Germany Humiliates Itself By Conceding To A Second Greek Bailout(Zerohedge)

[rockhopper]

couple more links , picked up from shaun richards blog inc

Accusations of Treason in the Greek Parliament

http://coveringdelta.wordpress.com/2011/05/29/accusations-of-treason-in-the-greek-parliament/

and another zero hedge one : "The Greek "Ultimatum": Bailout (For The Bankers) And (Loss Of) Sovereignty"

http://www.zerohedge.com/article/greeces-ultimatum-bailout-bankers-or-loss-sovereignty#new

cheers,

rockhopper

[aa3]

or more the case, germany has worked hard , has a high domestic savings rate and a trade surplus.

a bailout means that the ECB will print money and give it to greece, diluting the value of the euro and germanys savings.

True, part of the issue though is the nature of the debt backed monetary system. Germany being a net saver, must lend tremendous amounts of money to other nations. Because all savings are also debt in our monetary system. So Germany ends up lending money all over the place, including areas where German bankers don't really understand the situation.

Japan was in a similiar situation in the 80's and lost tremendous amounts on bad investments. Now it mainly just backs up savings with the national debt, which is now at 200% of GDP. Germany hasn't been willing to take that path so far.

[aa3]

They also loaned a lot of money to Greece - oops!

Recycling surplus cash into countries running deficits, just so that you can accumulate a greater surplus is a fools game. China is discovering this, as is Germany.

Yep China figured it out... China is a lot smarter than Japan and Germany. China took the exporting as far as it could go, and got the technology they wanted, and when it couldn't be pushed farther.. they made the switch to demand led growth. First by government stimulus, then the second phase that will play out over several decades is consumer led growth.

My feeling is Japan and Germany understand what is happening but the governments are seized by the huge industrial corporations. Which benefit so much from this arrangement. Whereas in China the Communist Party is still calling the shots, and only views the profits of the industrial corporations in the big picture.

A similiar comparison is between China and the US-UK. In the US-UK without doubt the banks have seized control of the political system. And are doing things good for the banks regardless of whether it harms the populace. While in China the big 4 banks are owned by the state, which is ran by the Communist party.

[alexw]

No, it isn't the same as numbers on a screen when creditors talk of forcing privatisation, a nice way of putting 'seizing assets'. Will six thousand islands be enough?

There's that, and the talk of 'outside tax collection agents' for Greece. Will they have blue helmets, a bit like NATO peacekeepers, or might they be more like those nice people from Blackwater, employed by the Coalition Of The Willing to be in the Euro?

All loan sharking ends in ugliness.

One of those i'm sure, it is german debts they are enforcing after all.

But in all seriousness, foreign debt collectors won't work. It would come to be seen as it is - occupation by a foreign power and if you think the current greek riots are bad just wait to see what would happen if they went through with their idiotic proposals.

[Nationalist]

Getting out of the euro would be incredibly difficult. Any country which mooted the possibility would find instant cash hoarding - people would convert all their money to euro cash and stash it behind the fridge. The enabling legislation would take at least a year to pass and all that time the economy would be stalled.

Some sort of "default-lite" might be possible. A government could start printing euro-equivalent IOU notes and part-paying benefits and salaries in these. If tax bills could be settled in these at parity they would have a market value up near a euro. There would need to be years of parallel running before you'd be shot of the euro.

And the eurocrats know it...

(The above does not apply to Germany - the stampede would be in the opposite direction: gimme DMs now!)

[Game_Over]

Getting out of the euro would be incredibly difficult. Any country which mooted the possibility would find instant cash hoarding - people would convert all their money to euro cash and stash it behind the fridge. The enabling legislation would take at least a year to pass and all that time the economy would be stalled.

Some sort of "default-lite" might be possible. A government could start printing euro-equivalent IOU notes and part-paying benefits and salaries in these. If tax bills could be settled in these at parity they would have a market value up near a euro. There would need to be years of parallel running before you'd be shot of the euro.

And the eurocrats know it...

(The above does not apply to Germany - the stampede would be in the opposite direction: gimme DMs now!)

As is being discussed on another thread

They would be given Greek Euro notes - identifiable by serial number

When bank deposits were changed to Euros these notes would then no longer be legal tender and would have to be exchanged for Drachmas on a 1 to 1 basis

Whatever the level the Drachma had fallen to against the Euro.

IMHO.

As Euros are identifiable to the issuing central bank, the change from Euros to Drachmas could actually be done overnight

All Euro notes with the appropriate serial number prefix would just become Greek Euros - or Drachmas

So far no one has explained why this could not happen.

[Injin]

As is being discussed on another thread

They would be given Greek Euro notes - identifiable by serial number

When bank deposits were changed to Euros these notes would then no longer be legal tender and would have to be exchanged for Drachmas on a 1 to 1 basis

Whatever the level the Drachma had fallen to against the Euro.

IMHO.

As Euros are identifiable to the issuing central bank, the change from Euros to Drachmas could actually be done overnight

All Euro notes with the appropriate serial number prefix would just become Greek Euros - or Drachmas

So far no one has explained why this could not happen.

Greece defaulting within the euro regime is technically/operationally just like Newcastle City Council defaulting within the sterling regime.

But (and you are right on this I think) Greece defaulting isn't like Newcastle City Council defaulting socially and politically. While the peopel of newcastle would think it sucked, they won't down tools and stop paying taxes entirely if a taxman and receiver is sent in from london. The greeks will though, if someone is sent from brussels. There will be very, very heavy popular demand for drachmas to come back.

I'd carry on rejecting notions of this being a mere technical exercise in euro accounting as you have been, GO.

[Game_Over]

Greece defaulting within the euro regime is technically/operationally just like Newcastle City Council defaulting within the sterling regime.

But (and you are right on this I think) Greece defaulting isn't like Newcastle City Council defaulting socially and politically. While the peopel of newcastle would think it sucked, they won't down tools and stop paying taxes entirely if a taxman and receiver is sent in from london. The greeks will though, if someone is sent from brussels. There will be very, very heavy popular demand for drachmas to come back.

I'd carry on rejecting notions of this being a mere technical exercise in euro accounting as you have been, GO.

Whatever occurs will be 'interesting' to say the least.

The thing I find annoying though, is that by clinging onto a failed idea, more damage is being done than if politicians accepted the reality of the situation.

[onesmallstep]

they have to save the banks that's all.

unless there is a 180deg reversal of policy which won't happen with current club in control.

the real question is how much money can they muster or print.

actually assuming the Greeks et al never manage to run a surplus, we are probably looking at extreme political swings in the end.

[Giordano Bruno]

http://www.zerohedge.com/article/germany-humiliates-itself-conceding-second-greek-bailout-eur-predictably-jumps-briefly

My comments: Greece has been negotiating very well. Greek hinted strongly they were willing to leave the Euro, the trump card. So now Germany looks to be caving and agreeing to give Greece any amount of money it wants. Well by giving, I mean the ECB will print up the number.

I honestly think that will be the plan, just keep bailing out and trying to get whatever concessions they can in a game of chicken. But at the end of the day the Euro can't handle a default by even one member. In the short run the Euro zone has a lot of capacity left to bailout. They could do giant bailouts every few months and be fine.

If the printed money got too great, all they would have to do is raise the base rate in the Eurozone a little to compensate.

It sounds too easy somehow. I think 'Weimar Republic' or 'Zimbabwe'. Edited May 31, 2011 by Giordano Bruno

[copydude]

they have to save the banks that's all.

unless there is a 180deg reversal of policy which won't happen with current club in control.

the real question is how much money can they muster or print.

actually assuming the Greeks et al never manage to run a surplus, we are probably looking at extreme political swings in the end.

No 'assuming' about it. Half the countries will never fit the Euro model . . . never did, never will. France survives on a strong domestic economy . . . the opposite of Germany. Now, suppose you plunged France into austerity and told it to become export led . . .

The bailout terms are not only impossible demands, they are creating huge, cynical underclasses across Europe, completely unrepresented by politicians. The text book, power vacuum. This has to end in tears. People complain about Greece, but repressive policies only drive more and more people into the twilight and the black economy.

The only success stories in the EU are those who didn't adopt the Euro. Poland and the Czech Republic are thanking their lucky stars right now.

The same IMF policies plunged millions in Russia into poverty. The resurgence of nationalism in Russia, and the revival of Stalinistic xenophobia, is a direct consequence.

I can see people burning those blue flags with the yellow stars, just the way people torch American flags in demos. I know plenty of people in Eastern Europe who feel that way.

[wonderpup]

I can see people burning those blue flags with the yellow stars, just the way people torch American flags in demos. I know plenty of people in Eastern Europe who feel that way.

I will be joining them. Until this crisis I genuinely felt the EU to be a pro individual rights setup, essentially benign if mildly corrupt and horribly inefficient - but it has now revealed itself to be just another technocrat enforcer that will happily sell it's citizens down the river to preserve the wealth and power of the ruling elites.

[onesmallstep]

No 'assuming' about it. Half the countries will never fit the Euro model . . . never did, never will. France survives on a strong domestic economy . . . the opposite of Germany. Now, suppose you plunged France into austerity and told it to become export led . . .

The bailout terms are not only impossible demands, they are creating huge, cynical underclasses across Europe, completely unrepresented by politicians. The text book, power vacuum. This has to end in tears. People complain about Greece, but repressive policies only drive more and more people into the twilight and the black economy.

The only success stories in the EU are those who didn't adopt the Euro. Poland and the Czech Republic are thanking their lucky stars right now.

The same IMF policies plunged millions in Russia into poverty. The resurgence of nationalism in Russia, and the revival of Stalinistic xenophobia, is a direct consequence.

I can see people burning those blue flags with the yellow stars, just the way people torch American flags in demos. I know plenty of people in Eastern Europe who feel that way.

well it's all ready happened to a certain extent, as you say the austerity can only get worse without miracle growth and you have a point that the more they are taxed the more they will avoid being taxed.

But if they default then German and French banks collapse and so do their economies, I suppose the default will come when the banks become sufficiently strong to soak it up. I don't know how long that will take though and it's the banks customers who will be providing the funds.

[RufflesTheGuineaPig]

All Euro notes with the appropriate serial number prefix would just become Greek Euros - or Drachmas

So far no one has explained why this could not happen.

Because the notes will have been ditributed all accross Europe by tourists and traders and will be mixed in with the rest of the Euro currency. Euros are Euros, backed by the ECB, regfardless of serial number.

[Jie Bie]

Because the notes will have been ditributed all accross Europe by tourists and traders and will be mixed in with the rest of the Euro currency. Euros are Euros, backed by the ECB, regfardless of serial number.

there is also nothing stopping a greek citizen using their bank card in germany or italy to withdraw their funds in non-greek euros.

[scepticus]

And of course the Euro's shooting up on the news over a percent against the dollar and a percent and a half against the yen. What a ******ing bunch of half wits - ITS NOT GOING TO SOVE ANYTHING :angry:

Is the market that dumb or do they see something you don't?

[RufflesTheGuineaPig]

there is also nothing stopping a greek citizen using their bank card in germany or italy to withdraw their funds in non-greek euros.

Correct. This is why it's a load of tosh.

The thing to worry about is where the money these Greek banks are paying out is coming from.

[Injin]

Correct. This is why it's a load of tosh.

The thing to worry about is where the money these Greek banks are paying out is coming from.

There is nothing stopping the holder of a scottish banknote from withdrawing their money in non scottish pound notes.

English shopkeepers still won't accept the scottish ones.

And that's what to watch for on this one.

[snowflux]

There is nothing stopping the holder of a scottish banknote from withdrawing their money in non scottish pound notes.

English shopkeepers still won't accept the scottish ones.

And that's what to watch for on this one.

Presumably, the economic effect of a few paranoid Eurozone shopkeepers refusing to accept "Greek" euros would be the same as that of a few paranoid British shopkeepers refusing to accept Scottish banknotes: ****** all.

[snowflux]

I've noticed that Scottish banknotes are subject to Gresham's Law south of the border.

And the effect of this on Scotland's economy is?

[Injin]

Presumably, the economic effect of a few paranoid Eurozone shopkeepers refusing to accept "Greek" euros would be the same as that of a few paranoid British shopkeepers refusing to accept Scottish banknotes: ****** all.

I think it's much more than a few, to be quite honest.

From what I can gather from all the brick chucking, tool downing, suttle diplomacy and troops being sent in - a lot of people are very pissed off.

The scottish banknote thing is merely an example to show that the basic scenario is possible and in fact already occurs.

[RufflesTheGuineaPig]

There is nothing stopping the holder of a scottish banknote from withdrawing their money in non scottish pound notes.

English shopkeepers still won't accept the scottish ones.

Typical Injin statement. Technically correct but nothing to do with the topic... but makes him sound like he knows what he's talking about.

In other new, the sky is blue, water is wet, politicians lie.

[snowflux]

I think it's much more than a few, to be quite honest.

From what I can gather from all the brick chucking, tool downing, suttle diplomacy and troops being sent in - a lot of people are very pissed off.

The scottish banknote thing is merely an example to show that the basic scenario is possible and in fact already occurs.

AFAIK, no troops have been deployed to force Germans to accept euros with a "Y" on.

[Injin]

Typical Injin statement. Technically correct but nothing to do with the topic... but makes him sound like he knows what he's talking about.

In other new, the sky is blue, water is wet, politicians lie.

The position you stated was that such a thing was impossible.

All i did was provide actual evidence from your day to day life otherwise.

And now you have taken your bat home.

[Injin]

AFAIK, no troops have been deployed to force Germans to accept euros with a "Y" on.

Never said that they were.