Eurosystem SMP 49 E

European Union Loans 38 E

Greek Public Sector 30E

Funds from rest of the Worlds gov 25E

IMF 15E

National Bank of Greece 13,7E

European Central Banks 13,1E

Piraeus bank 9,4E

EFG 9E

FMS 6,3E

Source; Barclays

Everybody exited about the Greek vote late last night, but is anything changing, or is it same old same old? The markets are selling the news, on very light volumes. Kathimerini gives some colour on the topic;

Three weeks of peaceful street protests; a couple of PASOK members of parliament resigning this week; a few more PASOK members of parliament challenging the leadership qualities of Greek Prime Minister George Papandreou; rampant unemployment; violent clashes with the police; and one of the worst financial crises in modern Greek history culminated today in…a cabinet reshuffle.

Prime Minister Papandreou is facing the most intense criticism since his election in October of 2009, both from his party and from Greek society. What on Wednesday night looked like a grand coalition government with the main opposition party, New Democracy, was transformed on Thursday into an intra-party “reshuffling for elections”.

The new government was sworn in on June 17 and will be up for a confidence vote on June 21. The opposition parties are not impressed with the reshuffle. Most citizens reacted by saying “same old, same old”.

Full reading,
Reshuffling for elections?

First they lend you money, then they demand Austerity, then they want to buy assets at fire sale prices. Finally, they want your history. Expect the Greeks to start even bigger protests going forward, especially when you try taking everything from one of the most proud people in Europe. Kathimerin reports;

Authorities in Skopje erected a huge bronze statue of Alexander the Great in the city center on Tuesday, a move certain to aggravate a longrunning dispute with Athens over the official name of the Former Yugoslav Republic of Macedonia that has barred the tiny Balkan country from joining the EU and NATO.

The 11-meter-high statue, which weighs around 40 tons, was raised onto a 10-meter-high pedestal in the heart of Skopje as crowds cheered.

On Monday night, commenting on news about preparations to raise the statue of the ancient Greek warrior in Skopje, Foreign Minister Stavros Lambrinidis suggested that authorities in FYROM “concentrate on building bridges rather than erecting walls and statues.”

Lambrinidis, who is visiting Luxembourg for a summit of peers from the EU and Balkans, told his FYROM counterpart, Antonio Milososki that “instead of trying to rewrite history we should try to write the future.”

The European Union’s Enlargement Commissioner, Stefan Fule, also reacted to the plans late on Monday, warning FYROM that taking action considered by Greece as «provocative» could harm its ambitions to join the bloc.

Initial sell the Great Greek news in early European trading. Some intraday levels below, Dax and Stoxx.

Remember when the coalition came into government amidst a fanfare of government spending cuts and ‘austerity’? Well, the below chart should give you a steer on just how the government has performed in meeting its aim of rolling back the state.

(click for sharper image)

The red line cutting its way through the above chart is the trend line – a negative number means the UK government has had to borrow more than it takes in to meet its spending commitments. The long term trend over the past 10 years has been for ever more borrowing by the government. Far from stopping this trend the coalition of Tories and Lib-Dems have continued it.

According to the Office for National Statistics the government had to borrow £17.4bn in May. However, the BBC has an interesting spin on this claiming:

UK public sector borrowing falls back in May – Public sector net borrowing fell in May, reversing a surprise overshoot in government borrowing seen in April

Go look at that chart again – the long term trend is still firmly in place with ever increasing borrowing requirements. Back out the monthly ‘noise’ and the trend is there for all to see. £17.4bn borrowing in one month is still the 8th highest ever monthly figure borrowed in the history of the UK.

More worryingly from the ONS report is the news that when you include all the UK government financial interventions the Debt to GDP ratio is at 151.1%:

The reason that the government didn’t have to borrow even more money was because it has managed to raise more revenue – thanks mainly to the rise in VAT. But at what cost?

The economy is skirting dangerously close to re-recession and those bumper tax revenues are likely to miss expectations in the second half of the year as the UK consumer feels the pinch, thanks to higher taxes and the tax of inflation. There is even talk about cutting VAT back to 17.5% – which would instantly reverse the revenue take.

For all the cheerleading in the press this is a horrible borrowing number only offset by temporary rises in tax revenue – when those revenue streams dry up later in the year look for this government to break the borrowing record of over £20bn in one month – a record incidentally set by this government back in November.

We wonder how many people will be thinking of this government in terms of reduced spending when it breaks its own borrowing record.

Court Gold made simple

El Erian is out speaking, about the inevitable default of Greece, in Taipei this morning. Basically, throwing good money after bad money. Reuters reports;

Greece’s government won a vote of confidence late on Tuesday, a crucial step toward securing further financial aid from the European Union as the country tries to avoid the euro zone’s first sovereign debt default.

“For the next three years, we’re going to see different economies work out different problems. For European economies, especially Greece, it would be through default,” Mohamed El-Erian, chief executive of PIMCO, told reporters in Taipei on Wednesday via a video conference.

El-Erian has suggested in the past that Greece would default and that Europe risks wasting money for nothing by pumping billions of dollars into the ailing economy.

He added on Wednesday it was “unlikely but not impossible” that a Greek default would trigger another global financial crisis.

The confidence vote in Athens came after a European ultimatum requiring the debt-choked state to implement a five-year austerity package of measures within the next two weeks or miss out on a 12-billion euro tranche of aid money.

European policymakers are also considering a second bailout package worth an estimated 120 billion euros that is meant to extend Greece’s year-old 110 billion euro deal and fund it into 2014.

Next schedule with regards to Greece, by Soc Gen.

George Papandreou’s PASOK government survived the confidence vote on Tuesday night. As expected, Papandreou obtained a relatively narrow majority, with 155 votes to 143 in the 300 seat Parliament (and two abstentions). The focus now shifts to next Tuesday’s Parliamentary vote of the Medium-Term Fiscal Plan (MTFS). The MTFS includes €28bn of additional austerity measures for 2011-2012 as well as an accelerated privatisation plan.

The formal Parliamentary approval of the MTFS is a necessary condition for the IMF’s quarterly disbursements, with the next €12bn tranche due in July.

The IMF will only disburse if the EU does

The IMF made it clear that the July tranche to Greece can only be disbursed if the EU provides concrete assurances that it will continue to provide funding to Greece as stipulated under the EU/IMF adjustment program.

Because of this conditionality, next Tuesday’s Parliamentary passage of the MTFS remains a critical roadblock to provide Greece with a medium-term funding solution from the EU/IMF. Although not the most likely outcome, a failure to approve the MTFS could pave the way to anticipated elections.

Only the approval of the MTFS will remove the policy deadlock

Only after the MTFS is approved can the EU officially put forward a medium-term funding plan for Greece, through to 2014. And only once Greece is funded for at least the next twelve months will the IMF give its official consent to its share of the quarterly disbursement (€3.3bn).

Assuming a parliamentary majority is reached on the MTFS, a decision from the EU on Greece’s medium-term funding – at least in principle — could be reached at the EU Meeting on 3 July, rather than 11 July as initially suggested by EU Commissioner Olli Rehn. That would then clear the way for the IMF to authorise its share of the quarterly disbursements, too.

Let the Fire Sales begin. Bloomberg reports;

Greek Prime Minister George Papandreou won a vote of confidence, bolstering his new government’s chances of pushing through austerity measures to secure further international financial aid for the country.

A total of 155 lawmakers supported the motion in the 300- seat parliament in Athens early this morning, with 143 voting against, the speaker, Filippos Petsalnikos, said in remarks carried live on state-run Vouli TV. Papandreou reshuffled his Cabinet and sought the approval of the chamber after fending off a revolt within his Pasok party last week. That came after opposition parties rejected his call for a national unity government.

“If we give up in the middle of the road, history will judge us harshly,” Papandreou said as he wound up the debate in the legislature. “The impression the political class in this country gives is that it hasn’t understood the seriousness of the crisis.”

Follow link to real time voting on Europe’s future.

Real Time Voting

Oxi=No

Nai=Yes

Court. ZH

• The past several decades have witnessed an erosion of our manufacturing base in exchange for a reliance on wealth creation via financial assets.
• Fiscal balance alone will not likely produce 20 million jobs over the next decade. Government must take a leading role in job creation.
• A growing number of skeptics wonder whether college is worth the time or the cost.

Full must read article by Gross on the failure of College, School Daze, School Daze Good Old Golden Rule Days.

The trader wrote about this subject back in Mid May, further reading on College Conspiracy-largest scam in U.S. history!