It used to be better times in Greece. The latest proposals from Troika & Co, should be humiliating to the once Lord of the World, Greece. The country used to rule the World, and will now be supervised by Euro politicians, while the people are getting accustomed to living in austerity. What’s next, fire sales of cheap islands to the Chinese and Alexander the Great proclaimed to belong to Macedonia? Great reading below by Felix Salmon of Reuters;
Greece is now officially a ward of the international community. It has no real independence when it comes to fiscal policy any more, and if everything goes according to plan, it’s not going to have any independence for many, many years to come. Here, for instance, is a little of the official Eurogroup statement:
Willem Buiter talks to Viv Davies about Greece and the Eurozone. Buiter believes that Greece’s public debt should be written off, it’s banks recapitalised and that the country be provided with sufficient conditional support to grow its economy. They discuss the LTROs and the risks of loss of control over the aggregate size of the balance sheet and potential national central bank insolvencies. Buiter suggests that now is not the time for self-righteousness amongst European policymakers.
Interview link here.
The Greek saga is reaching ridiculous proportions. Troika on/off, IMF on/off, Deal(s) on/off. The situation is definitely the tale of the Emperor’s new clothes. Any intelligent person realizes Greece must leave the EZ sooner or later. Of course, there is no politician willing to deliver the harsh message, but we are reaching the point of the Big stop loss regarding Greece. Accorfding to the Telegraph Germany is planning for the Grexit;
The German finance ministry is actively pushing for Greece to declare itself bankrupt and to agree a “haircut” on the bulk of its debts held by banks, a move that would be classed as a default by financial markets.
Eurozone finance ministers meet on Monday to approve the next tranche of loans from the EU and the International Monetary Fund, designed to stave off national bankruptcy while the new Greek government puts the country’s finances in order.
But the severe austerity measures being demanded have caused such fury in Greece, and the cuts required are so deep, that Wolfgang Schäuble, the German finance minister, does not believe that any government would be able to implement them.
It will be a long weekend. …Guest Post by Macro Story.
Good Morning. As we head into a three day weekend (US bond and equity markets are closed on Monday) were the fate of Greece as a member of the EU may possibly be decided I wanted to offer a less technical, more macro Morning Brief today.
But first a few technical points and securities to watch on option expiration day. This is a long post by the way but there is a lot going on this weekend in Europe.
That feisty AUD/USD currency pair is back at it again turning what looked like a bearish reversal into possibly another head fake. As of this post it stands only 50 pips from prior highs of 1.0845.
HYG (high yield debt) was weak yet again on Friday and putting in another lower low. This excellent market timer topped on January 26 in a rather bearish high volume double top pattern. Watch HYG to see if it continues to underperform equity. Also watch HYG relative to LQD (investment grade debt). HYG has been underperforming LQD as investor risk aversion has been growing.
Dow Transports topped on February 3 and has been putting in a series of lower highs and lower lows. Thursday the transports did outperform the dow for a change but from a technical perspective it was a simple inside day after selling off 2% on Wednesday.
EMD (mid cap futures) took out another resistance level on Thursday. The next resistance level comes in at approximately 990. EMD is still about 3% below the July highs versus the SPX which is slightly above.
Hudson on the Greek experiment, austerity and banksters, via Real News.
In Greece, the financial elites of Europe have gotten agreement from the Greek government to another round of what some people are calling savage austerity measures, for example, lowering the minimum wage by 22 percent, a new round of privatizations, and cuts to pensions and many other social programs. This is, I guess, an example of banks and a banking technocrat that now leads the Greek government directly intervening, calling government policy. So what does this tell us here in the U.S., Canada, and other countries that are watching this?
The white knight, China, is back to rescuing the World once again. Southern Europe is implementing austerity, and all will be fine. The question is thought, has Spain (and maybe others) been involved in creative accounting, just like Greece? From Open Europe;
Spain seems to be doing its best to steal a couple of headlines from Greece. Why? Well, according to sources quoted by Reuters, the European Commission suspects that the newly elected centre-right government led by Mariano Rajoy (pictured) might have inflated Spain’s deficit figures for 2011 – potentially a pretty harmless exercise, given that the new cabinet only took office before last Christmas, meaning most of the blame for failing to meet the deficit reduction targets will fall on its predecessor anyway.
Greece is entering the phase where any deal will be met with further violence. People are realizing what austerity means, and who will buy their country cheaply. The once No1 power of the world, is sliding into total chaos. Report from Greece by Occupy London.
There are various estimations about the number of the people concentrated on the streets and squares of the country. Athens had anything over 500,000 people on the streets, it is not easy to estimate it, but before the attack of the police every street leading to Syntagma and the square were packed, with thousands more coming from the neighbourhoods on foot or by buses and trains. Half an hour before the demo one could see the metro stations and the bus stops full of people waiting to get on a vehicle that would bring them to the centre. Every city saw rallies and mass marches, with Heraclion of Crete, a city that holds a record in the recent wave of suicides, having a 30,000-strong march. Demonstrations alla round the country turned violent, with people destroying banks or occupying governmental buildings, e.g. in Volos the branch of Eurobank, the Inland Revenue Offices and the town hall were torched or in Corfu people attacked to the offices of their region’s MPs, trashing them, the town hall of Rhodes was occupied during the demo and still is occupied, to mention but a few of such actions. (Full reporting here.)
When you are bust you must tell the obvious. “Forget your money, it ain’t coming back”. Greece must do the inevitable, irrespective of the incalculable consequences. From Reuters;
“The consequences of disorderly default would be incalculable for the country – not just for the economy … it will lead us onto an unknown, dangerous path,” Deputy Finance Minister Filippos Sachinidis said.
In an interview with the newspaper Imerisia, he described the catastrophe he believes Greece would suffer if it failed to meet debt repayments of 14.5 billion euros due on March 20.
“Let’s just ask ourselves what it would mean for the country to lose its banking system, to be cut off from imports of raw materials, pharmaceuticals, fuel, basic foodstuffs and technology,” he said.
Some insight on the endgame for Greece. From Credit Slips.
We have been hearing about the oncoming endgame to the Greek saga for almost two years now. Several developments have occurred in the past few months that may make the prediction come true sooner rather than later.
The first is a seeming shift in the attitudes of European leaders. They are not blinking in the face of Greek government resistance to the punitive conditionality of the loan agreement. In fact, they are asking for such extreme measures in the face of a complete collapse of the Greek economy that one is forced to wonder whether their aim is rather to “volunteer” Greece for a default and, perhaps most of all, a euro exit. In any case, the tone of the debate has changed considerably, with many more European voices openly discussing the scenario of a default and euro exit, some confidently asserting that Greece’s collapse will not be Lehman. (Full article here.)