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Thread: Systemic Risk on Red Alert !!! ( Greek Riots )

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    Default Systemic Risk on Red Alert !!! ( Greek Riots )

    because so many aspects / potential consequences of this aren't actually financial, I posted it in this forum instead ...


    from

    (snip)"Since 2009, I’ve been warning that systemic risk remains high. However, from that time until today, investors have been willing to bet on the US Federal Reserve (and the world’s central banks) keeping a lid on things.

    Until today.

    Greece has erupted into full-scale, violent riots that could shut down the entire Government there. SHOULD this happen it’s the beginning of the END GAME for central bank intervention in the financial system.

    Let me explain.

    The only thing that has maintained investor confidence since the depths of 2009 is the belief that the central banks can continue to bailout/ intervene to control any financial problem.

    Remember, we never actually “took the hit” we needed to take in 2008. The same junk debt remains in the system (it’s just been hidden by loosened accounting standards). The same enormous derivatives time bomb is still ticking (it’s over $600 TRILLION in size).

    None of these problems were solved. None were even addressed. All the central banks did was lend more money to the insolvent big banks. Well, that and damage their sovereign balance sheets by taking on a ton of garbage debt (the Fed’s balance sheet is now over $2.8 TRILLION in size).

    So in plain terms, the central banks took systemic risk that existed in the private sector and allowed it to spread to the public sector.

    What does this mean?

    That the next Crisis won’t just involve banks like Goldman Sachs, it will involve entire countries (including the US) going belly-up.

    We’re already seeing it in Greece. That situation has made it very clear what happens when you combine public outrage with Government bankruptcy and systemic insolvency: SHUT-DOWN.

    This IS coming to the US. And it won’t be long. Once the bailout wagon stops (first in Greece) the ensuing collapse will spread VERY quickly. The reason is quite simple: Greece is the Bear Stearns of the Sovereign debt Collapse.

    So buckle up, because it was only six months or so after Bear Stearns that the Lehman disaster unfolded. Given the amount of leverage in the system today, we could easily see the issues hitting Greece today arriving at the US’s shores before the year’s end."(snip)


    And just in case anybody has 'missed' current events in Greece ( because US mainstream news media barely covers it ) ...

    from

    (snip)"Greek police have fired teargas at protesters outside parliament as MPs prepared to debate new austerity measures required for the EU and IMF bail-out package.

    Demonstrators who broke off from a strike rally in Athens responded by throwing yoghurt and stones.

    Prime Minister George Papandreou faces the risk of a revolt in his Pasok party over the austerity package.

    He has proposed a unity government to pass the measures, state TV reports.

    He is seeking support for a new austerity programme of 28bn euros (£24.6bn; $40.5bn) in cuts to take effect from 2012 to 2015.

    Thousands are taking part in a general strike, the third in Greece this year.

    Ports, public transport and banks have been badly disrupted as the main public- and private-sector unions go out on strike.

    State-run companies have also joined the walkout, while hospitals are only offering emergency care. However, airports are operating normally after air traffic controllers called off their strike.

    A top credit agency has cut Greece's rating, making it the least credit-worthy nation out of 131 countries it monitors.

    The Greek government said the downgrade by Standard & Poor's - from B to CCC - ignored its efforts to secure funding.

    In order for the next tranche of rescue loans to go through, parliament must adopt the new austerity plan by the end of June.

    'Fight the battle'

    Police thwarted protesters who were attempting to blockade parliament and stop MPs getting in for the debate.

    They sealed off the roads leading to Syntagma Square and created a pathway for deputies.

    The Greek demonstrators are calling themselves the "indignants", linking themselves to Spanish anti-austerity protesters who set up camps in Madrid and Barcelona.

    The square is awash with Greek and Spanish flags, as well as banners reading "Resist" and the battle cry from the Spanish civil war, "No pasaran" (they shall not pass), the AFP news agency reports. (snip)

    and from

    (snip)"Right now the communist trade union federation PAME is marching into the square - my estimate is about 200,000 people in this contingent alone. They are flanked by tough looking men carrying red flags with super-sized flag poles. This of course is to fend off anarchists, who so far have not turned up.

    The square itself has been occupied for 22 days by so-called "indignados" - thousands of young people organised along the Spanish model.(snip)

    (snip)"For all the leftist iconography plus the presence of that, by now familiar demographic, the Facebook youth - or "graduates with no future" - this thing has gone beyond left and right, it's no longer even a class thing. As the crowd around me erupts with the chant, "Greece, Greece, Greece!" it's clear that for many people it is the Hellenic republic versus the rest of the world.

    Standing here amid a crowd that is frustrated, but not yet tense, which is hurling abuse and the occasional plastic bottle at the cops defending parliament it is strange to think this is the front line of the world's financial system. For if Greece defaults, the world leaders fear a second Lehman."(snip)

    ~
    Last edited by Melonie; 06-15-2011 at 03:30 PM.

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    Default Re: Systemic Risk on Red Alert !!! ( Greek Riots )

    Here's a wild guess. A ten year depression is coming. Maybe it will get better after that.

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    Default Re: Systemic Risk on Red Alert !!! ( Greek Riots )

    ^^^ be that as it may, the 'systemic risks' pointed out by the article's author aren't just economic.


    from

    (snip)ATHENS — As the Greek government struggles to save its debt-racked economy from collapse, another crisis is growing in the capital: A sharp increase in violent crime is stirring unrest among a public already demoralized by unending economic hardship.

    Once a rarity in Athens, long proclaimed one of the safest European capitals, crime has grown uglier. Knifings are no longer unusual and assault rifles have been used in armed raids on street kiosks and jewelry shops.

    According to police statistics for 2010, the most recent available, street robberies in the capital doubled compared with 2009, robberies of taxi drivers nearly quadrupled and homicides were up 50 percent.(snip)

    (snip)"An attempted crackdown on organized crime has had limited success, provoking several shootouts. Two police officers were killed in March, and several more have been wounded.

    Illicit trade and crime have created a no-go zone, splitting the heart of Athens in half. Commercial and archaeological sites frequented by tourists are largely unaffected. But dingy streets and plazas behind Omonia Square have become a haven for the drug and sex trades and the scene of frequent armed clashes between migrant groups wrestling for control of this trade. As tolerance wears down, migrants have been singled out in a wave of brutal attacks linked to far-right groups.

    Residents and shopkeepers have had enough. Most of those who can have moved away, said Vassiliki Nikolakopoulou, 57, who heads a residents’ committee and has been robbed twice by people she perceived to be immigrants wielding knives.

    “We were warning this would happen five years ago,” she said. “Now it’s a jungle.”

    Ioanna Katseli, who manages a street kiosk near the city center, has been robbed several times by people she said were immigrants and drug addicts and said her husband, a taxi driver, had been threatened at knife-point by thieves.

    Ms. Katseli, 58, stopped wearing jewelry after the murder of a 45-year-old owner of a kiosk in February, a few blocks away, by men wielding Kalashnikov rifles. “I’m not surprised my old customers stay away,” she said, adding that her efforts to find work elsewhere had failed.

    Public anger peaked on May 10 when a 44-year-old Greek man was knifed to death on a street corner while his wife was going into labor. The assailants snatched the video camera with which the man had planned to film the birth.

    After rumors that the killers were immigrants, a 21-year-old Bangladeshi man was stabbed to death. Two Afghan citizens have since been charged with the Greek man’s murder while the Bangladeshi’s killers remain at large.

    A public demonstration protesting the Greek’s killing was hijacked by far-rightists who chased immigrants and beat them with clubs."(snip)

    (snip)"In recent weeks, police have increased patrols and hundreds of illegal immigrants have been evacuated from squats. The authorities have created several facilities, outside Athens, for detention of immigrants facing deportation. There are plans to move drug rehabilitation clinics from the city center.

    Many migrants argue they are being punished for the wrongdoing of a few. “Most of us just want to work,” said Salim, 28, who came to Athens from Afghanistan in 2006 and manages a convenience store near Victoria Square. He declined to give his surname for fear of reprisals; his store windows have been smashed twice in two weeks.

    The police say half of all crime suspects are immigrants.

    “The security problems in the city center are largely linked to the problem of illegal immigration,” said Mr. Kokkalakis, the police spokesman. “Many migrants resort to petty crime, thefts, burglaries, prostitution and drug dealing to survive and pay off their supposed benefactors” — smugglers who bring migrants for a fee.

    Yiannis Panousis, a professor of criminology at the University of Athens, said the problem could not be attributed to immigrants or drugs. Police raids should be more focused, he said.

    “If organized crime is broken, the cover-ups will be exposed,” he said, noting that migrants resorting to crime are protected by the people who exploit them.

    The economic crisis and 16 percent official unemployment are not the cause of the increased crime, said Yiannis Panousis, a professor of criminology at the University of Athens. “You don’t start mugging because you’ve lost your job," he said, but tolerance had been eroded.
    Vassiliki Papoulia, 46, an employee at a public company near Koumoudourou Square, where dozens of migrants sleep at night, said: “I was never a racist but I’ve become one. Why can’t we send them all home?”

    Others are more understanding. Aliki Katsikari, 63, manages a restaurant in the trendy district of Psyrri and employs a Bangladeshi and a Pakistani in her kitchen. Her street has been the site of brawls between gangs of Asian and African immigrants and is a hangout for drug addicts.

    “It’s not their fault,” she said. “It’s the neglect of the state.”

    Since far-right parties made gains in local elections in November, vigilante groups have patrolled city squares.(snip)


    While the arguable 'root' of these problems are indeed economic, i.e. very high unemployment rates for young people - a gov't that is so broke that it can no longer 'placate' its unemployed with generous social welfare benefits - a gov't that is so broke that it must cut both the number of police and the paychecks of remaining police, the arguable 'consequences' extend far beyond the economic alone. Bloody street riots, escalating levels of violent crime, widespread strike induced shutdowns of 'essential' services, cutbacks in gov't services, cutbacks in social welfare benefits, cutbacks in police protection, cutbacks in prosecutions etc. all contribute to a 'systemic' breakdown.

    As the Greek experience ( and the Soviet Union's breakup experience before it ) painfully point out, when the gov't can no longer control the 'streets' organized crime moves in to fill the vacuum. Similarly, when the unemployed are no longer receiving generous levels of gov't funded 'free' food and money, many will turn to crime and take 'free' food and money from others. Additionally when the gov't can no longer effectively enforce society's laws, 'extremist' groups ( on both the right and the left as well as outside of politics i.e. gangs ) begin to take 'enforcement' into their own hands using their own standards of 'justice'. And after the angry citizenry have reduced gov't to disfunctional levels, thus no longer have 'ruling' politicians to blame for their personal situations, that blame often gets refocused toward other 'easy targets' like illegal immigrants / minorities etc.

    Of course the standard American / Western European response is that 'this could never happen here'. Unfortunately, over the course of the past few years, a whole lot of things that supposedly 'could never happen here' HAVE happened !!!

    ~
    Last edited by Melonie; 06-16-2011 at 12:39 AM.

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