So it begins... signs of a Greek bank run

[RandomGuy]

(edit)I love going doom and gloom (edit), but things are looking bad, in other words:

Europe is well and truly fucked. Its politicians are going to be unable to stop it at this point, I believe. That has some VERY serious repercussions.

Most likely chain of events, in my opinion:

We are seeing the beginning of an old-fashioned bank run in Greece.
http://www.bloomberg.com/news/2012-05-15/greek-president-told-banks-anxious-as-deposits-pulled.html

This domino will tip and start runs in other vulnerable countries, with Greece exiting the Euro by the end of the year, possibly dragging Portugal with it, if not other weak countries.

The bank runs will cause the collapse of large European banks, and the interlinking of large financial institutions in the US and Asia will cause them to come under a new round of stress. From what I hear from the investment classes who monitor this all, a lot of financial institutions have tried to limit their direct exposure. My gut says they have very deep vulnerabilities that most probably aren't fully incorporated into their risk models.

I think we will see more US bank bailouts next year, and a US recession, further reinforcing a global downturn.

China, whose largest export market is the EU, will see its growth shudder to a halt, bursting its property bubble, making them unable to help Europe. India will muddle along.

My gleeful predictions of golds demise will not be borne out, as people go to gold as a store of value with the decline of the Euro and introduction of the old national currencies that will quickly devalue. I expect gold and silver will get astronomically expensive. Good news for these schmucks:
http://dsc.discovery.com/tv/gold-rush-alaska/

On the upside, gas prices will go down. Mixed blessing as we may very well see actual deflation.

The financial crisis of 2008 is about to be dwarfed.

Again, my take on it. I hope I am wrong, but the only way to avoid this is for European politicians to do things that they have demonstrated that they will not do. I don't see a sudden change of heart/charactor.

[Winehole23]

The financial crisis of 2008 is about to be dwarfed.what we were afraid would happen in 2008: debt-deflation and a wave of sovereign defaults.

hope you're wrong, but it does look bad.

[TeyshaBlue]

Time for a front end QE and let the TBTF save their own skins. The stock market corrects as the artificial investment market resets leaving behind the derivative laden investment "banks".

[Wild Cobra]

I don't believe you RG...

You seem to love Doom and Gloom topics.

[TeyshaBlue]

I don't believe you RG...

You seem to love Doom and Gloom topics.

Feel free to pose a counter scenario.

[RandomGuy]

I don't believe you RG...

You seem to love Doom and Gloom topics.

(edit) snark redacted (/edit)

Time will tell.

I think I may tap a CFO/CIO or two for their thoughts.

[Wild Cobra]

Feel free to pose a counter scenario.
I was making the point that it appears RG's nature is liking such topics. I wasn't saying he was right or wrong.

His first like:

I hate going doom and gloom, but things are looking bad, in other words:

[CosmicCowboy]

I think the European Union will survive losing Greece and Portugal. they clearly don't have the political will to get their shit together. Yeah, funds will flee Greece but they will land in Germany and the UK. It's not the end of the world.

[ChumpDumper]

I wasn't saying he was right or wrong.


I don't believe you RG.

[Winehole23]

Time for a front end QE and let the TBTF save their own skins. The stock market corrects as the artificial investment market resets leaving behind the derivative laden investment "banks".naw. we'll save em again.

[CosmicCowboy]

And looking on the bright side, Greece is about to be the poster child on what happens when a country lets it's debts and promises to it's populace get out of whack with it's revenues.

The wealthy will flee and the lower classes will riot. Greece is fucked.

Hopefully some people including our politicians and Blue teamers in here will realize that we can't keep racking up astronomical debt forever.

[Wild Cobra]

I wasn't saying he was right or wrong.
I don't believe you RG...

Oh Chumpie...

Why this silly diversion?

I was saying he was right or wrong about the article. I was disagreeing with his "I don't like" start of the "doom and gloom."

My God...

Teysha...

Chumpie...

Why are you guys making this about me?

[Winehole23]

I think the European Union will survive losing Greece and Portugal. they clearly don't have the political will to get their shit together. Yeah, funds will flee Greece but they will land in Germany and the UK. It's not the end of the world.if they flee Italy and Spain for Germany it could be the end of the Euro and possibly the Eurozone as currently constituted.

[Winehole23]

danger is real. not inevitable, but very real.

[Wild Cobra]

And looking on the bright side, Greece is about to be the poster child on what happens when a country lets it's debts and promises to it's populace get out of whack with it's revenues.

The wealthy will flee and the lower classes will riot. Greece is fucked.

Hopefully some people including our politicians and Blue teamers in here will realize that we can't keep racking up astronomical debt forever.
We can only pray.

[RandomGuy]

I was making the point that it appears RG's nature is liking such topics. I wasn't saying he was right or wrong.

His first like:

Hmm. You may have a point.

Gloom and doom is much more interesting.

[RandomGuy]

And looking on the bright side, Greece is about to be the poster child on what happens when a country lets it's debts and promises to it's populace get out of whack with it's revenues.

The wealthy will flee and the lower classes will riot. Greece is fucked.

Hopefully some people including our politicians and Blue teamers in here will realize that we can't keep racking up astronomical debt forever.

We can't.

I am all for spending cuts, if coupled by tax increases.

I am willing to comprimise, if met halfway.

[Wild Cobra]

We can't.

I am all for spending cuts, if coupled by tax increases.

I am willing to comprimise, if met halfway.
We don't need tax increases, we need more tax payers. We have too many deductions that keep people from paying their fair share, both at the bottom and top. Us middle class are the ones being screwed.

[Winehole23]

Hopefully some people including our politicians and Blue teamers in here will realize that we can't keep racking up astronomical debt forever.Hopefully, some people will realize we can't keep propping up asinine strawmen forever...

[CosmicCowboy]

We can't.

I am all for spending cuts, if coupled by tax increases.

I am willing to comprimise, if met halfway.

I have said before I would support tax increases targeted at reducing the deficit IF they were coupled with multiples of that increase in real spending cuts and ended when the deficit was brought back under control.

[Winehole23]

lol Republican crocodile tears over the national debt after hitting the snooze bar for 30 years

[CosmicCowboy]

lol Republican crocodile tears over the national debt after hitting the snooze bar for 30 years

Who said it was a Republican or Democrat issue? There is plenty of blame to go around. Pull your head out of the blue sand.

[coyotes_geek]

I think the European Union will survive losing Greece and Portugal. they clearly don't have the political will to get their shit together. Yeah, funds will flee Greece but they will land in Germany and the UK. It's not the end of the world.

That's kind of what I'm thinking too. Greece and Portugal get sacrificed with the wagons getting re-circled around everyone else.

[CosmicCowboy]

That's kind of what I'm thinking too. Greece and Portugal get sacrificed with the wagons getting re-circled around everyone else.

Yeah, the EU will use the funds they were going to give them to their own banks to cover losses incurred on the sovereign defaults

[Wild Cobra]

Hopefully, some people will realize we can't keep propping up asinine strawmen forever...
Hoh...

How is that a strawman when the math shows it isn't sustainable?

[boutons_deux]

Who said it was a Republican or Democrat issue? There is plenty of blame to go around. Pull your head out of the blue sand.

The Repugs/VRWC took the lead in pushing hard for and obtaining for tax expenditures for the wealthy, for the UCA, started/botch bogus wars, waste $Ts on a bloated, corrupt, wasteful MIC (corporate welfare at its most exemplary), financial deregulation, and war on employees (salaries).

your false equivalence (Dems are just as bad as Repugs) is, as always, bullshit.

[coyotes_geek]

The Repugs/VRWC took the lead in pushing hard for and obtaining for tax expenditures for the wealthy, for the UCA, started/botch bogus wars, waste $Ts on a bloated, corrupt, wasteful MIC (corporate welfare at its most exemplary), financial deregulation, and war on employees (salaries).

You should go debate that boutons character. He thinks corporate welfare is a good thing.

[RandomGuy]

I have said before I would support tax increases targeted at reducing the deficit IF they were coupled with multiples of that increase in real spending cuts and ended when the deficit was brought back under control.

"multiples" ??

That isn't halfway.

That is "I give 1/3, you give 2/3" at best.

Do you think this is fair?

[CosmicCowboy]

"multiples" ??

That isn't halfway.

That is "I give 1/3, you give 2/3" at best.

Do you think this is fair?

Sure I'll meet you halfway if we are talking about percentage tax increases/spending cuts.

[coyotes_geek]

"multiples" ??

That isn't halfway.

That is "I give 1/3, you give 2/3" at best.

Do you think this is fair?

Obama thought it was. This time last year he was talking about a 3:1 cuts/revenues ratio as part of the debt ceiling debate.

[Winehole23]

Who said it was a Republican or Democrat issue? you did.



Hopefully some people including our politicians and Blue teamers in here will realize that we can't keep racking up astronomical debt forever.

[CosmicCowboy]

you did.





I was responding to this post.


lol Republican crocodile tears over the national debt after hitting the snooze bar for 30 years

I hold Republicans and Democrats equally responsible for the hole we have dug ourselves but as you pointed out, the Republicans are the only ones talking seriously about doing anything about it. Crocodile tears? Probably, but the Democrats plan to balance the budget by raising taxes on "millionaires" is equally suspect.

[RandomGuy]

Obama thought it was. This time last year he was talking about a 3:1 cuts/revenues ratio as part of the debt ceiling debate.

... and this was still rejected by Republicans.


Does that indicate a willingness to genuinely comprimise to solve problems to you?

[RandomGuy]

Sure I'll meet you halfway if we are talking about percentage tax increases/spending cuts.

Cool.

I would shoot for a 1% total debt reduction each year for 20 years.

In this time the economy would grow to the point where the debt would be smaller in real terms, and smaller in relative terms.

Take a deficit of X dollars +1 percent reduction and divide that by two.

Raise taxes to cover one half, and cut spending to get the other half.

It would be harsh on both ends, but would be a good sustainable way to dig our way out, and deleverage.

[RandomGuy]

your false equivalence (Dems are just as bad as Repugs) is, as always, bullshit.

In this case, I would agree.

The GOP is painting itself into an inflexible corner.

The Dems are slowly following suit, after having shown a willingness to comprimise.

[coyotes_geek]

... and this was still rejected by Republicans.


Does that indicate a willingness to genuinely comprimise to solve problems to you?

No, nor was I trying to suggest that they were. I was just pointing out that Obama thought a 3:1 cuts/revenues ratio was fair. I agree with him.

[coyotes_geek]

Cool.

I would shoot for a 1% total debt reduction each year for 20 years.

In this time the economy would grow to the point where the debt would be smaller in real terms, and smaller in relative terms.

Take a deficit of X dollars +1 percent reduction and divide that by two.

Raise taxes to cover one half, and cut spending to get the other half.

It would be harsh on both ends, but would be a good sustainable way to dig our way out, and deleverage.

Something similar to this concept is what I'd like to see as well, just with a different cuts/taxes ratio.

[CosmicCowboy]

If the Republicans weren't so focused on talking about debt reduction the Democrats wouldn't be talking about it at all. They would be talking about things like gay marriage and using public funding for abortions through planned parenthood...





oh wait...:lol

[Winehole23]

been waiting for the GOP to make good on its lip service to smaller government and individualism all my life. pardon me if I don't take their loud noises about the same too seriously this time around either.

[coyotes_geek]

Back on topic, a POV on Greece a little more to the warm fuzzy side than the doom and gloom side.


Many experts believe an eventual departure of Greece from the eurozone is already priced into stocks, bonds and currencies. The return of the drachma may not necessarily be analogous to the bankruptcy of Lehman Brothers -- especially since Greece's crisis has been playing out since early 2010.

"Is this a Lehman-like event? Banks and markets have been preparing for this for years," said John Canally, investment strategist for LPL Financial in Boston. "And the global economy is in a lot better place than it was in 2008."

link (http://money.cnn.com/2012/05/16/markets/thebuzz/index.htm?iid=HP_LN)

[Winehole23]

I don't see the Greek exit as directly being a catastrophe, but rather as possible prelude to Spain and Italy getting crunched, which might be.

[RandomGuy]

If the Republicans weren't so focused on talking about debt reduction the Democrats wouldn't be talking about it at all.

oh wait...:lol

Perhaps not as much. I can mildly agree that the GOP's strong push does guide the conversation.

I think the "better angel" of fiscal conservatism that the Republican party has been to the nation's conscience has turned into a Grand Inquistor ("convert or die").

Doesn't the Republican drift towards the kind of no comprimise extreme end of the spectrum worry you at least a little?

[Capt Bringdown]

Leaving the Euro maybe better than the alternative
A Tempting Rationale for Leaving the Euro (http://www.nytimes.com/2012/05/16/business/economy/leaving-the-euro-may-be-better-than-the-alternative.html?_r=1)

For a project intended to draw Europe together, the euro did surprisingly little to build solidarity. German voters endured a recession two decades ago after bringing in their brethren from the Soviet bloc. They now appear unwilling to spend a pfennig to help the Greeks, Spaniards, Portuguese, Irish or Italians.

Conceived as a tool for integration, the euro could, instead, tear Europe apart.

Europe would be in much better shape if the euro didn’t exist and each member country had its own currency. Monetary union has shackled together nations with vastly different economies, depriving them of an independent monetary policy that can help them through rough times. The interest rate and exchange rate that serve Germany also have to serve Spain, though that country has more than four times Germany’s joblessness.

The main problem is that while leaders eagerly embraced the monetary bond, they rejected its necessary complement: a central budget that would transfer money from successful regions to underperforming ones, as the United States government sends tax dollars collected in Massachusetts to pay for unemployment benefits in Nevada.

- more - (http://www.nytimes.com/2012/05/16/business/economy/leaving-the-euro-may-be-better-than-the-alternative.html?_r=1)

[RandomGuy]

Back on topic, a POV on Greece a little more to the warm fuzzy side than the doom and gloom side.

I dunno. The potential for a continent-wide bank run is not something I think any stock has incorporated.

The betting focus on the Greek exit is not if, but when, and how bad it will ultimately get.

[coyotes_geek]

I dunno. The potential for a continent-wide bank run is not something I think any stock has incorporated.

The betting focus on the Greek exit is not if, but when, and how bad it will ultimately get.

Just presenting the other side. Things very well could play out per your OP. I hope we get something a little closer to what I posted though. Time will tell.

[Winehole23]

http://www.rawstory.com/rs/2012/05/16/moodys-to-downgrade-21-spanish-banks/

[Marcus Bryant]

been waiting for the GOP to make good on its lip service to smaller government and individualism all my life. pardon me if I don't take their loud noises about the same too seriously this time around either.

True.

[Marcus Bryant]

Strange how the sun never setting on the American empire is not firmly in the crosshairs of the conservative party.

[Nbadan]

gold prices will continue to rise...
Inflation will remain in check...
Greece will be rescued...
RG is wrong again...

[TDMVPDPOY]

whether its doom n gloom, china will continue to print out whatever figures they see fit

they can afford to....reason being their economy is fueled by living on USA debt interests....expand whatever interests it has and buy up more capital with ur money...

[ElNono]

And looking on the bright side, Greece is about to be the poster child on what happens when a country lets it's debts and promises to it's populace get out of whack with it's revenues.

The wealthy will flee and the lower classes will riot. Greece is fucked.

Hopefully some people including our politicians and Blue teamers in here will realize that we can't keep racking up astronomical debt forever.

apples vs oranges

Greece currency isn't sovereign... the US just has to keep an eye in inflation.

[ElNono]

BTW, I don't see a doom and gloom scenario or the end of the Eurozone either...

[The Reckoning]

we'll see with the recent elections in france.

seems like germany is the one holding the EU together. sounds oddly familiar (as i've stated before) to previous european conflicts 70 years ago.

[Winehole23]

BTW, I don't see a doom and gloom scenario or the end of the Eurozone either...hope you're right

[Winehole23]

http://www.ft.com/intl/cms/s/0/187a0562-a00a-11e1-90f3-00144feabdc0.html#axzz1v7ekzcNK

[Winehole23]

Greece (http://topics.bloomberg.com/greece/)’s secret loan from Goldman Sachs Group Inc. (GS) (http://www.bloomberg.com/quote/GS:US) was a costly mistake from the start.

On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said.

Papanicolaou and his predecessor, Christoforos Sardelis, revealing details for the first time of a contract that helped Greece mask its growing sovereign debt to meet European Union requirements, said the country didn’t understand what it was buying and was ill-equipped to judge the risks or costs.

“The Goldman Sachs deal is a very sexy story between two sinners,” Sardelis, who oversaw the swap as head of Greece’s Public Debt Management Agency from 1999 through 2004, said in an interview.

Goldman Sachs’s instant gain on the transaction illustrates the dangers to clients who engage in complex, tailored trades that lack comparable market prices and whose fees aren’t disclosed. Harvard University (http://topics.bloomberg.com/harvard-university/), Alabama (http://topics.bloomberg.com/alabama/)’s Jefferson County and the German city of Pforzheim all have found themselves on the losing end of the one-of-a-kind private deals typically pitched to them by securities firms as means to improve their finances.
http://www.imackgroup.com/mathematics/779863-bloomberg-how-goldman-sachs-screwed-greece/

[Spur_Fanatic]

The greeks are so weak. They want it all:
The rest of Europe to support them, while living their lives as they used to.

Germany should just kick them off the euro.

[Agloco]

Apologies if this was already posted:

This article deals with both Greece and now Spain.

http://www.cbsnews.com/8301-500395_162-57454651/greeks-spaniards-withdraw-euros-by-the-billions/


(AP) ATHENS, Greece - In Europe's most economically stricken countries, people are taking their money out of their banks as a way to protect their savings from the growing financial storm.

Worried that their savings could be devalued, or that banks are on the verge of collapse and that governments cannot make good on deposit insurance, people in Greece, Spain and beyond are withdrawing euros by the billions — behavior that is magnifying their countries' financial stresses.

The money is being hoarded at home or deposited in banks in more stable economies.

[Edward]

Europe fucked itself by trying so hard to save a backwater shithole country with only 11,000,000 people

[mavs>spurs]

^didn't just fuck europe tbh, we bout to feel the pain me and you i'm afraid :lol

[mavs>spurs]

i'm sittin on just a couple G's of savings left from before i quit my job in order to go balls to the wall and finish my degree, seriously thinking about investing on a gun and some seeds :lol

[SnakeBoy]

Germany should just kick them off the euro.

It's not that simple. Germany relies on the PIGS buying their goods and services with the euro. So when they get kicked off the euro Germany's economy will take a big hit. So with the PIGS the euro is fucked and without them the euro is fucked. It was a bad concept from the beginning.

[Winehole23]

New steps by three major central banks to boost global growth failed to impress investors on Friday, sending Spanish borrowing costs back near unsustainable levels and hitting European stocks.
Reflecting the impact of the European Central Bank's http://media.cnbc.com/i/CNBC/Sections/News_And_Analysis/_News/_CNBC_EXPLAINS/_IMAGES/CNBC_explains_icon1.gif (http://www.cnbc.com/id/44536753) decision to cut lending rates (http://www.cnbc.com/id/48055904) to 0.75 percent and deposit rates to zero, German government bond yields were weaker with the yield on two-year debt briefly turning negative.
German two-year government bond yields (http://www.cnbc.com/id/15839203/?site=14081545) fell to zero and briefly turned negative on Friday after the European Central Bank cut interest rates the previous day.
http://www.cnbc.com/id/48090854