able to pay salaries and would have to leave the euro zone and start printing its own currency. However, another opinion poll indicated support for SYRIZA did not mean Greeks wanted to ditch the euro. Three-quarters of decided Greek voters back the euro, according to an Ipsos poll, which surveyed people in Greece, Germany, France, Italy and Spain on whether they would vote to keep the euro if their countries held a referendum tomorrow. "Regardless of the turmoil and the debate that's going on in these crucial countries, it would seem that for the time being, people want to stick with the euro,» said John Wright, senior vice president of global public affairs at Ipsos. Many Greeks, though, are not taking chances on banks being able to keep their money safe and have resorted to hiding cash at home - creating a new target, police say, for gangs that usually prey on «hard targets» such as the banks themselves. No one knows how much cash is stashed in Greek homes - in cupboards, at the back of the ice-box, beneath the floor or under the mattress - but it could well be in the billions, and burglars are after their share of loot. Common euro bonds, which would allow weaker nations like Greece to borrow with the collective backing of the bloc, are back on the agenda as Greece's possible exit looms larger. France's election on May 6 of a Socialist president, Francois Hollande, has changed the tone of the debate on euro bonds. He urged a reluctant German Chancellor Angela Merkel and other European leaders at talks on Wednesday to consider recourse to euro bonds among other measures. Merkel, seen as an architect of the austerity prescription for Greece, now looks increasingly vulnerable on the euro zone crisis. Other European leaders have rallied around Hollande's call for a new emphasis on growth alongside debt-cutting. On euro bonds, Germany's opposition Social Democrats (SDP) and Greens have taken a similar line to Hollande. But there were signs on Thursday they might instead accept a compromise plan to mutualise only a proportion of members' sovereign debts. This would involve mutualising the debts of euro zone countries beyond 60 percent of GDP. The euro crisis has also thrown a spotlight on the vulnerability of commercial banks to a full-blown crisis of confidence in the single currency, especially in the indebted countries of southern Europe, such as Spain.
Spain is considering creating a single nationalised bank out of its failed lenders, including problem lender Bankia, if the state cannot find buyers for state-rescued banks, a senior Economy Ministry source said.
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