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Thread: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

  1. #26
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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    Quote Originally Posted by eagle2 View Post
    Germany is benefiting greatly from Greece, and some of the other weaker economies in Europe, on the Euro. Greece and the other weaker economies in Europe have kept the value of the Euro down, which has greatly benefited Germany's export industries. If Germany had its own currency, it would obviously be a lot stronger than the Euro, and German exports would be a lot more expensive.
    What about all the money Germany has sent to Greece that it will never see again ?

    What about all the German imports the Greeks haven't paid for ?

    When the Deutschmark was strong, Germany did not have any trouble exporting more than it imported. They have long had an export based economy in Germany.

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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    ... and just think ... Greece is 'small potatoes' compared to the 'bailout' needs of Spain, Portugal, Italy etc.

    The UK Telegraph offered this opinion this morning ... from


    (snip)"The week that Europe stopped pretending

    Switzerland is threatening capital controls to repel bank flight from Euroland. The Swiss two-year note has fallen to -0.32pc, not that it seems to make any difference.

    Denmark’s central bank said it was battening down the hatches for a "splintering" of EMU. It has cut interest rates twice in a matter or days and pledged to do whatever it takes to stop euros flooding into the country. Contingency plans are on the lips of officials in every capital in Europe, and beyond.

    On a single day, the European Commission said monetary union was in danger of "disintegration" and the European Central Bank said it was "unsustainable" as constructed. Their plaintive cries may have fallen on deaf ears in Berlin, but they were heard all too clearly by investors across the world.

    Joschka Fischer, Germany’s former vice-Chancellor, said EU leaders have two weeks left to save the project.

    "Europe continues to try to quench the fire with gasoline – German-enforced austerity. In a mere three years, the eurozone’s financial crisis has become an existential crisis for Europe."

    "Let’s not delude ourselves: If the euro falls apart, so will the European Union, triggering a global economic crisis on a scale that most people alive today have never experienced," he said.

    Mr Fischer has the matter backwards. The euro itself is the chief cause of the existential crisis he discerns. Yet he is right that three precious years have been squandered, and that Europe‘s policy mix has been atrociously misguided.

    The pace of fiscal tightening has been too extreme, made much worse by the ECB’s monetary tightening last year. This inflicted a double-barrelled shock on Southern Europe. The whole region was forced back into slump before it had reached "escape velocity".

    The window of opportunity offered by US recovery is slamming shut again. America’s dire jobs data for May - and the downward revision for April - confirm the fears of cycle specialists that the US economy has slipped below stall speed. America risks tanking back into recession as the "fiscal cliff" approaches late this year, unless the Fed comes to the rescue again soon.

    Brazil wilted in the first quarter. India grew at the slowest pace in nine years. China’s HSBC manufacturing index fell further into contraction in May, with new orders dropping sharply and inventories rising.

    We face the grim possibility that all key engines of the global system will sputter together, this time with interest rates already near zero in the West and average public debt in the OECD club already at a record 106pc of GDP.

    "The world’s largest emerging economies are no longer in a position to carry the global economy through tough times, as they did during the 'recovery' years of 2009-2011," said China expert Andy Xie.

    The warnings from the bond markets could hardly be clearer. German 10-year Bund yields closed at 1.17pc. The two-year notes turned negative. British Gilts closed at 1.53pc, the lowest in 300 years. US Treasuries fell to 1.45pc, lower than at any time during the Great Depression.

    The debt markets are pricing in for a global deflationary bust. Europe will have to restore shattered trust in the worst possible circumstances.

    If deposit flight from Spain was €66bn in March before the Greek election tore away the pretence that Europe had solved anything, one dreads to think what it will be in April and May when the data come out.

    Alberto Gallo from RBS says Spain will need an EU rescue package of €370bn to €450bn to bail out its crippled property lenders and limp through to 2014, pushing public debt to 110pc of GDP.

    This would be the biggest loan package in history by a huge margin. Whether the EU bail-out fund could raise the money on the global markets at viable cost is an open question.
    "(snip)


    The essential take-away from this commentary is that all European countries that do NOT use the Euro are now vulnerable to a huge influx of new money being transferred out of Greece, Spain, Portugal, Italy etc. as the 'smart money' tries to avoid being forced to take losses when their Greek, Spanish, Portuguese, Italian etc. assets are forcibly repriced in devalued Drachmas, Escudos, Lira etc. That influx, if not 'restricted' by the imposition of capital control measures, will result in the Swiss Franc, the Danish Krone, as well as Swedish, Polish, and even UK currency exchange rates rising. A rising currency exchange rate in turn will mean that the price of export goods sold by Swiss, Danish, Swedish etc. companies will instantly become more expensive for foreign buyers - causing a matching drop in export sales / profits thus dropping domestic employment levels thus dropping gov't tax receipts.

    At that point, the 20-odd year old 'artificial' export market which allowed high priced European goods to be sold at de-facto above market prices to European consumers ( with those 'artificially' high price levels being 'subsidized' by an ever expanding level of 'vendor financed' Euro debt ) will almost instantly cease to exist. At that point, with little chance that anyone will be willing to loan additional moneys to Greece, Spain, Portugal, Italy etc., the Swiss, Danish, Swedish and other European exporters will finally face a day of reckoning when trying to sell their higher priced products into a global market ( where their higher labor costs, higher environmental costs, higher tax rates, etc. will make them very uncompetitive ).

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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    What about all the money Germany has sent to Greece that it will never see again ?

    What about all the German imports the Greeks haven't paid for ?
    Well, the Germans can always 'collect' in the same way they did 70 years ago ! Greeks and Germans both have long memories !



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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    That is one thing that terrifies many Greeks : German fiscal controls on the Greek budget. Or it could be imposing German productivity on the Greek economy.

    As you pointed out, the Greeks seem intent on cutting their own throats : tourist bus drivers going on strike; Greek shipbuilding and repair in the toilet. The mind reels at the non-stop foolishness. A substantial segment of Greece seriously expects to somehow, some way just keep going the way they have been for the last decade or so. There is no part of " the party is over " that is within their understanding. Amazing.

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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    ^^^ for better or worse, this circles back to a truism that has been around since the Roman Empire i.e. the "tyranny of the majority" ... which was summed up concisely by 19th century historian and political analyst Alexis de Tocqueville ...

    (snip)"Tocqueville warned that "modern democracy may be adept at inventing new forms of tyranny, because radical equality could lead to the materialism of an expanding bourgeoisie and to the selfishness of individualism. In such conditions "we lose interest in the future of our descendents...and meekly allow ourselves to be led in ignorance by a despotic force all the more powerful because it does not resemble one."[21] Tocqueville worried that if despotism were to take root in a modern democracy, it would be a much more dangerous version than the oppression under the Roman emperors or tyrants of the past who could only exert a pernicious influence on a small group of people at a time. In contrast, a despotism under a democracy could see "a multitude of men," uniformly alike, equal, "constantly circling for petty pleasures," unaware of fellow citizens, and subject to the will of a powerful state which exerted an "immense protective power".[2] Tocqueville compared a potentially despotic democratic government to a protective parent who wants to keep its citizens (children) as "perpetual children," and which doesn't break men's wills but rather guides it, and presides over people in the same way as a shepherd looking after a "flock of timid animals."[2](snip) from Wiki

    (snip)"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.”
    ― Alexis de Tocqueville (snip) from


    Political ramifications aside, De Tocqueville's very pertinent observation - which is as true today as in De Tocqueville's time almost 200 years ago - is that a point always arises in a democracy where a majority of voters who have no personal 'skin in the game' discover that they can vote to continue / increase their own short term 'benefits', regardless of the burden those short term 'benefits' impose on a minority of fellow citizens, impose upon future citizens, impose on their own longer term futures etc. Indeed the argument can be made that the majority of Greek citizens - as well as the majority of citizens of Spain, Portugal, Italy etc. and certain US states like CA and IL and NY - have no real understanding of the overall economics which has been 'subsidizing' their standards of living above that which they themselves are capable of producing. They simply assume that by voting for particular policies that their 'subsidized' standard of living will continue into the future as it has in the past. They will indeed face a rude awakening when the day arrives when those who have actually been financing their 'subsidized' standard of living draw a line in the sand regarding ongoing future 'subsidies', thus forcing them to accept the lower standard of living that is sustainable based upon their own productivity.
    Last edited by Melonie; 06-04-2012 at 01:55 PM.

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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    whoa why is she wearing a nazi symbol. wth

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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    ^^^ that's a photo-shopped image that was used in Greek newspaper headlines recently ... implying that Germany's reluctance to further burden German taxpayers in order to continue providing the Greek gov't / Greek workers with additional borrowed moneys that will most likely never be paid back ... was based on a renewed nazi-like position by Germany wishing to take control of Greece's internal economy i.e. to increase taxes and reduce gov't spending levels ( as a condition of the Germans sending Greece future bailout money ). I won't add much more, other than pointing you to this UK Daily Mail news story

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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    Greece is rapidly running out of other people's money ... from


    (snip)As European leaders grapple with how to preserve their monetary union, Greece is rapidly running out of money.

    --------------------------------------------------------------------------------

    Nikos Lekkas, a government official, said banks had hindered his efforts to collect back taxes.

    Government coffers could be empty as soon as July, shortly after this month’s pivotal elections. In the worst case, Athens might have to temporarily stop paying for salaries and pensions, along with imports of fuel, food and pharmaceuticals.

    Officials, scrambling for solutions, have considered dipping into funds that are supposed to be for Greece’s troubled banks. Some are even suggesting doling out i.o.u.’s.

    Greek leaders said that despite their latest bailout of 130 billion euros, or $161.7 billion, they face a shortfall of 1.7 billion euros because tax revenue and other sources of potential income are drying up. A wrenching recession and harsh budget cuts have left businesses and individuals with less and less to give for taxes — and growing incentive to avoid paying what they owe.

    The budget gap is widening as the so-called troika of lenders — the International Monetary Fund, the European Central Bank and the European Commission — withholds 1 billion euros in bailout money earmarked for government financing while it waits to see whether new leaders elected June 17 will honor Greece’s commitments.(snip)


    It would appear that there is zero chance that Greek voters will elect new leaders that will agree to abide by the 'austerity measures' which earlier Greek leaders agreed to implement as a condition of ( primarily ) Germany and ( to some extent ) France agreeing to loan Greece 'bailout' money. The likely new Greek leaders are now not only talking about abandoning these 'austerity measures', but are now openly proposing that loaned 'bailout' funds earmarked to bolster the capital reserves of Greece's banks be 'hijacked' and spent on gov't paychecks / benefit checks instead. Undoubtedly the German and French 'bailout' funding sources will view this as proof that their previously loaned money will probably never be paid back, and that loaning Greece additional money will only constitute 'spending good money after bad'. This will leave new Greek leaders with no choice but to 'ration' whatever remaining funds they can still lay their hands on.

    Ultimately, foreign suppliers to Greece for fuel, food, pharmaceuticals etc. are simply not going to continue delivering 'valuable' goods paid for by Greek 'IOU's' ... that might be honored at an indeterminate future time at an indeterminate valuation level. Nor are they going to accept being paid for past 'valuable' goods deliveries at a 50% or 20% or 10% fraction of the moneys that Greece actually owes them. When grocery store shelves empty out, when electricity starts shutting off, when the high percentage of Greek gov't workers and Greek social welfare beneficiaries' checks stop rolling in, etc. things should get extremely 'interesting'.

    George Soros has already made the call that there's less than 3 months remaining before the entire situation 'falls apart'.
    Last edited by Melonie; 06-06-2012 at 01:34 PM.

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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    and George may have been overly generous with the 3 month estimate ...


    from

    (snip)The shortages in chemotherapy medicine and other expensive drugs arose when pharmaceutical companies cut credit to the country's largest state-backed heath insurance fund, EOPYY, which provides subsidised medicine to ordinary Greeks.

    The problem is yet another reminder of the challenges facing Greece, which goes to the polls for a second time this month after May's elections failed to deliver a government.

    Coalition talks between competing parties broke down when the far left demanded a renegotiation of the country's austerity drive – something that is opposed by its European partners, notably Germany. The ratings agency Standard & Poor's said this week that there was a one in three chance that Greece could quit the euro in the months after the elections on 17 June.

    Yesterday, the privately run SKAI TV showed scenes of hysteria as hundreds of Greeks queued outside one of the five pharmacies owned by EOPYY. A patient could be heard screaming inside the pharmacy, and a man said he had been waiting hours to get his mother's cancer medication.

    The average cost of a cancer patient's prescription is €2,000 (£1,600) but members of the EOPYY healthcare fund got the medicines at a heavy discount. By lunchtime, the morning queues had vanished. "I got my relative's drug a day early," said one woman. "But off course, with this situation, I'm worried we might not be this lucky next time."

    The morning frenzy, according to an employee, was due to misinformation. "Thousands came thinking we would provide all sort of medicine when we were ordered to hand out only the most expensive type."

    Workers at the EOPYY pharmacy at the Georgios Gennimatas oncological hospital told The Independent they gave out around 1,000 cancer drugs to about 300 patients. However, they still lacked some chemotherapy medicines, as one pharmaceutical company had yet to deliver. "One sufferer started screaming and insulting us because we lacked a medicine," said an employee who refused to give her name. "People are very anxious to get their medication and express their feelings in different ways. You can't blame them."

    Kalliopi Metaxa, a retired doctor and volunteer at the KEFI Cancer Society, said its members were desperate. "It's a chaotic situation – a temporary solution was provided to help the seriously ill. But what happens when the government runs out of money again?"

    She added that in her years as a state doctor, she had never seen such a health crisis although Greece had a history of being late with its payments to health providers.

    It's not just the pharmaceutical companies that are owed money. The EOPYY fund is also in debt to pharmacists. The government had pledged to repay the last outstanding instalment of this year's €270m debt to pharmacists after they cut credit to EOPYY, forcing members to pay for their own medicines, which are normally subsidised by the fund.

    But the Prime Minister, Panayotis Pikrammenos, said this week that his caretaker government could not begin repay £6.5bn of outstanding payments to pharmacies until Greece receives its next loan instalment from its international creditors.(snip)

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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    This would be comical were it not so tragic. I can understand the "alternate universe" inhabited by the Left in Greece. They are literally trying to hold the EU hostage.: "You bail us out from our spendthrift ways or we will never pay back all the previous loans you gave us. " It is amazing to me that the EU is finally getting it. That said loans will never be paid back. This was predicted over a year ago. It boggles the mind that the metaphorical gun is being held to the head of Greece !

    I don't like generalizing but it seems pretty clear that one of many fundamental flaws to the whole EU concept is that the "Northern" and "Southern" European mentalities just do not mix. The Northerners work harder , save more and produce more. They are far more industrialized. Their Left is mostly Socialist or Social Democrat. The Southerners take siestas , long lunches, are still somewhat more agrarian and their Left tends to be much "harder". I know. I've been to both Northern and Southern Europe and seen the contrasts for myself.

    I can remember reading George Will and several writers in National Review who predicted 15 and even 20 years ago tha the EU would eventually collapse based on nothing more than human nature and nationalism.

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    Default Re: If it Smells like Panic, Looks like Panic, and Sounds like Panic .. ( Greece )

    It is amazing to me that the EU is finally getting it. That said loans will never be paid back. This was predicted over a year ago.

    The 'economic realists' would tell you that the primarily German driven position of ceasing additional 'bailout' loans based on Greece's failure to live up to the 'austerity measures' they previously agreed to in order to obtain earlier 'bailout' loans isn't really about Greece. In reality it is about Spain, Portugal, Italy etc. ... who are following in Greece's footsteps of being politically unable to implement similar 'austerity measures' re gov't spending levels, gov't employment levels, increased taxation, reduced gov't subsidies etc.

    The Germans know that if they don't 'put a metaphorical gun to the head' of Greece over disregarded 'austerity measures', that there is no way that they can say NO to requests for Spanish 'bailout' loans that are already starting to be made in earnest. With Spain's economy being 10 times as large as Greece, the potential German losses on 'bailout' loans that won't be repaid will be truly substantial. And the same consistency principle also applies to Portugal, to Italy etc., whose trajectory towards needing 'bailout' loans is similar. From a very pragmatic standpoint, it would appear that the Germans have reached a 'fork in the road' where they are deciding to 'take their losses' regarding previous 'bailout' loans made to Greece that will not be paid back in order to avoid taking much MUCH larger potential losses on future 'bailout' loans to Spain, Portugal, Italy etc. that are similarly unlikely to ever be paid back in full.

    Also, unlike different US states, Germany is refusing to allow itself to be put in the position of becoming a component of a Federal Europe i.e. a 'deep pocket' source of ongoing money transfers to other less productive European 'states' that cannot seem to control their gov't spending levels / gov't employment levels / gov't subsidy costs. The obvious Federal Europe versus USA analogy is Texas being equivalent to Germany versus California, Michigan, Illinois etc. being equivalent to Spain, Greece, Italy.

    At any rate, it would now appear that unless China or Russia decide to step in with 'bailout' loans ( Russia already made 'bailout' loans to the similarly bankrupt EU Cypriot gov't last year ), that Greece ... and soon Spain ... will see their 'credit' cut off. As discussed in the article about subsidized Greek prescription drugs, this will mean that Greece ... and soon Spain ... will wind up having to pay 'cash on the barrelhead' for all imported necessities. This will finally FORCE the Greek ... and soon Spanish ... population to face the reality that their past levels of gov't worker paychecks, retirement checks, social welfare benefits, gov't subsidized pricing of prescription drugs / food / fuel etc. simply cannot continue to be paid for at the 'expense' of electricity being shut down for lack of imported fuel, at the 'expense' of prescription drugs / food / countless other imported essentials becoming unavailable as long as foreign suppliers remain unpaid etc.
    Last edited by Melonie; 06-07-2012 at 08:32 AM.

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