Why the Eurozone will have to give in to Greece
- Greece’s Government wants a managed default; not to leave the Eurozone
- The ECB can make it very difficult for Greece to stay in the Euro,
The emperor is naked! There is no mechanism to force an exit and the ECBs supposed powers are irrelevant – see below the likely course of negotiations if they go to the brink and over it.
- Greece refuses to agree to austerity and threatens default.
- EU threatens to force them out of the Eurozone. Bluff called as there is no mechanism to force this on a country
- The ECB refuses to lend to Greek banks hoping that the Greeks will back down. Bluff called.
- ECB refuses to lend and the banks fail
- Immediate bank nationalisation by the Greek Government and a default on all the banks debt.
- This will be followed by immediate default on the Greek debt
- Greece then continues to use Euros within a nationalised banking industry, noting ECB can do
- Impact on Greece? Limited as the country is viable economically
Now, let’s watch what happens. My guess…..large amounts of Greek debt will be written-off – the market prices the debt now at 56% of face value – see here. The interest paid on this debt is now around 10%. Seems like a great deal – buy Greek debt and get 10% per annum and it’s in Euros – brilliant. Don’t do it.
Can the EU change the rules and create a mechanism to force an exit from the Eurozone? Hmmmm…….need to check it out. I suspect such a move would need to be adopted unanimously.
Do rules exist for all or for some! I had no idea when I was young that “we” can bomb people without declaring war and without judging them in a court!
Bitcoin – what is it? Think of it as a video game. It has rules but, unlike video games, Bitcoin is “distributed”. This means that the rules cannot be changed without every participant of Bitcoin agreeing. This means that the rules won’t change – ever. If there are better rules then a new Bitcoin will develop.
The rules say that Bitcoins can be exchanged, can be created and have a limit – they cannot exceed 21 million. They can be created by “hard work”, called “mining”. Basically anyone who has the funds can invest in computer hardware to create Bitcoins. The more that are created, the more difficult it is to create new Bitcoins. The return on investment, i.e. the return on investing time and money in “mining” Bitcoins, is high at the beginning and lower towards the end (on the basis of today’s technology).
What is great about Bitcoins is that they can be exchanged without banks, Governments and regulators. It is akin to barter and brings power to the people not to the institutions.
Note that should you buy Bitcoins then changing them back to “country currencies” is under attack by Governments. This is Bitcoins vulnerability but also it’s strength – if Bitcoin takes off, why would you ever want to exchange it for another currency!
Two articles of interest – both these people visited Syria as part of an 8 country delegation.
It is entirely clear to me from reports comping out of Syria that the CIA and Mossad are working their magic and yet again we have regime change as the objective. Why this is their objective is a matter of speculation. What is sure is that they are there! If Charles Taylor of Sierra Leone can get slammed up for 50 years for financing gangs that committed war crimes then Obama an be indicted and so can Cameron, Sarkozy and others for arming terrorists to enter Syria and create chaos and perpetrate atrocities.
With 3 million Kurds in Syria out of a total 21 million, the Kurds are on a roll – they are not Arabs and want their land back. they already have the north of Iraq, Turkey won’t give them anything and nether will Iran – the big opportunity for Kurds is Syria. With the North of Iraq and the North East of Syria they can at last have independence for Kurdistan. What an opportunity – now that the head of the Sryrian National Council is a Kurd they are well on their way!
Have a look at where the Western media – those intrepid journalists are getting their information – http://www.countercurrents.org/collins310712.htm
The only way to bring a country or corporation back from the dead is to halt all payments to creditors – the Greek Government is spending only slightly more than it earns (3% of GDP) if interest and loan repayments are ignored and with military spending at over 3% (double the NATO average) this is easy to address.
The simple answer is because the Government can!
Since the beginning of time, taxing income or spending has been easy. Taxing wealth or corporations is tricky, the two are linked, both have vast resources that they bring to bear behind their lobbying and both pay huge amounts to tax accountants to reduce their tax bills and hide their wealth.
Sitting in square and asking for a revolution is unlikely to get the desired result. True to form the Egyptians asked for change and got it. Not!
What a dilemma for Obama and the Western poodles (merkel, cameron, others). Do they support the new movement? Do they insist that the junta remains in power until elections can be organised?
I love the irony of this one!
May this be the first place that the Arab people take control and define their destiny!
The Venezuelan authorities condemn NATO’s actions in Libya.
There is more to this story than we are being told. Why does mainstream media not probe further for the truth?
Yesterday I again heard that Gadaffi got what was coming to him for his role in ordering the Lockerbie bombing! It amazes me that people are prepared to believe whatever they are told by Governments and mainstream media and look no further.
I will not rest in my pleas to the Greek people to refuse categorically the pernicious austerity measures being implemented by their Government. Do not allow them to destroy generations of Greeks to save the bankers.
Greece joined the EU in 1981 and has spent at least $250 billion in defence spending since then. There debt is around $450bn. Remember that the German and French armament industry have done very well out of this as have their bankers who have lent Greece the money to gorge itself on missiles and such like. Greece is number 23 in the defence spending league!
I urge you to default on this debt! Say no to your Government now and make the Governments and bankers of the EU, the UK and the US face up to the consequences of their greed. Let’s cleanse ourselves and them in the process!
Markets have started to work out that debt can’t drive consumerism forever. The developed world is over-indebted, disparities between developed and developing countries and between rich and poor within those countries are more extreme than ever. When the poor have more debt than they can handle and the rich rely upon the masses to drive the economy then there is a problem!
A breaking story today from no lesser source than Press TV that their assets have been frozen by Nat West, a bloated UK bank. It would seem that Press TV is hurting the establishment in the UK with some radical reporting – the great star of course is George Galloway with his Real Deal show – catch a recent episode on Youtube and subscribe – http://www.youtube.com/watch?v=SbbkEEEY2m0.
My complete support for the Greeks! Do not allow your elected leaders to inflict further pain on you! When bankers offer loans and the borrower can’t pay then the bankers lose money.
The Guardian reckons in this article that if you lend 10m to Greece for 5 years then yo can insure it for 2m – if that’s so then the market doesn’t really believe that there is going to be a default.
Please do the world a favour and rise up to defeat the people that want you to suffer for others’ greed!
I am surfing the web and chasing up on various ideas and thoughts that I have had over the last few weeks. In particular along the theme of that old forgotten chestnut “a terrorist is another man’s freedom fighter”.
A great friend of mine, Johnny Marsh (Johnny HJ to a few), once took a leak against my Great Great Grandfather’s statue in Wexford, Ireland whilst hitching around that part of the world. He announced this proudly to me over a pint when he returned. It has taken until now for me to determine that in fact it was his Great Uncle who was called by the same name – John Edward Redmond.
John Edward Redmond Junior, still to this day unaffected by the disdain of my dear friend Johnny HJ, was not honoured by a monument but by the legacy of freedom at a big price.
Ireland was a hotbed of subterfuge. Cromwell invaded and injected Protestant Loyalists into the country having massacred many Catholics. After many years Parliament agreed to Home ruel for the Irsih except for the 6 districts in the North – these would be dealt with later. This area, that had only ever been considered as Ireland and only annexed to England for a temporary period after Home Rule, is what we know as Northern Ireland.
So, we inject Protestants into a country then carve out that Protestant area from the agreement and now claim that because the majority in this area are Protestant that this area must remain separated from the rest of Ireland! Wow!
If we not return to the original thought – what is a terrorist, we can start to see that there really are two sides to the story. Ask yourself the question, are the IRA monsters? The Kurds, are they terrorists? This most simpe of questions that we have all asked no doubt in our youth is forgotten when we talk of Iran, Libya, Venezuela, Zimbabwe, Uganda – look at each of the stories here and you will see a much more complex story. Are there any universal truths that can guide us in finding the way forward in these discussions? What would King Solomon have said?
Finally someone from the mainstream, Dan Baker – http://www.guardian.co.uk/commentisfree/cifamerica/2010/sep/20/tarp-bailout-banks-wall-street has been published stating what many of us knew to be a reality – the banking system was not in crisis, the bankers were!
There is a very strong case for splitting up the casino-type activities of the banks from the commercial activities. The case rests on two key points:
- Customers deposits are guaranteed by the Government and provide banks with a huge source of capital with which to go and borrow and play at the tables of the casino
- The core activities of banking that is essential to the economy – managing money and lending to consumers and businesses
There is only one argument against that I give any credibility
- If we hamper our banks in that way then a sector that accounts for 15% of tax revenues and 10% of GDP will disappear
Over the last 30 years there has been such a brain drain into financial activities that add no value at all to the society that I would have no fear for its future if the financial sector shrank considerably. I long for the day that an engineering graduate or a maths graduate actually have a wider choice of potential careers. one thing is for sure, they would have more of chance of adding value to society if many of the casino-like activities of the financial sector disappeared.
Myners was quoted in the Telegraph on 23rd January 2010 as saying “The argument is that hedge funds, private equity and proprietary trading are a source of risk – that is not our general view. In the UK, the three activities were not responsible for RBS, HBOS or Northern Rock, who, on the whole, failed in the rather classic way of making bad loans.”
This is either stupid or disingenuous. Banks made bad loans because an investment bank would then, for a large commission, underwrite (using their prop desks) the repackaging of these loans to others – hedge funds, other banks etc.. Banks therefore could make any loan and flip it keeping the fee and moving on to the next borrower.
How hedge funds and prop trading didn’t contribute to this I do not know.
I can certainly excuse Private Equity from the equation – these guys are mostly borrowers and are in any case unrelated to the banks.
One very interesting and tricky issue is how can splitting up the banks by itself offer a solution to the securitisation of these loans? The answer, and Myners is right here perhaps (although he hasn’t given this as the reason), it doesn’t. Stopping banks from making mad loans and flipping them is best curbed by either capital requirements or outlawing the activity by forcing banks to hold a significant portion of all loans that they make.
Obama is a big disappointment. Never has someone offered such hope and disappointed more. As a master of politics he is becoming rather transparent. Two examples, first a call for a world without nuclear weapons for which he won the Nobel peace Prize (while continuing two wars perpetrated by the Bush regime). Second a call for a total freeze on all settlement growth in Palestinian occupied territories including what is termed as “natural growth”. Both these statements were clearly ridiculous.
Most recently we have “break up the banks!” It won’t happen. If I had the cash I would be long in banking shares and would have been for at least 6 months. Politicians don’t depend upon people’s votes but on the support of business and in particular the bankers. What is wonderful about this statement is that the breaking up the banks if not easy – there is a huge grey area between taking deposits and simple lending and the more exotic activities such as securitisation. This gives Obama a lot of room to negotiate with the inevitable opposition yet still come out with a win or at least what can, in time for the next election be termed one.
In my view banks that take deposits should not be able to carry out any activities apart from lending to individuals and businesses. I would exclude proprietary trading of course and any equity investments. In addition I would exclude any commission-based activities such as underwriting, broking and M&A. The later are best practiced by independent operations with no conflict of interest as it most often described (what I would describe as “unfair advantage or even insider trading”).
Who is going to support that? The people yes but politicians….? You just be joking. Viva la revolucion!
At least 12 months before they have to declare its existence (IAEA obliges members to inform them 6 months before nuclear materials are in use) Iran announced on 21st September to the IAEA that it is building a new plant for the production of LEU uranium for use in nuclear reactors and that it is open for inspection.
Why then does the UK press, Obama and others suggest that it was secret? They even knew of its existence before the announcement?
Israel is playing a smart game and the US and its poodles are toeing the line. What better way to distract from continual settlement growth and the damning report of the UN with respect to the Israeli attack on Gaza.
The UK and US press is being completely disingenuous in suggesting that Iran has been caught red-handed and equally is being irresponsible in fueling our fears about Iran. Nuclear materials for a bomb require 80% pure Uranium, Iran produces small amounts of 5% pure Uranium. The difference is enormous and there has been NO evidence of any attempts to increase purity above 5%.
I doubt whether anyone will but I do advise those who are least interested in this issue to listen to Ahmadinejad’s UN speech that so may so disgracefully walked of.
Unlike Obama’s carefully trained delivery this is an impassioned speech that talks clearly and intelligently about what he perceives to be the problems of the world.
Disagree if you wish with his speech but at least sit through it! Certainly don’t bother me with your opinions if you haven’t.