The Greek Tragedy looks like it is inching ever closer to the inevitable
denoument going into the weekend. Of course, the Stock Market is giddy over all
the recent GREAT NEWZ that in fact all of us Doomers are totally WRONG here, and
the FSofA Economy is Booming! HAPPY DAZE ARE HERE AGAIN!
Over in Greece though, despite the Installation of Technocrat-Fascist L-Pap as
PM of Greece a couple of months back, it appears the coalition Goobermint will
take NO MORE of the "austerity". The latest round is to cut the Greek Minimum
Wage to 25% BELOW its current €750 level. Figuring say a 1.2 exchange rate
here, that means in Dollars the Greek Min Wage is around $900/mo. Around $225 a
week. No idea what Greeks pay on average for Rent, but I do know Gas in Europe
these days goes around $8/Gallon. Clearly, you ALREADY cannot live an
Industrial lifestyle on the current wages, and Greeks certainly cannot be buying
BMWs priced at $40K and up here either.
So, L-Pap's "coalition" Partners have all seemingly drawn a Line in the Sand
here and will not approve these cuts, despite the fact the Troika has ALSO drawn
a Line in the Sand and says it will not fork over more Funny Money to Greece if
they DON'T agree to more austerity. The credibility of the Troika is already
pretty low, but if they capitulate and hand over more Funny Money anyhow,
they'll lose anything they got left here. The Greek Gooobermint cannot back
down either, because if they agree to this latest "Plan", their Life Expectancy
will be measured in Days if not Hours.
Now, perhaps there are some Back Door methods of forcing the Greeks into Default
while at the same time Bailing out everyone with exposure here, except also
nobody really knows how much CDS is written on Greece, and of course if the
Greeks go Belly Up all the "collateral" the ECB now holds in Greek Bonds would
have to be marked to ZERO, which cannot be too good for its Balance Sheet.
If/When the Greek Default does come, this just has to produce a "Lehman Moment"
for the Eurozone.
TPTB have had a good couple of YEARS here to prepare for this moment, but
equally obscure and cloudy is exactly what those Preps might be here? All sorts
of Rumours flying about reintrodution of Legacy Currencies and so forth, but as
soon as somebody Floats such an idea, it gets just as quickly Shot Down as
pathetically unworkable on the pages of Zero hedge and every other Financial
Blog out there.
Anyhow, again if/when Greece goes Down, there just HAS to be an even BIGGER run
on Spanish, Portuguese and Italian Banks than already is underway here. Why
would ANYBODY stay in a Theatre so obviously Smoking Up with Flames already
shooting up from the Cheap Seats?
The Troika will Capitulate in some way, though it is likely to be Back Door and
not admitted to. That can slow the collapse some. The Greeks cannot capitulate
anymore than they already have to Austerity. Their society is collapsing.
Anyone who can leave Greece is doing so. They can't be Taxed to pay the Bills,
because they are not employed,and the few who are still employed already cannot
afford the price of Gas to get to work. There is NO SURPLUS in Greece, not in
Trade and probably not even in Olives to feed the current population Athens.
We are incrementally Closer now to Hitting the Wall. Europe is set for a
Firestorm, and for the Greeks, the Jig is UP here. They MUST Default, they MUST
Revolt or they MUST Leave if they can. All 3 are likely here depending on the
individual circumstances of the Peoples. If the Troika capitulates here and
funds them, even through the back door, it will Extend & Pretend the game a
while longer, but that will just put immediate pressure on the Bond Issues of
the rest of the PIIGS. The ECB will lose credibility, and a Hyperinflation of
the Euro would seem unstoppable at that point.
The next month should have some spectacular fireworks. Break out the Popcorn.
Greece Draws The Line As Unity Government Leaders Refuse To Cede To Further
Troika Austerity Demands
Submitted by Tyler Durden on 02/03/2012 13:02 -0500
Bond default European Central Bank Eurozone Fail Finland George Papandreou
Germany Greece International Monetary Fund Italy Netherlands ratings
It appears that Greece will not even have to wait until the dreaded March 20
funding D-Day. As was earlier reported, Greek PM Lucas Papademos may resign if
he is unable to persuade his coalition unity government to agree to further
Troika demands for additional austerity. It now appears that there will be no
agreement, and thus the primary demand from the Troika for further cash
disbursement will not be met. The FT reports: "All three party leaders in
Greece's teetering national unity government have opposed new austerity measures
demanded by international lenders, forcing eurozone finance ministers to
postpone approval of a new €130bn bail-out and moving the country closer to a
full-blown default. Representatives of the so-called "troika" – the European
Commission, European Central Bank and International Monetary Fund – have
demanded further cuts in government jobs and severe reductions in Greek
salaries, including an immediate 25 per cent cut in the €750 minimum monthly
wage, before agreeing the new rescue. But representatives of all three coalition
partners, including centre-left Pasok of former prime minister George Papandreou
and the centre-right New Democracy of likely successor Antonis Samaras, said
they were unwilling to back the government layoffs." Now we have been here
before, and as a reminder the last time Greece threatened to pull out of Europe
with the G-Pap referendum threat back in the fall, G-Pap was promptly replaced
with the Trilateral Commission member and former ECB Vice President, Lucas
Papademos. The problem is that for him to obtain power, he needed to form a
coalition government. Well, that now appears to be in tatters, as not one party
is willing to break to the Greeks that the minimum wage of €750 will be cut even
further. The question is who will blink first this time, as it is quite likely
that neither the Troika nor Greece want an out of control default. Unless, of
course, this was Germany's plan B to the imposition of a Greek commissar all
More from the FT:
In addition, a Greek government official said the EU and IMF negotiators
rejected a counter-proposal that would have frozen Greek wages for three years
and cut social security contributions by 10 per cent.
Without approval of the new bail-out within a matter of days, Athens is at risk
of defaulting on a €14.5bn bond that comes due on March 20. Many eurozone
officials fear such a default could reignite panic in European bond markets,
pushing Italy and Spain back into danger.
The standoff in Athens has angered officials in eurozone creditor countries,
particularly in those that have retained their triple A credit ratings and will
be leant on most heavily to provide new Greek aid.
Finance ministers from the four remaining triple As – Germany, the Netherlands,
Finland and Luxembourg – met in Berlin on Friday where they agreed that Athens
must move quickly or they would withhold assistance.
"We want no further delays," Jan Kees de Jager, the Dutch finance minister, said
after the meeting.
Eurozone finance ministers had hoped to meet on Monday in Brussels to sign off
on the new bail-out, but officials cancelled the gathering on Friday.
Jean-Claude Juncker, the Luxembourg prime minister who serves as chairman of the
group, issued a statement saying only that the meeting "may be scheduled later
in the week".
Kathimerini with the pre-story:
Papademos is expected to meet PASOK's George Papandreou, New Democracy's Antonis
Samaras and Giorgos Karatzaferis of the Popular Orthodox Rally (LAOS) on
Saturday. The three politicians will have to agree on measures that will satisfy
Greece's lenders and pave the way for a new bailout.
However, a number of sticking points remain. One of the main issues on which the
party leaders are finding it difficult to agree is the private sector wage
reductions that are being demanded by the troika of the European Commission,
European Central Bank and International Monetary Fund.
Sources told Kathimerini that the troika is demanding that the minimum wage of
751 euros per month (gross) be reduced and that labor costs in the private
sector drop by 25 percent in a bid to help Greece regain competitiveness.
Labor unions and employers wrote to Papademos on Friday to inform him that they
cannot agree on a wage cut.
Papademos needs the agreement of the political leaders so the prospect of Greece
receiving a new bailout can be discussed at the meeting of eurozone finance
ministers on Monday.
Greece will have to set out the measures it plans to take over the next two
years to reform its economy and create a primary budget surplus as well as the
framework for the debt restructuring agreement with its bondholders.
Skai TV and radio reported on Friday that should the leaders fail to agree a
deal, Papademos will tender his resignation on Monday.
And so on. To say that by now the market may well surge, however briefly, out of
pure delight that Greece has finally defaulted, may not be a stretch. Of course,
the "however briefly" period will shortly thereafter end, leaving Europe with
few things to look forward to aside from complete disintegration of the union
and its currency. But at least US banks will be fully insulated to that
"contingency" which is increasingly looking like a "certainty."