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Saturday, January 31, 2015

Greco-German chicken

I have the impression that the Greeks are not bluffing here:
As Deutsche Bank's George Saravelos politely puts it, "Developments since the Greek election on Sunday have moved very fast." And indeed, so far the new Tsipras cabinet, and here we focus on the words and deeds of the new finance minister Yanis Varoufakis, has shown that the market's greatest hope - that the status quo in Greece will continue - has been crushed into a pulp (and so have Greek stock and bond prices) especially following yesterday's most recent comments by the finmin in which he said that Greece "does not want the $7 billion" from the Troika agreement and that it wants to "rethink the whole program", culminating with an epic exchange with Eurogroup chief Jeroen Dijsselbloem in which Greece made it clear that the "constructive talks" are over.

And suddenly the Eurozone is stunned, because what had until now been its greatest carrot when it comes to dealing with Greece, has become completely useless when the impoverished, insolvent nation itself says it no longer needs a bailout, seemingly blissfully unaware of the consequences.

So earlier today the ECB's Erikki Liikanen, tired of pleasantries and dealing with what to Europe is a completely incomprehensible and illogical stance, one which is essentially a massive defection by Greece in the European "prisoner's dilemma", and which while leading to a Greek financial collapse and Grexit - both prerequisites to a subsequent Greek economic recovery unburdened by the shackles of the Euro - would also unleash a European depression, came out and directly threatened Greece that it now has 1 month until the end of February to reach a deal with the Troika, or else the ECB would cut off lending to Greek banks, in the process destroying the otherwise insolvent Greek banking sector.

And since only the ECB backstop has prevented a banking sector panic, the ECB is essentially betting the house, and the sanctity of the Eurozone (because after a Grexit all bets are off which peripheral leaves next) that the threat, and soon reality, of a bank run (at last check Greece had about €145 billion in deposits still left in its bank after JPM's latest estimate of €15 billion in outflows in January) will finally force Varoufakis and Tsipras to sit at the negotiating table with the understanding that not they but the Troika has all the leverage.
 Meanwhile, Germany has already ruled out any debt cancellation: "German Chancellor Angela Merkel ruled out any cancellation of Greece's debt and said the country has already received substantial cuts from banks and creditors."

The challenge that the EU faces is that they have nothing. Their only argument is that of a coven of vampires arguing with their victim: "you need to keep letting us bleed you, because if we die, you die." But that argument means nothing to a dying man.

Once it's clear that they can't get any more out of the EU, it costs Greece nothing to allow the entire Euro edifice to collapse. They are already bankrupt, and it is no longer in their interest to permit the EU to continue concealing that simple fact.

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52 Comments:

Anonymous Rolf January 31, 2015 4:36 PM  

Might be a good time to buy puts / inverse funds on the EU stock and bond market. And, as they sell assets to raise cash, I fear gold has a ways down before it bottoms the day before they go full printing-press inflation, not even trying to hide the monetization they need to stimulate inflation.

Anonymous hygate January 31, 2015 4:40 PM  

There is an old saying:

If you owe the bank $1000 and can't repay it you have a problem. If you owe the bank a $1,000,000,000 and you can't repay it the bank has a problem.

Adjust the figures for inflation.

Anonymous Noah B. January 31, 2015 4:55 PM  

Agreed, Rolf. The typical dynamic in times like these is that gold gets liquidated along with everything else.

Anonymous The other skeptic January 31, 2015 4:59 PM  

Canada in recession, the US to follow.

Blogger Rantor January 31, 2015 5:14 PM  

Serves Germany and company right. I warned my German friends and in-laws, you can't tie the Mark to a bunch of weak currencies and have it work out. All of the PIGS have suffered stress due to the changeover. I think Greece is only the first to go.

Reminds me of an English kid who seemed smarter than the bankers when they said that decimalisation of the pound would not be inflationary. He said, but today I get 240 penny candy for a pound, after the change, only a hundred. That's more than twice the price!

Blogger DaveofSpades January 31, 2015 5:18 PM  

Greece will never recover from this. The people are addicted to welfare, produce nothing, and are completely reliant on cash/goodwill of others. Told to cut the welfare, they rioted in the streets for the right to be lazy. They have no manufacturing infrastructure, no skills, and no desire for any.

Sound like any bigger country you know? We're as doomed as they are and for the same reasons.

Anonymous Noah B. January 31, 2015 5:28 PM  

"Greece will never recover from this."

Sure they will. It will be painful and it won't happen overnight, but free enterprise will return and Greece will prosper after the collapse of the welfare state.

Anonymous A Reader January 31, 2015 5:37 PM  

I predict that the European Union will cease to exist in 10 years.

If Greece exits, others countries will get the same idea.
Citizens in the wealthier European countries, such as Germany, might well wonder "Why should we subsidize these bums?"
Also, the appeal of nationalistic parties in France and Great Britain will grow.

Anonymous Johnycomelately January 31, 2015 5:52 PM  

There is more to this than meets the eye, there is a financial reset on the horizon and it involves SDRs, the Greeks are savvy and don't want to be holding Euro debt when the great reset takes place.

Why else would the Euros scuttle Ukraine's favourable loan from Russia? Its an asset grab before the wealth of nations are denominated in SDRs.

Eye opening site, 2018 is the crunch year for Basel 3 accords to kick in.

7 part series
SDRs and the new Bretton Woods
http://philosophyofmetrics.com/2014/01/21/sdrs-and-the-new-bretton-woods-part-one/

Anonymous WTF? January 31, 2015 5:53 PM  

"which while leading to a Greek financial collapse and Grexit... would also unleash a European depression"

Wait, so it is bad for your economy to stop lending money to lazy bums who are never going to pay you back?

Anonymous Noah B. January 31, 2015 6:09 PM  

"Wait, so it is bad for your economy to stop lending money to lazy bums who are never going to pay you back?"

No, but if Germany stops lending money to Greece, the Greeks can't continue to buy German exports at the same rate they've done in the best. SSDD -- government and big corporations ripping off taxpayers and savers in both Greece and Germany.

Blogger Robert What? January 31, 2015 6:13 PM  

Fwiw - my bet is the banksters - with money confiscated from German taxpayers and maybe even US taxpayers - will in the end - simply give money to the Greeks with no financial strings attached. Not that the banksters care about suffering in Greece, but just that the Banksters will not tolerate losses for themselves. Am I offered any odds on that?

Anonymous Daniel January 31, 2015 6:17 PM  

Greco-German Chicken should be an olympic sport. Games without frontiers...war without tears...

Anonymous The other skeptic January 31, 2015 6:53 PM  

Meanwhile things are falling apart in Europe.

Anonymous Noah B. January 31, 2015 7:06 PM  

Kind of OT, but since American Sniper came up a few days ago, I thought I'd mention that saw it yesterday but there were several things that bothered me about it. There shouldn't be any major spoilers in what I'm about to write. In most of the scenes where Kyle is behind a rifle scope, his spotter is just sitting there doing nothing most of the time, except chatting. Much of the dialogue throughout the movie seems flat, forced, and unnatural. There was another scene where his CO was asking him about a kill, and Kyle is fairly disrespectful, and simply walks away. But the most bothersome scene was at the end of the movie, when Kyle is "playing" with his wife and points a revolver at her (!). All of this may be perfectly accurate, but if so, it's not very flattering.

And it seemed strange to me that none of these things were mentioned by Rolling Stone.

Anonymous zen0 January 31, 2015 7:10 PM  

If this is true..........

Caught On Tape: Dijsselbloem To Varoufakis: "You Just Killed Troika"

Anonymous Orville January 31, 2015 7:15 PM  

But don't forget the Russians are also courting Greece, and it's not just about peeling Greece away, but blowing a huge hole below the waterline in the EU and it's master anglo-american banksters. When Dieselboom whispered "you just destroyed the troika" to the Greek FinMin, he probably wasn't kidding. This is the kind of thing that leads to doing desperate shit like starting a war in the Ukraine.

Anonymous The other skeptic January 31, 2015 7:20 PM  

And, the Federal Gov't does not want to bail out bankrupt pension funds ...

Anonymous Salt January 31, 2015 7:53 PM  

And people thought Greece blowing away Troy was a big deal. Greeks bearing gifts and all.

Blogger Shibes Meadow January 31, 2015 8:02 PM  

Noah B: I, too, was disturbed by the depiction of Kyle holding his wife at gunpoint. His finger was inside the trigger guard, for Pete's sake! Only a fool would handle a weapon in that fashion. If I were to ever catch my son or any of my nieces or nephews clowning around with a gun like that, I'd relieve them of the weapon and then knock them ass-over-eyebrows into the back yard. I liked the movie overall, but that scene should have been done differently.

I approve of the current situation in Greece for the same reason I liked American Sniper: anything the Revolution hates is fine by me.

Anonymous zen0 January 31, 2015 8:05 PM  

> Meanwhile things are falling apart in Europe.

The head of that movement appeared on stage with the new Greek leader during his victory speech. Its a co-ordinated move by Somebody

Anonymous fp January 31, 2015 8:37 PM  

"Kind of OT, but since American Sniper came up a few days ago"

Pure propaganda. Fodder for the neoCON MIC. Jeb Bush liked it too.

Anonymous Porky January 31, 2015 10:34 PM  

Can someone please explain NIRP to me?

Right now it's at the top of my list of things that make you go WTF?

Oh, and ditto on Sniper. Quite a bit of stupid in that film.

Blogger bob k. mando January 31, 2015 11:13 PM  

Porky January 31, 2015 10:34 PM
Can someone please explain NIRP to me?



NIRP, like ZIRP before it, is a completely ludicrous ( but logical ) progression in the Neo-Keynsian / Monetarist schemes to ( nominally ) keep the economies of the world from crashing.

at least, that's what they tell everybody.

what they really are, is a way to arrange the 'rules' so they can steal wealth from everyone else. completely coinkidinkly, these policies are just about as anti-Capitalist / pro-Marxist as you can get.

consider, in Denmark they are already PAYING people to take out mortgages:
http://www.zerohedge.com/news/2015-01-30/denmark-you-are-now-paid-take-out-mortgage
"And just like that, first in Denmark, and soon everywhere else in Europe, a situation has now emerged where savers who pay the bank to hold their cash courtesy of negative deposit rates, are directly funding the negative interest rate paid to those who wish to take out debt. In fact, the more debt the greater the saver-subsidized windfall."


the more money you 'save' in the bank, the more you pay for the privilege.

i wonder how long it will take the Danes to figure out that they are far better of buying gold than depositing money in a bank?

Blogger Emmanuel Mateo-Morales January 31, 2015 11:24 PM  

To all the people bashing American Sniper as though it were anything like that tongue and cheek propaganda film in Quintin Tarantino's revenge flick, I have a few suggestions for you:

1. Take a long walk off a short cliff.

2. Chug on drain cleaner.

3. Wrap your mouth around a glock.

4. Lick an electric fence.

5. Be a fucking coward and quitter pretending to be a fucking man who goes to Greaseball land and rights articles about women so hilariously bad, it really does leave me wondering if his wife reads what he rights and what she do if she found out the complete and utter contempt he seems to harbor for the fairer sex.

Though I'm not a social Darwinist, in this case, I'll make an exception because the idea of you coddled, armchair, fuck faced weasels playing pretend Ubermensch polluting the gene pool with your lack of common fucking viewing comprehension and lack of being able to make basic fucking discernments is as frightening as Mexicans and a bunch of other Central and South American colonists who share surnames like my own and turning it into fucking Mehico, Cuba, or Venezuela.

I wish I could take a fucking pen, write the words, 'Kick me, I'm a fucking numb-nuts' on a piece of paper, and slap it on your backs with fucking industrial strength wonder glue, such is my contempt for you lowly keyboard warriors.

Anonymous Homesteader January 31, 2015 11:31 PM  

Meds, Emmanuel...must..take..your...meds...

Anonymous Sam the Man January 31, 2015 11:35 PM  

Emmanuel Mateo-Morales

Tell us what you really think. You are going to have to learn that using vague insinuations does not work on this site, you have to directly say what you mean.

Anonymous Sam the Man January 31, 2015 11:38 PM  

The only confusing thing to me about the sniper-seal movie is how do they train them to balance balls on thir noses? Ddi they cover that?

Anonymous Hong Hu Shi January 31, 2015 11:48 PM  

The only confusing thing to me about the sniper-seal movie is how do they train them to balance balls on thir noses? Ddi they cover that?

That was CGI, dumbass. No one can balance a ball on his nose!

Anonymous Porky February 01, 2015 12:06 AM  

NIRP, like ZIRP before it, is a completely ludicrous ( but logical ) progression in the Neo-Keynsian / Monetarist schemes to ( nominally ) keep the economies of the world from crashing.

Yeah. As VD is fond of saying, you can't print borrowers.

And yet...they seem to have figured out a way to print borrowers.

Anonymous zen0 February 01, 2015 12:06 AM  

> Oh, and ditto on Sniper. Quite a bit of stupid in that film.

Its a MOVIE. Movies are not reality. There is a whole industry based upon this. Google "Hollywood"..........

Anonymous zen0 February 01, 2015 12:22 AM  

I saw a sniper vid on youtube once in Iraq. No drama, just business. The only conversation was the spotter talking. The sniper did not speak. Just shot. He had a pile of shells around him.

No one wants to see a movie about that. There has to be pussy involved somewhere.

No pussy, no budget. Duh.

Blogger Doom February 01, 2015 12:25 AM  

But a few things.

I don't doubt that a bunch of communists have the will to pull the trigger. Hell, after, they might start butchering the rich in their country, as killing the golden goose is common for such, having learned vampirisim but having lost their humanity in the learning. But will they risk being cut of and shut off by the rest of the world, having to have and create their own stone age wealth system? They are communist/hard socialists, so maybe they think they can. Of course, they may not have what it takes even if they decide to become their own best enemy. Time will tell.

Anonymous fp February 01, 2015 12:34 AM  

"Meds, Emmanuel...must..take..your...meds..."

Yeah and switch to decaf. American Psycho er...Sniper is pablum for the neoCONNED masses.

Anonymous Noah B. February 01, 2015 1:13 AM  

"Yeah and switch to decaf. American Psycho er...Sniper is pablum for the neoCONNED masses."

It did kind of seem like propaganda. I've found myself really bothered by Kyle's false claim about Jesse Ventura, and I have only been able to come up with one logical explanation as to why Kyle would have said this. And that explanation is that the feds required him to say that in order to publish his book, which would have been done in order to discredit and silence Ventura because of his involvement in the 9/11 Truther movement.

Anonymous zen0 February 01, 2015 1:18 AM  

Emmanuel does not need to check his meds or go to decaf. He basically challenged people's filmological comprehension. Disqualifying him on medical grounds does not answer the challenge.

Anonymous Curtis February 01, 2015 1:19 AM  

Emmanuel, calm down. No doubt, after seeing the movie and being all goose-bumply, first thing you did when you got home feeling all super-bad, was reach under your bed and pulled out your crusty .22, cleaned it, went on ebay looking for a scope, bought some sub-sonic .22 ammo, and got you some terrorererist paper targets. And a ghillie suit.

Meanwhile, Kyle didn't kill one booslim for your freedum or libertard.

Anonymous fp February 01, 2015 1:25 AM  

"He basically challenged people's filmological comprehension."

Just because we are not hyperventilating about criticism of a film doesn't mean we can't comprehend it. You should be telling him it's just a movie.

Anonymous fp February 01, 2015 1:32 AM  

Emmanuel is either parody or an AS fanboi which is very telling.

Blogger grendel February 01, 2015 3:52 AM  

I haven't seen the movie, but I'm listening to the audiobook and I know he didn't have a spotter.

I'm excited for negative interest rate loans to come to the U.S. I'll know it's almost time to buy a house.

Blogger papabear February 01, 2015 5:03 AM  

"his spotter"

Don't think that was a real spotter, just a Marine assigned security to watch his back. Don't know why the SEALs didn't go out in pairs, with a real spotter. Manpower shortage?

Anonymous VD February 01, 2015 5:09 AM  

And yet...they seem to have figured out a way to print borrowers.

No, they haven't. They are tens of trillions of dollars short the debt they need. Read L1. And if you don't know what that is, you can't even think about having an opinion on the matter.

Anonymous VD February 01, 2015 5:30 AM  

The strange thing is that in Q2, non-financial businesses somehow managed to shed 23 percent of their debt, $2.3 trillion worth. And the US economy is now $35 trillion south of its 60-year debt trend. That is SERIOUS credit disinflation; we're actually back into credit deflation if you ignore the Fed's ex post facto revisions and simply compare the actual numbers reported at the time.

Anonymous Senator John McCain February 01, 2015 7:51 AM  

Fwiw - my bet is the banksters - with money confiscated from German taxpayers and maybe even US taxpayers - will in the end - simply give money to the Greeks with no financial strings attached. Not that the banksters care about suffering in Greece, but just that the Banksters will not tolerate losses for themselves. Am I offered any odds on that?

I like the way you think, my friend.

Blogger Antonio From Spain February 01, 2015 8:18 AM  

“Meanwhile things are falling apart in Europe.”

There we go again…

About that, let’s not forget the First Commandment of Reporting News about Spain: say bad things only and hyped to the max, and if those bad, bad things do not come to pass, let’s keep it quiet. A few months ago, the Catalonian secessionist movement was all the rage. Millions, we were told, in a region of seven million were marching for Catalonian freedom. Catalonian independence was practically complete. What happened with that? What happened, of course, cannot be reported, it would violate the First Commandment of Reporting News about Spain.

About this new radical leftist party in Spain, “Podemos” (Spanish: We Can). I mentioned them here last September. Podemos’ original goal was to infiltrate and co-opt the foundering communist party Izquierda Unida (United Left, the 3rd largest party in the nation, after the supposedly center-of-right PP and the socialist party). But the supposedly center-of-right PP government saw the appearance of this party as an opportunity to pummel the struggling socialist party (exactly the same strategy that the French socialists used in the 80s to hurt the conservatives by promoting Jean-Marie Le Pen’s National Front). Leftist TVs (funded by the PP) also enthusiastically promoted the leader of Podemos. And once again doom seemed inevitable. And all of a sudden, a brand new party that just intended to co-opt the nation’s third largest party was considered the party that would from now on dominate Spanish politics. But then the second in command of Podemos was hit by a scandal, and then another prominent member was hit by another scandal, and then the leader’s girlfriend, and then the charismatic leader himself shocked everybody with a dismal appearance on tv insulting a jornalist…

But the reports remain unaltered: Podemos will take the next elections by a landslide, or something very much like that. After all, Catalonia became independent by late 2014 with a strongly unified secessionist movement, didn’t they? And if we care to remember, a few years ago, when unrest first began in Greece we were told that blood would soon follow in the streets of Spain, that collapse would come sooner than later and we should not expect any growth in Spain in the next decades or generations… (Spanish GDP grew 2% in the last quarter of 2014, but let’s keep it quiet)

By the way, Madrid has an average of eight demonstrations per day. It’s been like that for years. So the mathematics of counting demonstrators have become something of an art here. The area occupied by yesterday’s demonstration allows for 46,000 people. Reports, therefore, mention hundreds of thousands. You know, like the millions who marched in Catalonia right before it became independent. Actually, the largest demonstrations in Spain have been against communist terrorism and against abortion, again let’s keep it quiet.

Anonymous FUBAR Nation Ben February 01, 2015 8:39 AM  

Is Greece Creditanstalt?

OpenID simplytimothy February 01, 2015 9:13 AM  

@Antonio From Spain

By the way, Madrid has an average of eight demonstrations per day. It’s been like that for years. So the mathematics of counting demonstrators have become something of an art here. The area occupied by yesterday’s demonstration allows for 46,000 people. Reports, therefore, mention hundreds of thousands. You know, like the millions who marched in Catalonia right before it became independent. Actually, the largest demonstrations in Spain have been against communist terrorism and against abortion

Very informative, thank you.

Anonymous Porky February 01, 2015 10:51 AM  

No, they haven't. They are tens of trillions of dollars short the debt they need.

I didn't say they've met their needs, silly.

I said it seems they have found a way to print borrowers. I suppose we'll have to wait and see how they ramp up the program.

I've got an idea....how about instead of a tax refund, everybody will get a line of credit at -.5%!

Man, the possibilities are endless!



Blogger bob k. mando February 01, 2015 1:29 PM  

Porky February 01, 2015 10:51 AM
I didn't say they've met their needs, silly.



then they aren't "printing borrowers" in any meaningful sense.

so, you can drop the pretense of having gotten over on anybody.

Blogger Anthony February 01, 2015 10:08 PM  

So what happens if the Greek government says "We're defaulting on all our debt. No more payments, at all."? Most of the debt is held by other governments, not by Greek citizens, so the internal political effects are second-order, and the government can blame the effects on Evil German Bankers. What leverage does the rest of the EU have?

Anonymous Porky February 02, 2015 10:29 AM  

@brown-nose-bob

It's amusing how you herd animals perceive every noise as a threat. Even a guy like me who simply admits his own ignorance and posits a simple question seems to spook you into a defensive herd posture.

Moooo!

Blogger bob k. mando February 02, 2015 12:02 PM  

whatever, Princess.

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