Greece

[CaP'N GRuNGe]

I remember back in May 09 when I made my first claim that we had entered a deflationary depression. Back then there were a handful of huddlers (west va, dmarc, avernus) who thought it made sense and a whole bunch of others who flamed this unusual view of the US/Global economy. I think most people are now realizing that a deflationary depression is the likely outcome. I hope most of you have been loading up on firearms, food, water and cash. There's no telling how ugly it's going to get so it's best to prepare for the worst. But hopefully the end result will be a changed world in which greed is not the dictator.

 

Good luck fellow huddlers.

 

Bah. I choose to be positive. We're the United F'n States of America. Fundamentals are coming back, albeit slowly. We will get through this over the long term and come out stronger for it.

[bushwacked]

I think most people are now realizing that a deflationary depression is the likely outcome.

 

Link?

[CaP'N GRuNGe]

Link?

 

link

[WaterMan]

Tosberg calls American protesters violent. He needs to look at Greece's protesters.

[Ursa Majoris]

Interesting article that mentions the possibility of a less than cataclysmic scenario if Greece exits the Eurozone.

 

Talk about drama. German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou emerged from an emergency meeting on Wednesday evening with a bombshell: Greece will have to decide if it wants to remain in the European monetary union. Merkel and Sarkozy suspended all further bailout funds until that fateful choice is made.

 

What a shocker. The whole idea of a member of the euro zone bolting the union has been completely taboo, even as a debt crisis has raged through Europe for two years. There isn't even any mechanism in place through which a country can exit the monetary union. The fact that this possibility has even been mentioned is a major break with the past that leaves the future very uncertain. (See how the Greek referendum puts the E.U. deal in jeopardy.)

 

What happens now? Hard to say. It seemed that a referendum Papandreou had called for on Monday to seek public approval of Greece's participation in the latest euro zone bailout scheme, agreed to last week at a summit of European leaders, would be transformed into a vote on the country's continued membership in the monetary union itself. But events in Athens are changing rapidly and unpredictably. Papandreou may lose a confidence vote in parliament on Friday as his supporters melt away over his referendum plan. That raises the possibility of the Greek government falling and possibly a new election being held. Greece's future in the euro zone will remain an unknown as long as the country's domestic politics remain in turmoil.

 

Yet this whole amazing series of events has raised an important question: Would Greece be better off in or out of the monetary union? (See pictures of the protests in Greece.)

 

The conventional wisdom has always been that Greece's departure from the euro zone would be a complete calamity. If Greece bolted, it would lose its European bailout and most likely default, sending shockwaves through Europe's banking system and global financial markets. The Greek banking sector would likely collapse, while the government, frozen out of capital markets, might even be unable to pay its bills. For the euro zone, Greece's defection would raise the specter of a cascading series of departures if other weak economies, also suffering in the debt crisis, chose to follow Athens's example. To sum up, it could get ugly.

 

But there is another, less terrifying scenario. By leaving the euro, Greece would lose its bailout money — but it would also regain control over its economic future. By returning to its own currency, Athens could depreciate its way to better competitiveness, something the country simply can't do as part of the euro zone. Rather than suffering under German-imposed reforms and retrenchment, Greece could press forward with a drastic restructuring of its national debt, a step the leaders of the euro zone have been anxious to avoid. None of this means the process won't be painful — Greeks will have to endure years of austerity measures and reform whatever currency they use. But departing the euro zone might at the same time give the country a better shot at halting its economic free fall and returning to healthy growth, at least in a more reasonable period of time.

 

And the euro zone might gain from a Greek exit as well. Those tens of billions thrown at Greece in bailouts could then be redirected to recapitalize banks, shore up Italy and Spain and protect the core of the monetary union. How would global financial markets react? Hard to predict. The exodus of a country from the euro zone would be unprecedented and destabilizing. But then again, Greece's exit would not be surprising to anyone who hasn't been stranded on a South Pacific isle for the past two years. That suggests the impact might not be as dramatic as many fear, especially if Europe acts fast to back up its banks and defend the remaining euro zone member states. (See why there is no joy in Greece over the E.U. deal.)

 

In many ways, Greece is like a contestant on the old game show Let's Make a Deal. The country has a choice of two doors — one that leads it out of the euro and on its own; one that keeps it a part of Europe and its great experiment in integration. We can only guess what is behind those doors, and there is no way of knowing for certain which door is best to open. Greece could end up with a shiny new Cadillac. Or a year's supply of canned tuna. It's not a choice I'd want to make. I wish them luck.

[MrTed46]

So if New Jersey becomes insolvent the USA will just boot a state out of its country?

[Savage Beatings]

I am willing to bet a good chunk of change, that even while the official stance of the U.S. GOVERNMENT might be that we will not provide any financial aid to Europe in order to help them through this, that the FEDERAL RESERVE will be making all kinds of undisclosed "loans" to European banks as a way to help bail them out.

[Ursa Majoris]

So if New Jersey becomes insolvent the USA will just boot a state out of its country?

It depends if New Jersey is populated by serial tax evaders and people who vote themselves the ability to retire at 50 on full salary, I guess. It would also depend on whether New Jersey lied through it's teeth and presented false financial statements to gain admission to the Union in the first place. Also, when asking for help, I think the willingness of NJ to make some attempt to participate in it's own rescue might come into play.

[Brentastic]

Bah. I choose to be positive. We're the United F'n States of America. Fundamentals are coming back, albeit slowly. We will get through this over the long term and come out stronger for it.

I wish I could stay positive but the warning signs have been there and are becoming more evident with each day. I've said this a thousand times - until the US (and the world) eliminates the power of central banks, there is no light at the end of the tunnel. And based on how this global credit crisis is being handled, central bankers are gaining power, not losing it.

 

Below shows another banker gaining control in Greece. Just what the world needs - more bankers gaining control

 

http://www.businessweek.com/news/2011-11-0...-over-100-.html

Nov. 3 (Bloomberg) -- German government bonds fell for a second day as the European Central Bank prepared to announce its latest interest-rate decision and the BBC reported that Greek Prime Minister George Papandreou will step down.

 

Italian bonds erased their drop. Papandreou will propose a coalition government headed by former ECB vice-president Lucas Papademos, the BBC reported, without saying how it got the information. Greek two-year yields surged above 100 percent for the first time after European leaders yesterday suspended aid to the nation pending a vote they said would determine whether Greece stays in the euro area. New ECB President Mario Draghi takes over as head of the governing council after a resumption of bond purchase to stem debt-crisis contagion.

 

“The market will be looking very closely to see if there’s a shift in policy announced by Draghi,” said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets Ltd. in Edinburgh. “The ECB has the firepower to do something about the crisis but the question is whether he’s going to do it. That’s probably more important than any rates decision today.”

 

The 10-year German bund yield rose seven basis points to 1.89 percent at 12:34 p.m. London time. The 2.25 percent security due September 2021 fell 0.61, or 6.1 euros per 1,000- euro ($1,381) face amount, to 103.17. The rate dropped to 1.73 percent on Nov. 1, the lowest since Oct. 5. The two-year yield climbed three basis points to 0.45 percent.

 

ECB policy makers will leave the benchmark interest rate at 1.5 percent, according to the median estimate of 55 economists surveyed by Bloomberg News.

 

More on Papademos from wiki:

http://en.wikipedia.org/wiki/Lucas_Papademos

Lucas Demetrios Papademos (Greek: Λουκάς Παπαδήμος, Greek pronunciation: [luˈkas papaˈðimos]; born 11 October 1947 in Athens), is a Greek economist, former Vice President of the European Central Bank.

 

Papademos attended the Massachusetts Institute of Technology, gaining a degree in physics in 1970, a masters degree in electrical engineering in 1972, and a doctorate in economics, in 1978.

 

He followed an academic career at Columbia University, as well as serving as Senior Economist at the Federal Reserve Bank of Boston in 1980. He joined the Bank of Greece in 1985 as Chief Economist, rising to Deputy Governor in 1993 and Governor in 1994.He was Vice President of the European Central Bank from 2002 to 2010.

He has been a member of the Trilateral Commission since 1998.

He is a member of the Academy of Athens, and a professor of the University of Athens.

 

Bottom line: the world is controled by greedy criminals who only desire world dominance, control and money. Until we the masses do something about it our freedoms and liberties are going to continue to erode until we all live like peasants.

Edited November 3, 2011 by Brentastic

[Brentastic]

Link?

You want a link to my opinions?

[Azazello1313]

it won't be long now.

[Brentastic]

it won't be long now.

You're damn right it won't. Do you find this situation humorous? I don't.

[CaP'N GRuNGe]

You want a link to my opinions?

 

I helped you out and already gave your link a couple of posts above.

[SheikYerbuti]

I am willing to bet a good chunk of change, that even while the official stance of the U.S. GOVERNMENT might be that we will not provide any financial aid to Europe in order to help them through this, that the FEDERAL RESERVE will be making all kinds of undisclosed "loans" to European banks as a way to help bail them out.

 

I would be willing to take that bet with you. Problem is we'd never know if you won.

 

With the entire financial world staring at the European situation under a giant microscope, I think it would be very difficult for the US (or any country for that matter) to slip money under the door to anyone.

 

The US has already stated that if the European Central Bank isn't able to recapitalize the European banks by themselves, that the IMF would take steps to help. The US is the largest contributor to the IMF. Once the IMF steps in, that's when the Perch's of the world can grab their pitchforks and torches. If I had to bet, I'd bet that it doesn't come to that point. The ECB has already leveraged up its coffers to over 1 trillion euros to fix this mess, and by current estimations, that should be plenty.

[MrTed46]

It depends if New Jersey is populated by serial tax evaders and people who vote themselves the ability to retire at 50 on full salary, I guess. It would also depend on whether New Jersey lied through it's teeth and presented false financial statements to gain admission to the Union in the first place. Also, when asking for help, I think the willingness of NJ to make some attempt to participate in it's own rescue might come into play.

 

The EU as a whole has some blaim in this and now it's not so easy to turn their backs to the problem. It's a cluster F

[bushwacked]

You want a link to my opinions?

 

A lot of people are against additional bailout funds for Greece and you somehow leap to strongly insinuating that now people agree with your earlier predictions. That’s delusional enough. As part of that insinuation you state ”most people are now realizing that a deflationary depression is the likely outcome.” I was not aware that was the case, so I’m asking what you are basing that rather bold claim on (I realize you said think, but that still is a big time claim).

Edited November 3, 2011 by bushwacked

[Brentastic]

A lot of people are against additional bailout funds for Greece and you somehow leap to strongly insinuating that now people agree with your earlier predictions. That’s delusional enough. You then state you think” most people are now realizing that a deflationary depression is the likely outcome.” I was not aware that was the case, so I’m asking what you are basing that rather bold claim on.

I pay attention to the global financial crisis. Do you? Deflationary depression is in the works and I said as much over 2 years ago. It becomes more evident with each day. You pretend to be a smart guy, why don't you piece it together? I've been preaching the same thing for years - the world is awash in debt. It's not going away and now it's time to pay up. The biggest flaw in humans is short-sightedness. Nobody wants to plan for future generations, they only want to get through the immediate future. When governments start defaulting everything else will follow. A fish rots from the head. Pay attention to what's going on - I'm not going to spell it out for you. I already sound like a broken record.

[Azazello1313]

You're damn right it won't. Do you find this situation humorous? I don't.

 

hell no. your one-note chicken little conspiracist armaggeddon prophecy routine is extremely serious business.

[bushwacked]

I'm not going to spell it out for you.

 

 

I'm not asking for you to convince me the end of the world is near. I was asking you to support one rather measurable statement.

[Brentastic]

I helped you out and already gave your link a couple of posts above.

Although, I'm not sure BW really cares - he's just trolling like usual. He's probably a banker in real life.

[bushwacked]

Although, I'm not sure BW really cares - he's just trolling like usual. He's probably a banker in real life.

 

 

You made a statement I think is wholly inaccurate. I asked you to support it.

[Brentastic]

 

You made a statement I think is wholly inaccurate. I asked you to support it.

Contrary to popular belief, news articles are not the gospel when it comes to knowledge.

 

I cannot provide a link because I didn't get my info from another source, it came from my own brain (imagine that!). My statement was based on trader sentiment, the ongoing global credit crisis and the fact that liquidity in a deflationary environment moves all markets up and down more or less simultaneously. Pay attention, the warning signs are there and you won't need someone else to tell you what's going on in the world.

[Azazello1313]

Contrary to popular belief, news articles are not the gospel when it comes to knowledge.

 

I cannot provide a link because I didn't get my info from another source, it came from my own brain (imagine that!).

 

your statement was that "most people realize..."

 

I guess you meant most of the voices in your own head?

[SheikYerbuti]

I don't want to sound like I'm taking part in the "Jump Down Brent's Throat" game, but I think there's evidence that the majority does not think a deflationary depression is the likely outcome of the Euro crisis. The market has been trading on headlines and sentiment more than usual since the August Debt Ceiling debacle. If the majority view was an imminent depression, then the following would be different:

 

* Gold would be at an all-time high. It's currently about $200/oz off of its high. It would also be trading inversely from the S&P 500. For the last month it's been moving in tandem with the market, which is a sign it's not being rushed into as a safe haven from impending doom.

 

* The S&P would not be almost 150 points higher than the October 4th low, where fear of a Greek default was at its highest.

 

* The VIX would be well over 40. It's currently at 30, which is no doubt high, but it's safe to say if the majority opinion was imminent depression, the put action on the CBOE would be much much higher.

 

All that being said, this market moves hundreds of points based on which side of the bed some Belgian finance minister wakes up on, so things can change fast. But, I think the overall sentiment is at worst one of uncertainty.

[Brentastic]

I don't want to sound like I'm taking part in the "Jump Down Brent's Throat" game, but I think there's evidence that the majority does not think a deflationary depression is the likely outcome of the Euro crisis. The market has been trading on headlines and sentiment more than usual since the August Debt Ceiling debacle. If the majority view was an imminent depression, then the following would be different:

 

* Gold would be at an all-time high. It's currently about $200/oz off of its high. It would also be trading inversely from the S&P 500. For the last month it's been moving in tandem with the market, which is a sign it's not being rushed into as a safe haven from impending doom.

 

* The S&P would not be almost 150 points higher than the October 4th low, where fear of a Greek default was at its highest.

 

* The VIX would be well over 40. It's currently at 30, which is no doubt high, but it's safe to say if the majority opinion was imminent depression, the put action on the CBOE would be much much higher.

 

All that being said, this market moves hundreds of points based on which side of the bed some Belgian finance minister wakes up on, so things can change fast. But, I think the overall sentiment is at worst one of uncertainty.

Fair enough. In hindsight, what I should have said was "more people are realizing..." substitue most for more and I think my statement is accurate. My statement is from the view of someone who follows the financial world daily and for a living partially. I'm certain the central banks fear deflation as well, evidenced by their many inflationary policies in recent years. The end result, however, is that deflation cannot be avoided at this point and I think the Fed and our government knows this. The masses, however, probably do not.

 

But let me argue your first point about gold. I would argue that gold would not be trading at all time highs, rather it will also deflate along with most commodities and stocks. When the current depression is in full force and everyone finally does feel the impact, people will be in dire need of cash which is why I've been very steady in recommending everyone to hoard cash in preparation for what's to come. Gold will peak before the depression is fully underway and may have already peaked, we don't know yet. But this depression will be caused by mass defaults, mostly denominated in USD and a contraction of most things should be expected. Gold is a hedge when people become fearful but when EVERYONE is truly broke, cash, not gold, will be the primary need. Gold is still not a practical asset in our current economic structure. You can't buy groceries with gold. Which again, is why I've continually advised to be cash-heavy. If you're going to go long anything, you want to be long the dollar. The dollar is in the early stages of a multi-year climb.