152 replies to this topic

[Námo]

Endgame for the EUSSR:

It's becoming increasingly clear, that Greece will have have to default very soon. The Euro-extremists will try to cover the corpse with flowers, and call the default by some other name, but that really doesn't matter anymore.

A realistic scenario will probably look like this:

Greece:

• Every bank in Greece will instantly go insolvent.
• The Greek government will nationalise every bank in Greece.
• The Greek government will forbid withdrawals from Greek banks.
• To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law.
• Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting)
• The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting on 50 per cent or more of all Greek euro-denominated debts.

Ireland and Portugal:

• The Irish will, within a few days, walk away from the debts of its banking system.
• The Portuguese government will wait to see whether there is chaos in Greece before deciding whether to default in turn.

European Central Bank:

• The European Central Bank will become insolvent, given its very high exposure to Greek government debt, and to Greek banking sector and Irish banking sector debt.

France and Germany:

• A number of French and German banks will make sufficient losses that they no longer meet regulatory capital adequacy requirements.
• The French and German governments will meet to decide whether (a) to recapitalise the ECB, or (b) to allow the ECB to print money to restore its solvency. (Because the ECB has relatively little foreign currency-denominated exposure, it could in principle print its way out, but this is forbidden by its founding charter. On the other hand, the EU Treaty explicitly, and in terms, forbids the form of bailouts used for Greece, Portugal and Ireland, but a little thing like their being blatantly illegal hasn’t prevented that from happening, so it’s not intrinsically obvious that its being illegal for the ECB to print its way out will prove much of a hurdle.)
• They will recapitalise, and recapitalise their own banks, but declare an end to all bailouts.

Spain:

• There will be carnage in the market for Spanish banking sector bonds, as bondholders anticipate imposed debt-equity swaps.
• This assumption will prove justified, as the Spaniards choose to over-ride the structure of current bond contracts in the Spanish banking sector, recapitalising a number of banks via debt-equity swaps.
• Bondholders will take the Spanish Banking Sector to the European Court of Human Rights (and probably other courts, also), claiming violations of property rights. These cases won’t be heard for years. By the time they are finally heard, no-one will care.

The above scenario was outlined 4 days ago in The Telegraph, but events have been moving fast since then, confirming a lot of those trends. If someone wants to examine those developments a little closer, a good site to watch is Zero Hedge.

Of course all the people in power in the EUSSR will deny all this, but don't be fooled: they know that the game is over, and that all their wet dreams of an European Superstate has become a nightmare. All they are struggling for now is to buy a little more time, by relentless buying their own debt, or to be more precise, to transfer those debts to the taxpayers of as many European nations as possible.

To put salt in the wound, they are now even openly admitting, that they are lying to the European peoples:

“When it becomes serious, you have to lie.”

As if we didn't knew that already. They have been lying consistently the last ten years.

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Personal note: I hope this will be sooner rather than later, and I'll be celebrating when the first country are leaving the Euro-zone, and the dominos start to fall. Then I'm going to open a bottle of champagne and lit some fire-works, and listen to some awesome music:

http://www.youtube.com/watch?v=JSUIQgEVDM4

[Námo]

Addendum: Some sane voices in the cacophony of disinformation from the EUSSR:

Nigel Farage: Trapped Inside an Economic Prison:

(Short Version - Ch. I [8:09]) or (Full Version - Ch. I, II & III [14:33])


Pat Condell: Come on, Ireland!

http://www.youtube.com/watch?v=R6M8an_XKL8

[Allathar]

Can't come fast enough, imo. The Netherlands has spent way too much money already in this bureaucratic, corrupt system - it's the top spender, and yet we don't have anything to say in it.

[Vortigern]

Naming Nigel Farage as a "sane voice" has instantly devalued your arguments to almost everybody in Britain.

But I do kinda hope the EU falls apart. I've never understood how it's supposed to be a good thing for Britain to pay higher taxes that don't improve life for British taxpayers. That seems to me to somewhat defeat the point of paying taxes in the first place.

[duke_Qa]

As far as I'm concerned, EU should give the Greeks back their currency and let them pay back their own debts. If they fail their currency will rapidly inflate(government has to print money to pay back loans if there are no taxes to pay with) and the value of the loans will decrease and it will be less of a burden for the rest of the EU. Also, the rest of the world would have more valuable money that they could spend on Greece to improve the economic situation.

Might be a terrible solution for the Greeks themselves, but I'm somewhat annoyed at the unwillingness to support their state by paying their taxes, so they can see what happens when shit hits the fan for all I care.

On the topic of the rest of the EU and all this cash flowing out. As long as you get something back for the cash I think it is good, but if you are just sending it off to a national scale version of a unrepentant welfare junkie then that nation can go screw itself.

Edited by duke_Qa, 24 May 2011 - 03:04 PM.

[duke_Qa]

Well there will always be inefficiency in a human controlled system trying to keep half a billion humans happy. Luckily, the transparency that comes with liberal democracy and free press makes it easier to spot the most aggravating abuses and get those responsible taken care of... or you could say we are getting close to such a cleanup through grassroot resentment, Arab spring style.

Edited by duke_Qa, 25 May 2011 - 10:39 PM.

[Ash]

Good riddance to the EU. I can only hope that it doesn't drag every country into complete third-world degeneracy in its death throes. A few of Pat's videos have got a little bit too zealous of late, but I agree with everything he said in the Come On Ireland one. One cannot be too critical of the unelected EU superstate.

At some point, the way economics works in the world has got to fall apart and reshape itself into something more workable. Because right now we're all in a downward spiral and increased hardship, in a complete contrast to the fact that we've unlocked ways to improve and progress society and quality of life.

[Romanul]

I'm going to be honest: I really like mr. Roubini.

What he recently said at a meeting in Bucharest was that Europe will require some years and a bit of work and that the crisis will not last less than a couple of years; it will last more.
However, the PIGS countries are the problem; Europe should try to do something with them. The countries who were close to going bankrupt did what they had to do, even if their politicians lost a lot of credibility.

Here, for instance the Government had some really, really harsh measures here, such as cutting wages with 25% and giving us a VAT of 24%, and borrowing a lot of money. However, it prevented bankruptcy. Even if we should have taken these measures earlier.

If we look at Greece, they didn't take as harsh measures, and they ended up like this.

I'm also pretty sure that Germany and France will not end up the eurozone. It would kill their economies as well, on the short term.
Not to mention the Arab Revolutions issue, the main reason Germany and France agreed to create a common Economy ministry (Also the fact that Germany promised it would close all its 18 nuclear powerplants, and I'm pretty sure Angela Merkel doesn't want to buy oil from the Russians.)

[Námo]

I'm going to be honest: I really like mr. Roubini.

So do I, Dr. Doom has some very thoughtful views, and most of his predictions has come true until now.

However, the most fundamental debate on the current economic crisis is still the one between Keynes and Hayek; many contemporary economists seems to rediscover and revitalize this old debate, giving Hayek more credit than just a decade ago. If you look closely at the policies of the Euro-fundamentalists, it's just a modern version of The Road to Serfdom.

As the old saying goes: "generals are always trying to win the last war" ... this seems in fact to be the only real argument of the Euro-fundamentalists, that in order to avoid a repeat of the last war in Europe, we'll have to abolish the Nation-states of Europe, and replace them with a totalitarian Super-state.

EUSSR = European Union [of] Socialist Serfdom Regions

... the PIGS countries are the problem; Europe should try to do something with them ...

History are moving fast these days: make it PIIGS; many economists expect Italy to come in difficulties, too ... I prefer GIPSI to reflect the order in which they will fall: Greece, Ireland, Portugal, Spain, Italy ... and the elephant in the room IS the Euro itself, though I admit that there are plenty of dysfunctional politicians around.



Increasing public debt, and everything will be just fine?? ... I'll go for Hayek, not Keynes.

[Vortigern]

But good news for Estonia! Take that, all you doom merchants.

[duke_Qa]

Alas, a low government debt doesn't necessary mean high economic activity. It usually means there's very little going on at all, which can be just as bad.

[Ash]

Man, whoever designed today's economic/political structure was a colossal knob.
A society based entirely on spending more than you make and getting into debt? How obviously doomed to failure was that? I mean, seriously, those economists really didn't go for all that bigger-picture stuff did they?

Personal debts, and temporary debts, are a different matter because the eventuality is you're going to pay it back. But if you borrow and borrow and borrow and have no means to pay it off you're eventually going to be spending every penny just to keep the interest from stacking. OR, you're gonna default.

Borrowing from Peter to pay Paul, and then magically conjuring money to pay Peter (but wait! more money = less money if you conjure more of it!) which leaves you in debt to Patrick...

Please, someone, rid us of the stupidity of economics.

[Námo]

... I really like mr. Roubini.

... Dr. Doom has some very thoughtful views, and most of his predictions has come true until now.

A small update on above remarks:

European policy makers are seeking ways to restore investor confidence on increasing concern that Greece won’t be able to repay its debts after last year’s 110 billion euro ($155 billion) bailout. While finance ministers are mulling options such as extending maturities, ECB policy makers have argued that such steps could destroy Greece’s banking system and destabilize other nations in the 17-member euro region.

Nouriel Roubini, the economist who predicted the global financial crisis, said in Bucharest today that ECB council members’ remarks on the impact of a Greek default were “utter nonsense” and could “trigger a bank run in Greece.”

source: ECB may have more scope for Greek leeway than talk suggests

“utter nonsense” ... apart from his qualities as economist, it seems that he's also a very polite and diplomatic person.

[Námo]

Some interesting news. Looks like everybody is trying to kick the can further down the road:

Germany's Der Spiegel seems hell bent on getting sued to hell and back by Greece. After a few weeks ago it "broke" the news of a secret meeting that would consider the expulsion of the country from the Eurozone, it is once again stirring passions with an article claiming that Greece has missed all fiscal targets agreed under its bailout plan, according to a mission from an international inspection team, putting further funding for Athens at risk, Reuters summarizes.

"The troika (aka the International Monetary Fund, the European Commission and the European Central Bank) asserts in its report to be presented next week that Greece had missed all its agreed fiscal targets," weekly Spiegel magazine reported in a prerelease.

In other words, this could be the political game over for Greece, whose fate as has been disclosed recently, is intimately tied with the perception that it is following the troika's demands for fiscal change. If the three key bailout institutions are already leaking that Greece is done, next week could well be the beginning of the end for the €. In about 48 hours, even as America is enjoying a Monday off (or precisely because to that, to avoid a market panic), the European market could be digesting a very bitter pill of testing just how well pre-provisioned all those German, French and Dutch banks really are.

Zero Hedge has the details: Spiegel Greek Hit Piece #2: Bailout Troika Finds "Greece Missed All Fiscal Targets" - Next Steps: Game Over?

[duke_Qa]

Oh well, I still don't see how this could become an apocalypse for the euro though. It might be a bump in the road, but I suspect in worst-case scenario they will just force Greece to go back to whatever they had before and let them lie in their own bed.

[Vortigern]

Which would be the beginning of the end for the eurozone. How can any country have faith in the EU and its currency if they feel that as soon as things get bad the EU's just going to cut and run and leave them to fend for themselves? Either way, I've more than fed up with the EU already, so if it does fall apart so much the better. Let's just keep the free travel zone and the low trade restrictions, and stop trying to give a bunch of hugely different and disparate countries the same constitution and everyone can go back to being happy.

[Allathar]

Agreed with Vortigern.

Also, keep in mind that there really is no other way to go:
- continue to support Greece all the way, and the PIIS will soon also need support; this the EU can't provide, and there's no way in hell that the Netherlands, Germany, and France will continue to fund these countries, not while they are still recovering from the crisis themselves
- kick Greece out, and it's the beginning of the end of the €, as mentioned above
- let Greece take even more drastic measures - this won't work, if they can't even make the existing measures work, how can they cut costs even more? The only way to do that is by pretty much selling the country, and this will give Turkey and even China a foothold in the EU.

So yeah, I'm looking forward to the end of the euro

[Ash]

France, Germany and the Netherlands won't have much of a choice but to keep going with what the unelected Eurocrats calling all the shots. Essentially, all these countries don't have all that much control over their own money anymore. Nobody's allowed to say 'no' to Europe, remember?

[Námo]

Nobody's allowed to say 'no' to Europe, remember?

Yes, we can!

The Treaty of Lisbon (article 50) does explicitly allow withdrawal from the EU.

Even if this would not be provided explicitly in the Lisbon Treaty, the Vienna Convention on the Law on Treaties (article 54) would allow such a step.

Wake up, Europe.