Greece banks to be closed monday

[InRareForm]

http://www.washingtonpost.com/world/europe/greece-reportedly-decides-to-close-banks-monday/2015/06/28/071f4ef4-1dab-11e5-a135-935065bc30d0_story.html

[ElNono]

It's a game of chicken right now, we'll see who blinks first

[Winehole23]

barring an 11th hour rabbit pulled out of a hat, default and a Greek exit from the Euro look likely.

[boutons_deux]

Greek default will be like Argentina default?

Vulture investors buying Greek bonds cheap and start suing Greece, impounding Greek ships?

[RandomGuy]

barring an 11th hour rabbit pulled out of a hat, default and a Greek exit from the Euro look likely.

I would bet (a small amount) on them staying.

They get to vote on it, because the prime minister wants a referendum.

Greek people get to decide, which is not exactly a bad thing, IMO.

[TDMVPDPOY]

the hedgefunds/loaners know the greeks have no ability to pay, so they bought into in and took out insurance

so who pays when the greeks default, insurance companies or the taxpayer...

[Winehole23]

German hegemony trumps all:

http://www.thetimes.co.uk/tto/news/world/europe/article4484201.ece

[Clipper Nation]

:lol Socialism

[ElNono]

http://yanisvaroufakis.eu/2015/07/01/why-we-recommend-a-no-in-the-referendum-in-6-short-bullet-points/

[ElNono]

German hegemony trumps all:

http://www.thetimes.co.uk/tto/news/world/europe/article4484201.ece

non paywalled version:
http://www.theaustralian.com.au/news/world/greek-default-no-new-bailout-unless-tsipras-goes/story-fnb64oi6-1227422961480?nk=3d8dd7a1c132e78cfeba0f643bb53c34-1435804394

[Winehole23]

:lol SocialismGermany wins. They're socialists too. So is the rest of Europe.

How does that figure in your scheme?

[baseline bum]

non paywalled version:
http://www.theaustralian.com.au/news/world/greek-default-no-new-bailout-unless-tsipras-goes/story-fnb64oi6-1227422961480?nk=3d8dd7a1c132e78cfeba0f643bb53c34-1435804394

Paywall there too

[ElNono]

Paywall there too

well, fuck... if you're coming off Google search it shows it...

[ElNono]

The text of the article is posted on this reddit thread:
https://www.reddit.com/r/europe/comments/3bp3mf/no_new_bailout_unless_tsipras_goes_says_german/

[ElNono]

But this is why Greece needs to give them the middle finger and forge their own road. What kind of democracy is this when you have outsiders telling you "we don't like your government, put somebody else in charge"...

And Germany better be very, very careful of what they're doing. There's no way they're not going to take a gigantic hit if they have to write off all that debt.

[Winehole23]

Ireland and Greece compared:


Our current story is called, according to the Minister for Foreign Affairs Charlie Flanagan (http://www.irishtimes.com/search/search-7.1213540?tag_person=Charlie%20Flanagan&article=true), “the pride of Europe”. Of course this doesn’t mean that Europe is proud that we’ve almost doubled consistent child poverty, or that we keep centenarians for days on hospital trollies or that basic services like clinics for sufferers of rheumatic diseases are simply disappearing or that we’ve been left with unpayable public debt.

It surely doesn’t mean that Europe is proud that little Ireland was forced to bear the cost of a bank bailout put last week by Patrick Honohan (http://www.irishtimes.com/search/search-7.1213540?tag_person=Patrick%20Honohan&article=true), governor of the Central Bank, at €100 billion and rising. At the level of reality, it doesn’t actually mean anything at all. But that doesn’t mean that it’s a harmless fiction. “The Pride of Europe” is a makey-up story that is intended to take the place of the realities it displaces. It’s not a stand-alone narrative. It has an evil twin: Greece. It belongs to a particular genre of fiction: the morality tale. Ireland is the pride of Europe because it is the anti-Greece. We are good because we play along with the bigger stories of the euro zone crisis. Greece is evil because it stopped doing so.


One of those stories is that the crisis had nothing to do with reckless lending (by, for example, German state banks) and was created purely by reckless borrowing. The other, even more fantastical, is that so-called austerity (in reality a programme of sucking citizens dry to transfer their resources to private banks) produces economic growth.


These stories are as patently false as Enda’s fairy tale, but Ireland is the pride of Europe because it has gone along with them and Greece is the shame of Europe because it has not been able to sustain the suspension of disbelief.


Greece’s membership of the euro zone was always a fiction - a story that everyone agreed to believe because it was more convenient than reality. Greece never met the fiscal criteria for membership. So how was it allowed in? By cooking the books. A right-wing Greek government worked with Goldman Sachs to hide its debts using massive currency swaps at fictional exchange rates. Euro zone governments went along with the story.


When the crisis hit in 2008, there might have been a moment of truth. Instead we had the classic dynamic of a lie spawning more lies. The banks that lent so recklessly were bailed out by transferring their debts to European taxpayers and the IMF – their culpability disappeared from the story. A new fiction was invented – that Greece could simultaneously have its economy shrunk by relentless austerity and pay back hundreds of billions of euro.


The startling thing about the current debacle is that no one really believes this story any more. The IMF has long since admitted that its calculations about the economic effects of austerity were wildly wrong. No objective analyst believes that Greece can pay back its debts.


And yet the story must be maintained: Greece must keep punishing its people to pay back the money being borrowed to make the payments on the unpayable loans. In the upside-down world we inhabit, Syriza, which has called a halt to this fiction, is a bunch of mad fantasists, while the troika that goes on acting as if the fictions were real is the voice of hard-headed realism. http://www.irishtimes.com/opinion/who-will-dare-say-out-loud-emperor-has-no-clothes-1.2267032

[boutons_deux]

Ireland and Greece compared:

http://www.irishtimes.com/opinion/who-will-dare-say-out-loud-emperor-has-no-clothes-1.2267032

In brief, like all the other countries, including USA, Iceland, etc, they were raped by the capitalist Banksters, who are escaping ALL responsibility, accountability.

[pgardn]

In brief, like all the other countries, including USA, Iceland, etc, they were raped by the capitalist Banksters, who are escaping ALL responsibility, accountability.

Who is THEY?

The Greeks themselves participated at many levels.
Always ready to take the easy way if it fits your worldview.

[boutons_deux]

Who is THEY?

The Greeks themselves participated at many levels.
Always ready to take the easy way if it fits your worldview.

really? how did "many levels" of Greeks themselves participate with Goldman-Sacks to hide national debt to present Greece fraudulently as an acceptable candidate for Euro integration?

[Infinite_limit]

But this is why Greece needs to give them the middle finger and forge their own road. What kind of democracy is this when you have outsiders telling you "we don't like your government, put somebody else in charge"...

And Germany better be very, very careful of what they're doing. There's no way they're not going to take a gigantic hit if they have to write off all that debt.
You are describing the enslavement of joining the European Union

Americans laugh at Germany/UK saying it's an unfair one-sided relationship [will have to bailout Greece etc]. On the contrary those in Brussels have freely accomplished the equivalent of invading & occupying their fellow Europeans. Furthermore Germany is about to make a killing on imports.

[Jacob1983]

This proves that the eurozone, European Union, and the euro are jokes.

[Infinite_limit]

This proves that the eurozone, European Union, and the euro are jokes.
Imagine if Europe brought in Russia, Belarus & Ukraine. Immense resources but would require incredible number of immigrants. Europe not willing to sell out.

[Winehole23]

Sixty years ago today, an agreement was reached in London to cancel half of postwar Germany's debt (http://en.wikipedia.org/wiki/Agreement_on_German_External_Debts). That cancellation, and the way it was done, was vital to the reconstruction of Europe from war. It stands in marked contrast to the suffering being inflicted on European people today in the name of debt.

Germany emerged from the second world war still owing debt that originated with the first world war: the reparations (http://en.wikipedia.org/wiki/World_War_I_reparations) imposed on the country following the Versailles peace conference in 1919. Many, including John Maynard Keynes, argued that these unpayable debts and the economic policies they entailed led to the rise of the Nazis and the second world war.

By 1953, Germany (http://www.theguardian.com/world/germany) also had debts based on reconstruction loans made immediately after the end of the second world war. Germany's creditors included Greece and Spain, Pakistan and Egypt, as well as the US, UK and France.
German debts were well below the levels seen in Greece, Ireland, Portugal and Spain (http://www.theweek.co.uk/eurozone/euro-debt-crisis/47333/spain%E2%80%99s-soft-bailout-%E2%80%98us-too%E2%80%99-say-ireland-and-greece) today, making up around a quarter of national income. But even at this level, there was serious concern that debt payments would use up precious foreign currency earnings and endanger reconstruction.


Needing a strong West Germany as a bulwark against communism, the country's creditors came together in London and showed that they understood how you help a country that you want to recover from devastation. It showed they also understood that debt can never be seen as the responsibility of the debtor alone. Countries such as Greece (http://www.theguardian.com/world/greece) willingly took part in a deal to help create a stable and prosperous western Europe, despite the war crimes that German occupiers had inflicted just a few years before.


The debt cancellation for Germany was swift, taking place in advance of an actual crisis. Germany was given large cancellation of 50% of its debt. The deal covered all debts, including those owed by the private sector and even individuals. It also covered all creditors. No one was allowed to "hold out" and extract greater profits than anyone else. Any problems would be dealt with by negotiations between equals rather than through sanctions or the imposition of undemocratic policies.

http://www.theguardian.com/commentisfree/2013/feb/27/greece-spain-helped-germany-recover?CMP=fb_gu

[Winehole23]

Perhaps the most innovative feature of the London agreement was a clause that said West Germany should only pay for debts out of its trade surplus, and any repayments were limited to 3% of exports earnings every year. This meant those countries that were owed debt had to buy West German exports in order to be paid. It meant West Germany would only pay from genuine earnings, without recourse to new loans. And it meant Germany's creditors had an interest in the country growing and its economy thriving.

[Winehole23]

The priority of an indebted government today is to repay its debts, whatever the amount of the budget these repayments consume. In contrast to the 3% limit on German debt payments, today the IMF and World Bank regard debt payments of up to 15-25% of export revenues as being "sustainable" for impoverished countries. The Greek government's foreign debt payments are around 30% of exports.

[ElNono]

You are describing the enslavement of joining the European Union

Americans laugh at Germany/UK saying it's an unfair one-sided relationship [will have to bailout Greece etc]. On the contrary those in Brussels have freely accomplished the equivalent of invading & occupying their fellow Europeans. Furthermore Germany is about to make a killing on imports.

The IMF has been doing this for years... but they gotta learn when they're pushing too far. Greece wouldn't be the first to give them the middle finger, and should they opt to take that road, they won't be the last.

[Infinite_limit]

:Winehole quotes

No one fears a Greek uprising, their people have become soft from being a tourist destination for so long. The Nazis in WW2 was truly 'The Empire Strikes Back'. It was just a matter of time before they'd be back, might as well financially dictate which direction they head towards. This is the main difference with the German comparison. Greece is lazy, Germany in WW1 was backstabbed [no foreigner troops on German soil]. Plus are we really gonna ignore rebuilding Germany wasn't to combat the Soviet Union?

[Infinite_limit]

The IMF has been doing this for years... but they gotta learn when they're pushing too far. Greece wouldn't be the first to give them the middle finger, and should they opt to take that road, they won't be the last.
As a Pole I'm actually relieved, we were supposed to switch to the Euro in 2012 [announced in 2008]. These economic issues mean it won't occur anytime soon, if ever. But the social problems, attempting to force European nations to accept refugees is creating tension with the whole Union. Hopefully I've returned by the time it all falls apart.

The ability to currently work all across the Continent is an incentive for me to return

[pgardn]

really? how did "many levels" of Greeks themselves participate with Goldman-Sacks to hide national debt to present Greece fraudulently as an acceptable candidate for Euro integration?


That is a huge oversimplification of the root problem.
How did the National debt accumulate to begin with?


You choose to enter the problem at a point where you can assign blame that fits your mantra.
The Greeks have received money from a number of organizations who assumed they would get money back. It's not as simple as disguising the Greek problem and then hoping they fail so you can "take" the country.

[boutons_deux]

"How did the National debt accumulate to begin with?"

... by banks and funds lending Greece way too much.

Greeks' and Greek companies' tax evasion has been a problem for many decades. I don't absolve Greece, but the "debt" came from capitalist creditors. Forcing Greece, or any non-industrial country, to sell national, semi-national assets to foreign creditors at fire sale prices is the game.

Greece never should have joined the EU. Goldman-Sacks told Greece how to commit fraud on its debt level to be acceptable EU mucky mucks, who didn't do their homework, and many of whom are ex-G-S.

[boutons_deux]

Exclusive: Europeans tried to block IMF debt report on Greece:
http://www.reuters.com/article/2015/07/03/us-eurozone-greece-imf-idUSKCN0PD20120150703?feedType=RSS&feedName=topNews

[pgardn]

"How did the National debt accumulate to begin with?"

... by banks and funds lending Greece way too much.

Greeks' and Greek companies' tax evasion has been a problem for many decades. I don't absolve Greece, but the "debt" came from capitalist creditors. Forcing Greece, or any non-industrial country, to sell national, semi-national assets to foreign creditors at fire sale prices is the game.

Greece never should have joined the EU. Goldman-Sacks told Greece how to commit fraud on its debt level to be acceptable EU mucky mucks, who didn't do their homework, and many of whom are ex-G-S.




So the Greeks threw a German contingent out trying to advise on the pension payouts and how to begin to gather tax revenue so they could sell their country off to Capitalists in 2011? One of many time government experts from other countries were told not to look to closely by the Greeks? By their politicians.

I have no doubt multinational investment firms are looking for deals, that's what they do. But you are laying these players knowingly attempting to bankrupt Greece from way back when they were in trouble in the early 2000s and especially 2007 This did not happen over night, but the current Greek government would have you believe this. There were other countries that did not meet the perfect Euro standards either. The EU fudged on more than Greece.

I think the EU has finally accepted this is a black hole money pit at this point. Find the story about the Greek port that lies fallow with Union leeches sitting at the docks collecting pay checks while a private port right next to the union run port was busy with traffic. The Unions and old pensioners played an important parasitic role as well.

[boutons_deux]

the journalist/analysts are all over the place of yes vs no, consequences. the greek people seem to be totally confused yes vs no.

thanks Goldman-Sacks for your fraud, and thanks capitalists trying to make a few $Bs off a poor country.

[pgardn]

the journalist/analysts are all over the place of yes vs no, consequences. the greek people seem to be totally confused yes vs no.

thanks Goldman-Sacks for your fraud, and thanks capitalists trying to make a few $Bs off a poor country.

Thanks to the new government for lying to the people and now not only confusing them, but for the upcoming pain they will feel. If the Greels felt "poor" before, just wait. Poor is a relative term.

[ElNono]

Thanks to the new government for lying to the people and now not only confusing them, but for the upcoming pain they will feel. If the Greels felt "poor" before, just wait. Poor is a relative term.

They'll feel the pain no matter what they do, tbh... the real question is what's better for them post-pain... and they should definitely make their own choice in that matter...

[ElNono]

Early Returns Show Greeks Strongly Reject E.U. Bailout

The Interior Ministry projected that more than 60 percent of the voters had said no to a deal that would have imposed greater austerity measures on the beleaguered country.

http://www.nytimes.com/2015/07/06/world/europe/greek-referendum-debt-crisis-vote.html

[boutons_deux]

Greek referendum: No vote on track for landslide victory - live updates


http://www.theguardian.com/business/live/2015/jul/05/greeces-eurozone-future-in-the-balance-as-referendum-gets-under-way--eu-euro-bailout-live

[Blizzardwizard]

Good to see a no vote and a strong rejection of austerity. If only the British had the balls to reject it too..

[boutons_deux]

Thomas Piketty: “Germany has never repaid.”

Piketty: But not when it comes to repaying debts! Germany’s past, in this respect, should be of great significance to today’s Germans. Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted. The first lesson that we can take from the history of government debt is that we are not facing a brand new problem. There have been many ways to repay debts, and not just one, which is what Berlin and Paris would have the Greeks believe.

Piketty: My book recounts the history of income and wealth, including that of nations. What struck me while I was writing is that Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.

Piketty: When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.

https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff

[pgardn]

Seashell currency or perhaps old Greek scholars drawn on rolled cabbage leaves...

I have a feeling a dollar is gonna go a long way there, which is good if they can actually feed tourists.

[pgardn]

They'll feel the pain no matter what they do, tbh... the real question is what's better for them post-pain... and they should definitely make their own choice in that matter...

Some pain leads to death. I hope there is no rioting or regions trying to break free. They need to stick together and just keep the EU scapegoat mantra alive.

[ElNono]

Some pain leads to death. I hope there is no rioting or regions trying to break free. They need to stick together and just keep the EU scapegoat mantra alive.

Every kind of pain kills. One way or the other, it always does, tbh. Austerity, with it's high unemployment and extreme poverty kills too.

It was going to be painful no matter what, but at least they've now chosen to forge their own future, be it good or a tragedy, instead of technocrats in the IMF or Germany deciding for them.

[Winehole23]

The Piketty interview boutons posted, taking a longer view of history, is relevant. Germany is in the position of having been the reckless lender and also historically of having been the reckless debtor. Taking it all out on Greece is bullshit and tends to ruin the putative political purpose of the EU: European peace and unity.

[ElNono]

The overriding message from lenders seems to be that the world is gonna end if Greece doesn't pay it's debts. But the reality is that at worst they'll have to forcibly learn to live by their own means. Is that such a terrible thing?

[ElNono]

Another twist:

Yanis Varoufakis Abruptly Resigns as Greek Finance Minister

http://www.nytimes.com/2015/07/07/business/international/yanis-varoufakis-abruptly-resigns-as-greek-finance-minister.html

http://yanisvaroufakis.eu/2015/07/06/minister-no-more/

[Winehole23]

the usual goldbugs are spreading rumors about about Deutche Bank having its own Lehman moment, seeking as they have continuously since the 2008-9 global crash, to rip off gullible investors.

the trend of stories in the financial press about Deutche Bank, however, does not inspire confidence:


Here’s a re-cap of what’s happened at Deutsche Bank over the past 15 months:


In April of 2014, Deutsche Bank was forced to raise an additional 1.5 Billion of Tier 1 capital to support its capital structure. Why?
1 month later in May of 2014, the scramble for liquidity continued as DB announced the selling of 8 billion euros worth of stock – at up to a 30% discount. Why again? It was a move which raised eyebrows across the financial media. The calm outward image of Deutsche Bank did not seem to reflect their rushed efforts to raise liquidity. Something was decidedly rotten behind the curtain.
Fast forwarding to March of this year: Deutsche Bank fails the banking industry’s “stress tests” and is given a stern warning to shore up it’s capital structure.
In April, Deutsche Bank confirms its agreement to a joint settlement with the US and UK regarding the manipulation of LIBOR. The bank is saddled with a massive $2.1 billion payment to the DOJ. (Still, a small fraction of their winnings from the crime).
In May, one of Deutsche Bank’s CEOs, Anshu Jain is given an enormous amount of new authority by the board of directors. We guess that this is a “crisis move”. In times of crisis the power of the executive is often increased.
June 5: Greece misses its payment to the IMF. The risk of default across all of its debt is now considered acute. This has massive implications for Deutsche Bank.
June 6/7: (A Saturday/Sunday, and immediately following Greece’s missed payment to the IMF) Deutsche Bank’s two CEO’s announce their surprise departure from the company. (Just one month after Jain is given his new expanded powers). Anshu Jain will step down first at the end of June. Jürgen Fitschen will step down next May.
June 9: S&P lowers the rating of Deutsche Bank to BBB+ Just three notches above “junk”. (Incidentally, BBB+ is even lower than Lehman’s downgrade – which preceded its collapse by just 3 months)

http://notquant.com/is-deutsche-bank-the-next-lehman/



At the end of 2012, we wrote a couple of posts about how Deutsche Bank was charged by three separate whistleblowers with having greatly understated the risk of the biggest derivatives exposure in the entire bank, which meant it had artificially pumped up its capital level during the crisis. The second, longer post, Deutsche Bank’s $12 Billion in Hidden Losses: Why Whistleblower Charges Have Merit and Why They Matter (http://www.nakedcapitalism.com/2012/12/deutsche-banks-12-billion-in-hidden-losses-why-whistleblower-charges-have-merit-and-why-they-matter.html) was in response to a typical Matt Levine, “nothing to see here, move on” defense of financial services industry misconduct (Deutsche Bank Ignored Some “Losses” Until They Went Away (http://dealbreaker.com/2012/12/deutsche-bank-ignored-some-losses-until-they-went-away/)). Deutsche settled the charges for $55 million, which says the agency concluded there was a real problem. However, the fine looks light given the seriousness of the misconduct.http://www.nakedcapitalism.com/2015/05/sec-vindicates-deutsche-bank-derivatives-whistleblowers-eric-ben-artzi-and-matthew-simpson.html

Some context for the 2014 capitalization:


Deutsche Bank (http://www.forbes.com/companies/deutsche-bank/) has finally admitted – to no-one’s surprise – that it needs more capital. It has announced plans (https://www.deutsche-bank.de/medien/en/content/4666_4938.htm) to raise 8bn EUR of new Core Tier 1 equity capital (CET1).


Although everyone knew Deutsche Bank was short of capital, this admission is nevertheless somewhat embarrassing. Only last year, Deutsche Bank raised (http://www.ft.com/cms/s/0/83be1a82-b1a4-11e2-b324-00144feabdc0.html?siteedition=uk#axzz325IAfs2b) 3bn EUR with a rights issue and claimed that no further capital would be needed. Yet recently it announced plan (http://www.ft.com/cms/s/0/d91470fa-cf06-11e3-ac8d-00144feabdc0.html#axzz325IAfs2b)s to raise up to 1.5bn EUR of “additional capital” – debt which can convert to equity if CET1 falls below an agreed level. Now it seems even more of the best quality capital is needed as well. What on earth has gone wrong?


Deutsche Bank has long been something of a basket case. In 2007, when the first signs of the impending financial crisis began to appear, it was the most highly leveraged bank in Europe (http://www.forbes.com/europe-news/), with assets 68 times its Tier 1 capital. It narrowly managed to avoid (http://www.huffingtonpost.com/2012/12/05/deutsche-bank-12-billion-losses_n_2247360.html) sovereign bailout in the financial crisis, but it was a principal beneficiary (http://www.businessweek.com/the_thread/economicsunbound/archives/2009/03/german_and_fren.html) of the US government’s bailout of AIG and it received liquidity support (http://www.levyinstitute.org/pubs/wp_698.pdf) from the Fed and the ECB. But its problems weren’t limited to US subprime and toxic derivatives. The Icelandic journalist Sigrún Davíðsdóttir reports that (http://uti.is/2012/12/deutsche-bank-and-its-alleged-failure-to-recognise-up-to-12bn-losses/) Deutsche Bank had lent extensively to Icelandic banks and was left with the toxic loans when the Icelandic banks failed.


Deutsche Bank also turned out to have sizeable interests in Ireland’s teetering banks. When the Irish property market collapsed, the Irish government – partly at the EU’s insistence – bailed out its banks to prevent a chain of contagion spreading out across the Eurozone and risking the solvency of the large European banks such as Deutsche Bank. The banking crisis caused a deep recession in Ireland, while the bailouts caused a fiscal crisis, eventually resulting in sovereign bailout. The price of this has been five years of painful retrenchment by both government and private sector in Ireland.


But it didn’t end there. Deutsche Bank was also heavily exposed to periphery sovereign debt and associated credit derivatives. The exposure of German banks to Greek debt and credit default swaps was the principal reason for German nervousness about the private sector accepting losses: it was two years before the inevitable partial Greek default finally happened – by which time, of course, Deutsche Bank had largely unwound its exposures. It escaped serious damage in the PSI, unlike Greek pensioners whose funds were virtually wiped out. The ECB’s Securities Markets (http://www.forbes.com/markets/) Program helped Deutsche Bank and others unload their toxic Greek debt (and other dodgy sovereign debt) at better than market rates. Guess who holds it now? Yes, the ECB does – and the ECB is of course backed by taxpayers. Yet another disguised bailout for Deutsche Bank.

http://www.forbes.com/sites/francescoppola/2014/05/19/deutsche-banks-latest-capital-raising-wont-end-its-problems/

hiding risk?


Every billion euros Deutsche Bank kept off its balance sheet inflated measures of its financial health, including capital ratios, which otherwise might have compelled it to raise more money from investors, according to Thomas Selling, an emeritus accounting professor at the Thunderbird School of Global Management in Glendale, Arizona, and a former academic fellow at the U.S. Securities and Exchange Commission.


“Investors are relying on the financial statements for an unbiased view of the risk of the bank, and that view has been skewed,” said Selling, one of three accountants who examined deal documents at the request of Bloomberg News. “It makes their balance sheet look less risky than it really is.”

http://www.bloomberg.com/news/articles/2013-07-11/deutsche-bank-opaque-loans-from-brazil-to-italy-hide-risk

[Winehole23]

it's hardly unthinkable the troika is carrying water for a thinly capitalized, badly managed megabank that misstates both its exposure to risk and its own net worth.

[Winehole23]

https://twitter.com/Schuldensuehner/status/618032899288375296

[Winehole23]

despite the responses of media outlets and many pundits that the Eurocrats will have to beeat a retreat and offer Greece concessions, it’s not clear that this event strengthens the Greek government’s hand with its counterparties. Remember, Tsipras enjoyed popularity ratings of as high as 80% and has always retained majority support in polls. And it’s all too easy to forget that “the creditors” are not Merkel, Hollande, Lagarde and Draghi. The biggest group of “creditors” are taxpayers of the 18 other countries of the Eurozone. The ugly design of the Eurozone means that the sort of relief that Greece wants most, a reduction in the face amount of its debt (as opposed to the sort of reduction they’ve gotten, which is in economic value, via reductions in interest rates and extensions of maturities) puts the interest of those voters directly at odds with those in Greece. Our understanding is that a reduction in principal amount, under the perverse budgetary and accounting rules of the Eurozone, would result in those losses showing up as losses for budget purposes, now. They would need to be funded by increased taxes. Thus a reduction in austerity for Greece, via a debt writeoff, simply transfers austerity from Greece to other countries. It’s not hard to see why they won’t go for that. And Eurozone rules require unanimous decisions.http://www.nakedcapitalism.com/2015/07/will-the-ecb-continue-its-shermans-march-to-the-sea-with-the-greek-economy.html

[Winehole23]

Creditors take losses? Piffle.


Kenneth Rogoff, a Harvard professor, said although the Irish economy was recovering, the country would be "far better off" today if the Government had not taken over so much banking debt.
The influential economist said Ireland should be among a number of countries "that should receive a significant debt write-down".



"Of course, right now the Irish economy is recovering and it might not be the best time to confuse markets, especially with Greece on the brink," he told the Press Association.

"But eventually the issue should be brought back to the table."



Mr Rogoff believes massive debt saddled on vulnerable economies in Europe is a major impediment to their growth.



Northern Europeans were being "penny wise and pound-foolish" not to agree to broad write-downs for these countries, he says.



"I believe that Ireland would have been far better off today if the Government had not taken over so much of the bank debt, and instead allowed bank creditors to absorb a significant loss," he said.

"As I understand it, considerable pressure was brought to bear on Ireland to protect the rest of the eurozone against contagion.



"Perhaps, but then the costs of the bailout should have been shared as well.


http://www.independent.ie/breaking-news/irish-news/debt-writedown-for-ireland-urged-31352691.html

[ElNono]

Germany gotta be careful. After all, they're one of the biggest engineers and beneficiaries of the eurozone. One of the biggest issues with the Mark was that it appreciated too quickly, and exports became too expensive for their Euro partners. They had to play extensively with inflation to remain competitive. The eurozone solved all of these problems for them.

[angrydude]

The overriding message from lenders seems to be that the world is gonna end if Greece doesn't pay it's debts. But the reality is that at worst they'll have to forcibly learn to live by their own means. Is that such a terrible thing?

The world might start ending for bankster loan-sharking. That's the end of the world they're talking about.

[pgardn]

There is much worse that could happen actually. But being a small relatively unified country the likelihood is not great.

[pgardn]

http://www.spiegel.de/international/europe/greece-is-divided-as-the-referendum-approaches-a-1042045.html

[pgardn]

http://www.spiegel.de/international/europe/merkel-s-leadership-has-failed-in-the-greece-crisis-a-1042037.html

Some German views.

[ElNono]

http://www.spiegel.de/international/europe/greece-is-divided-as-the-referendum-approaches-a-1042045.html


http://www.spiegel.de/international/europe/merkel-s-leadership-has-failed-in-the-greece-crisis-a-1042037.html

Some German views.

thanks

[pgardn]

thanks

Ya.

[Winehole23]

http://www.spiegel.de/international/europe/greece-is-divided-as-the-referendum-approaches-a-1042045.htmlLiterary prose. Not much analysis here.

[Winehole23]

http://www.spiegel.de/international/europe/merkel-s-leadership-has-failed-in-the-greece-crisis-a-1042037.html

Some German views.This is much sharper.

[pgardn]

Literary prose. Not much analysis here.

Gotta feel the pulse of another country.

The 2nd is highly critical of the German government so I expected it might be more popular. This is the paper is very careful when criticizing Israel, it's definitely on the liberal end of the German voice IMO. There are some prior articles that were very critical of the Greeks that are a little dated; before there was even anything to vote on.

[boutons_deux]

Backlash grows against Germany

Where pressure had been mounting on Greece to accept the terms of the bailout before Sunday's vote, it's now turning on Germany to soften its hard line.

European officials want to see a resolution to the crisis as soon as possible — whether the terms are more favorable to creditors or to Greece — and Germany's power is genuinely unnerving to some of its European partners.

They may have an appreciation for history: A strong, unified Germany has not always been good for the rest of the continent.

http://www.vox.com/2015/7/7/8905647/backlash-grows-against-germany

[xeromass]

All eurozone PMs and FMs jetted their asses to Brussels for meeting and promised new Greek offer, yet Greeks came empty handed. They'll present it tomorrow, over teleconference, apparently. Bloody joke.

[boutons_deux]

Lone Star Bailout

Jared Bernstein (http://www.washingtonpost.com/posteverything/wp/2015/07/05/a-resounding-no-from-greece/?hpid=z9) weighs in on the big No, hopes that it leads to a change in Europe’s approach, but acknowledges the political difficulties:

To be fair, it’s not that simple. There are structural political factors in play, endemic to the fact that the currency union is not a political union, nor a fiscal union, nor a banking union. As one German economist put it to me, “How do you think the people of Manhattan would like bailing out Texas?” Fair point, and a non-trivial challenge, for sure.


Ahem. As it happens, the people of Manhattan did bail out Texas, big time. I wrote about it here (http://krugman.blogs.nytimes.com/2012/06/17/what-a-real-external-bank-bailout-looks-like/). The savings and loan crisis, which was very costly to taxpayers, was mainly a Texas affair:

The cleanup from that crisis cost taxpayers about $125 billion (pdf), back when that was real money. As best I can tell, around 60 percent of the losses were in Texas (pdf). So that’s around $75 billion in aid — not loans, outright transfer.

Texas GDP was about $300 billion in 1987. So this was equivalent to giving — not lending, not even taking an equity stake — Spain 25 percent of its GDP to bail out its banks.


But of course Manhattan was never asked to bail out Texas; we had a national system of deposit insurance, and the big Lone Star bailout was automatic.

http://krugman.blogs.nytimes.com/2015/07/06/lone-star-bailout-2/?_r=0

any of you shit kickers got different numbers?

[russellgoat]

So, they are getting a worse deal after all, or they are planning not paying anything down the line? :lol

[Infinite_limit]

So, they are getting a worse deal after all, or they are planning not paying anything down the line? :lol
Short of being ostracized from the community [BRICS would probably swoop in anyway] how can Greece be forced to pay?

[russellgoat]

Short of being ostracized from the community [BRICS would probably swoop in anyway] how can Greece be forced to pay?


Germany should have moved on and they should have been left to starve because nobody can stop them from doing the same shit again :lol

[Infinite_limit]

Germany should have moved on and they should have been left to starve because nobody can stop them from doing the same shit again :lol
Their government actually threatened to open up it's border to African/ME refugees. At that point Europe would have to invade.

[russellgoat]

Their government actually threatened to open up it's border to African/ME refugees. At that point Europe would have to invade.

Isn't that what European leaders want anyway? Isn't Syriza a pro-immigrant party? Or maybe they just want to do it slowly.

[boutons_deux]

austerity fails again. Repugs love austerity (when applied to the govt and the poor). Repugs are much bigger threat to USA than Muslim terrorists.


http://graphics8.nytimes.com/images/2015/07/08/opinion/070815krugman1/070815krugman1-blog480.png
Credit
It’s now clear, or should be clear, that the Greek program was doomed to failure without major debt relief; no matter how hard the Greeks tried, austerity would shrink GDP faster than it reduced debt relative to the baseline, so that the debt situation was bound to worsen even as the attempt to balance the budget imposed vast suffering.

And there was no good, or even non-terrible, answer given Greece’s membership in the euro.

But there’s a broader lesson from Greece that is relevant to all of us — and it’s not the usual one about mending our free-spending ways lest we become Greece, Greece I tell you. What we learn, instead, is that fiscal austerity plus hard money is a deeply toxic mix. The fiscal austerity depresses the economy, and pushes it toward deflation; if it’s accompanied by hard money (in Greece’s case the euro, but a fixed exchange rate, a gold standard, or any kind of obsessive fear of inflation would do the trick), the result is not just a depression and deflation, but quite likely a failure even to reduce the debt ratio.

For comparison, look at everyone’s favorite example of successful austerity, Canada in the 1990s. Canada came in with gross debt of roughly 100 percent of GDP, roughly comparable to Greece on the eve of the financial crisis. It then proceeded to do a pretty big fiscal adjustment — 6 percent of GDP according to the IMF’s measure of the structural balance, which is about a third of what Greece has done but comparable to other European debtors. But unemployment fell steadily. What was Canada’s secret?

The answer was, easy money and a large currency depreciation (https://research.stlouisfed.org/fred2/series/NNCABIS). These offset the drag from austerity, allowing growth to continue.

So, how does this play into U.S. policy debates?

Well, Republicans love to warn that America might turn into Greece (http://www.washingtonpost.com/posteverything/wp/2015/07/06/the-only-lesson-the-united-states-should-draw-from-greece/) any day now.

But look at the policy mix that is now de facto GOP orthodoxy:

sharp cuts in government spending (maybe offset by tax cuts for the rich, but these won’t provide much stimulus),

combined with a monetary policy obsessed with fears of dollar “debasement”.

That is, the conservative side of the US political spectrum, while holding up Greece as a cautionary tale, is actually demanding that we emulate the policy mix that turned Greek debt into a complete disaster.

http://krugman.blogs.nytimes.com/2015/07/08/policy-lessons-from-the-eurodebacle/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body&_r=1

[Slutter McGee]

austerity fails again. Repugs love austerity (when applied to the govt and the poor). Repugs are much bigger threat to USA than Muslim terrorists.


http://graphics8.nytimes.com/images/2015/07/08/opinion/070815krugman1/070815krugman1-blog480.png
Credit
It’s now clear, or should be clear, that the Greek program was doomed to failure without major debt relief; no matter how hard the Greeks tried, austerity would shrink GDP faster than it reduced debt relative to the baseline, so that the debt situation was bound to worsen even as the attempt to balance the budget imposed vast suffering.

And there was no good, or even non-terrible, answer given Greece’s membership in the euro.

But there’s a broader lesson from Greece that is relevant to all of us — and it’s not the usual one about mending our free-spending ways lest we become Greece, Greece I tell you. What we learn, instead, is that fiscal austerity plus hard money is a deeply toxic mix. The fiscal austerity depresses the economy, and pushes it toward deflation; if it’s accompanied by hard money (in Greece’s case the euro, but a fixed exchange rate, a gold standard, or any kind of obsessive fear of inflation would do the trick), the result is not just a depression and deflation, but quite likely a failure even to reduce the debt ratio.

For comparison, look at everyone’s favorite example of successful austerity, Canada in the 1990s. Canada came in with gross debt of roughly 100 percent of GDP, roughly comparable to Greece on the eve of the financial crisis. It then proceeded to do a pretty big fiscal adjustment — 6 percent of GDP according to the IMF’s measure of the structural balance, which is about a third of what Greece has done but comparable to other European debtors. But unemployment fell steadily. What was Canada’s secret?

The answer was, easy money and a large currency depreciation (https://research.stlouisfed.org/fred2/series/NNCABIS). These offset the drag from austerity, allowing growth to continue.

So, how does this play into U.S. policy debates?

Well, Republicans love to warn that America might turn into Greece (http://www.washingtonpost.com/posteverything/wp/2015/07/06/the-only-lesson-the-united-states-should-draw-from-greece/) any day now.

But look at the policy mix that is now de facto GOP orthodoxy:

sharp cuts in government spending (maybe offset by tax cuts for the rich, but these won’t provide much stimulus),

combined with a monetary policy obsessed with fears of dollar “debasement”.

That is, the conservative side of the US political spectrum, while holding up Greece as a cautionary tale, is actually demanding that we emulate the policy mix that turned Greek debt into a complete disaster.

http://krugman.blogs.nytimes.com/2015/07/08/policy-lessons-from-the-eurodebacle/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body&_r=1




Glad to see you quoting the same guy that believes price gouging laws are bullshit.

Sincerely,

Slutter McGee

[ElNono]

This is such a circus... they already know Greece won't be able to repay whatever they loan now... this loan would add up to 300 billion in bailout debt alone. Unless there's a haircut at some point, this isn't going to fly long term.

[Infinite_limit]

Isn't that what European leaders want anyway? Isn't Syriza a pro-immigrant party? Or maybe they just want to do it slowly.
I had to google but yes Syriza has some of the most progressive Immigration policies in the EuroZone


Those refugees are mainly showing up on European shores because of Euro butt buddy: the USA military [destabilizing governments]. So maybe the conflict will bring long term changes to how Europe views it's foreign relationships. In my lifetime, Immigration will not return to how it was the previous decade

It's an issue I am conflicted with. These refugees certainty don't "look European" and at the moment they sure as hell don't practice European culture but many are Christian. I'm not currently practicing religion but I understand it's necessary for Europes survival. This atheist and uber-liberal path the Western/Northern Europeans have taken will result in our Continent being over-run by barbarians again. Will these people end up switching to Islam down the road anyway? Where is the line and what is more important: looking European VS practicing European culture? Sure many [White] Americans look European but they don't possess the same ideals or values that even European Muslims do.

Multiculturalism in the long run will benefit Europe economically. But at what cultural price? Not looking good for the White Race, that is a foregone conclusion.

[Winehole23]

The proposal sent to Brussels Thursday evening (9 July), sets out plans to save around €13bn, far more severe than the package of €8 billion of spending cuts and tax rises contained in the proposal rejected by Sunday's referendum.


It has also been submitted to the Greek parliament and is set to be debated and voted on Friday.


It contains much of what was proposed to creditors two weeks ago, including increasing the retirement age to 67, but goes further in the areas of VAT reform and pensions. The plan would also scrap Greece’s scheme of offering supplementary pensions to the poorest people by 2019, a year ahead of the 2020 deadline previously proposed.


It also includes increases to VAT aimed at generating savings worth 1 percent of GDP, and a further €300 million in cuts to defence spending over the next two years.
More controversially, the left-wing Syriza government is proposing to increase taxes on low earners if its proposals lead to ‘fiscal shortfalls’.


Should the package not raise the €13 billion target, the government will increase taxes on incomes below €12,000 from 11 percent to 15 percent, and to 35 percent on wages over €12,000.

https://euobserver.com/news/129570

[boutons_deux]

This is such a circus... they already know Greece won't be able to repay whatever they loan now... this loan would add up to 300 billion in bailout debt alone. Unless there's a haircut at some point, this isn't going to fly long term.

the original lenders going back to early 2000s should never have lent the money. This disaster ain't all on Greece, just like the US foreclosure disaster was not all on the borrowers, but primarily on the lenders.

[ElNono]

lmao Europe pretty much kicking them out... now Greece need to show them the middle finger and dollarize their economy...

[boutons_deux]

dollarize? the pegs them to the Fed.

they go back to their own currency, and deflate. Germans will adore those super cheapo vacation weeks in Greece.

Germans got big deflation switching to Euro, others got inflated.

‘Secret’ History of the Greek Crisis

Put simply, in recent years, Greece has become an oligarchy. The very rich avoid civic responsibility. Few pay taxes. They fill Piraeus harbor with mega-yachts and put their money abroad rather than investing in Greek industry. It does not appear that even the self-proclaimed “revolutionary” Syriza government can alter this situation.

https://consortiumnews.com/2015/07/12/secret-history-of-the-greek-crisis/

[boutons_deux]

Greece Has Made No Preparation for a Grexit (http://www.nakedcapitalism.com/2015/07/greece-has-made-no-preparation-for-a-grexit.html)

This is as bad as we’ve feared. We regularly warned that there were no signs that Greece was preparing in a meaningful way for a Grexit (high level discussions like “first we seize the Bank of Greece building” don’t cut it), but sources close to Syriza have said in public what amounted to the same thing, that the government was completely preoccupied with the tactics of the negotiations and was not thinking or acting beyond that.

From the BBC’s Robert Peston (http://www.bbc.com/news/business-33497877) (hat tip Nathan):

So the first rather chilling thing I’ve learned, from well-placed bankers, is there have been no conversations between the Bank of Greece, the government or regulators and Greece’s commercial banks about the technicalities of leaving the euro and adopting a new currency.

This is astonishing – and some would say pretty close to criminal – given that on Wednesday night the president of the European Union, former Polish prime minister Donald Tusk, was explicit that this weekend’s negotiations were all about whether Greece would stay in the eurozone.


It’s “close to criminal” not to have considered it when European leaders told the Greek government before the election that they regarded an “Oxi” vote as tantamount to leaving the Eurozone and the ECB stopped increasing the ELA. The ECB has the means to force a de facto Grexit and top European officials were saying with a united voice that they were prepared to go that far.

I’ve been saying privately for weeks that this feels like Lehman: one side not willing or able to hear it won’t get its rescue, the other side not choosing or able to hear (until very late in the game) that they weren’t getting the message and neither side preparing for the rupture.

The Administration never called a bankruptcy lawyer to understand what a securities firm bankruptcy would mean. Lehman’s attorney filed only a short-form bankruptcy, which meant the firm collapsed in the most destructive manner possible.

http://www.nakedcapitalism.com/2015/07/greece-has-made-no-preparation-for-a-grexit.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

[ElNono]

[SIZE=3][FONT=arial]dollarize? the pegs them to the Fed.

they go back to their own currency, and deflate. Germans will adore those super cheapo vacation weeks in Greece.

They can still do it and stay pegged to a strong currency. ie: they can simply regulate that whoever was earning 30 euros an hour now earns 10 dollars an hour (effectively 9 euros) after the conversion to dollars. It's a defacto shredding of salaries and pensions, which is exactly what's going to happen when they switch to their own currency.

There's a few reasons to do this:
- If they switch to their own currency, it probably would be a more violent crash
- They instantly become competitive in the region
- For an economy based heavily on tourism like theirs, the switch provides cheaper tourism on a readily available currency
- It fiscally keeps them tied to a foreign currency, which means they'll still need to address their out of control spending
- It keeps inflation at bay, which is one of the worst problems when doing a currency conversion
- It prevents speculative attacks on the new currency
- The euro is bound to take a hit if/when they get kicked out. Moving to another strong currency automatically allows them to reap the benefits

[Winehole23]

IMF calls for debt relief:



The International Monetary Fund (http://www.imf.org/external/index.htm) has set off a political earthquake in Europe, warning that Greece may need a full moratorium on debt payments for 30 years and perhaps even long-term subsidies to claw its way out of depression.

"The dramatic deterioration in debt sustainability points to the need for debt relief (http://www.telegraph.co.uk/finance/economics/11738297/Mark-Carney-Greece-needs-debt-relief-to-survive.html)on a scale that would need to go well beyond what has been under consideration to date,” said the IMF in a confidential report.



Greek (http://www.telegraph.co.uk/news/worldnews/europe/greece/) public debt will spiral to 200pc of GDP over the next two years, compared to 177pc in an earlier report on debt sustainability issued just two weeks ago.



The findings are explosive. The document amounts to a warning that the IMF will not take part in any EMU-led rescue package for Greece unless Germany and the EMU creditor powers finally agree to sweeping debt relief.


http://www.telegraph.co.uk/finance/economics/11739985/IMF-stuns-Europe-with-call-for-massive-Greek-debt-relief.html

[Winehole23]

Doug Henwood in March, 1998:


Americans accustomed to thinking of Western Europe as a less austere and less orthodox way of doing capitalism should revise those thoughts immediately; Europe is now run by econocrats and central bankers, and it has become the most austere and most orthodox region of the world, with balanced budgets and hard money (http://www.ecb.int/) taking the front seat, and everything else either in the back seat or left behind entirely.http://www.leftbusinessobserver.com/EMU.html

[boutons_deux]

Doug Henwood in March, 1998:

http://www.leftbusinessobserver.com/EMU.html

balanced budgets?

but not zero national debt

https://en.wikipedia.org/wiki/List_of_countries_by_public_debt

[boutons_deux]

Doug Henwood in March, 1998:

http://www.leftbusinessobserver.com/EMU.html

EU balanced budgets?

http://www.oecd-ilibrary.org/economics/government-deficit_gov-dfct-table-en

[Winehole23]

You're missing the point cavilling at details. Neo-liberalism as it is practiced by European central banks and EU technocrats, was a radical shift from the status quo ante. One wonders considering the example of Greece, how compassionate, fair and humane the new Europe is compared to the old one.

Europe has tacked sharply to the right. Whole countries are now sacrificed to keep creditors whole.

[Winehole23]

God forbid a lender should ever have take a loss on a bad loan.

[boutons_deux]

You're missing the point cavilling at details. Neo-liberalism as it is practiced by European central banks and EU technocrats, was a radical shift from the status quo ante. One wonders considering the example of Greece, how compassionate, fair and humane the new Europe is compared to the old one.

Europe has tacked sharply to the right. Whole countries are now sacrificed to keep creditors whole.

yeah, ok, neo-liberalism everywhere, ok.

USA bailed out damaged Euro banks in the Banksters Great Depression.

[Winehole23]

sure, why not?

[boutons_deux]

sure, why not?

the banks and post-WWI,II Germany got bailed out, but the banks and germany won't bail out Greece.

[ElNono]

Terms of Greece’s Surrender:

http://yanisvaroufakis.eu/2015/07/15/the-euro-summit-agreement-on-greece-annotated-by-yanis-varoufakis/

Also interesting from him:

http://yanisvaroufakis.eu/2015/07/14/on-the-euro-summits-statement-on-greece-first-thoughts/

The last bit about the coup I thought was interesting.

[Nero5]

This proves that the eurozone, European Union, and the euro are jokes.

You have noticed which country owns so many of the US bonds and what the current US debt limit is?

[boutons_deux]

VAMPIRE SQUID NEWS


How Goldman Sachs Profited From the Greek Debt Crisis

http://readersupportednews.org/images/stories/alphabet/rsn-T.jpghe Greek debt crisis offers another illustration of Wall Street’s powers of persuasion and predation, although the Street is missing from most accounts.

The crisis was exacerbated years ago by a deal with Goldman Sachs, engineered by Goldman’s current CEO, Lloyd Blankfein.

Blankfein and his Goldman team helped Greece hide the true extent of its debt, and in the process almost doubled it. And just as with the American subprime crisis, and the current plight of many American cities, Wall Street’s predatory lending played an important although little-recognized role.

In 2001, Greece was looking for ways to disguise its mounting financial troubles. The Maastricht Treaty required all eurozone member states to show improvement in their public finances, but Greece was heading in the wrong direction.

Then Goldman Sachs came to the rescue, arranging a secret loan of 2.8 billion euros for Greece, disguised as an off-the-books “cross-currency swap”—a complicated transaction in which Greece’s foreign-currency debt was converted into a domestic-currency obligation using a fictitious market exchange rate.

As a result, about 2 percent of Greece’s debt magically disappeared from its national accounts. Christoforos Sardelis, then head of Greece’s Public Debt Management Agency, later described the deal to Bloomberg Business as “a very sexy story between two sinners.”

For its services, Goldman received a whopping 600 million euros ($793 million), according to Spyros Papanicolaou, who took over from Sardelis in 2005. That came to about 12 percent of Goldman’s revenue from its giant trading and principal-investments unit in 2001—which posted record sales that year. The unit was run by Blankfein.

Then the deal turned sour.

After the 9/11 attacks, bond yields plunged, resulting in a big loss for Greece because of the formula Goldman had used to compute the country’s debt repayments under the swap.

By 2005, Greece owed almost double what it had put into the deal, pushing its off-the-books debt from 2.8 billion euros to 5.1 billion.

In 2005, the deal was restructured and that 5.1 billion euros in debt locked in. Perhaps not incidentally, Mario Draghi, now head of the European Central Bank and a major player in the current Greek drama, was then managing director of Goldman’s international division.

Greece wasn’t the only sinner. Until 2008, European Union accounting rules allowed member nations to manage their debt with so-called off-market rates in swaps, pushed by Goldman and other Wall Street banks.

In the late 1990s, JPMorgan enabled Italy to hide its debt by swapping currency at a favorable exchange rate, thereby committing Italy to future payments that didn’t appear on its national accounts as future liabilities.

But Greece was in the worst shape, and Goldman was the biggest enabler. Undoubtedly, Greece suffers from years of corruption and tax avoidance by its wealthy. But Goldman wasn’t an innocent bystander: It padded its profits by leveraging Greece to the hilt—along with much of the rest of the global economy. Other Wall Street banks did the same. When the bubble burst, all that leveraging pulled the world economy to its knees.

Even with the global economy reeling from Wall Street’s excesses, Goldman offered Greece another gimmick. In early November 2009, three months before the country’s debt crisis became global news, a Goldman team proposed a financial instrument that would push the debt from Greece’s healthcare system far into the future. This time, though, Greece didn’t bite.

As we know, Wall Street got bailed out by American taxpayers. And in subsequent years, the banks became profitable again and repaid their bailout loans. Bank shares have gone through the roof.

Goldman’s were trading at $53 a share in November 2008; they’re now worth over $200. Executives at Goldman and other Wall Street banks have enjoyed huge pay packages and promotions. Blankfein, now Goldman’s CEO, raked in $24 million last year alone.

Meanwhile, the people of Greece struggle to buy medicine and food.

There are analogies here in America, beginning with the predatory loans made by Goldman, other big banks, and the financial companies they were allied with in the years leading up to the bust. Today, even as the bankers vacation in the Hamptons, millions of Americans continue to struggle with the aftershock of the financial crisis in terms of lost jobs, savings, and homes.

Meanwhile, cities and states across America have been forced to cut essential services because they’re trapped in similar deals sold to them by Wall Street banks. Many of these deals have involved swaps analogous to the ones Goldman sold the Greek government.

And much like the assurances it made to the Greek government, Goldman and other banks assured the municipalities that the swaps would let them borrow more cheaply than if they relied on traditional fixed-rate bonds—while downplaying the risks they faced.

Then, as interest rates plunged and the swaps turned out to cost far more, Goldman and the other banks refused to let the municipalities refinance without paying hefty fees to terminate the deals.

Three years ago, the Detroit Water Department had to pay Goldman and other banks penalties totaling $547 million to terminate costly interest-rate swaps.

Forty percent of Detroit’s water bills still go to paying off the penalty. Residents of Detroit whose water has been shut off because they can’t pay have no idea that Goldman and other big banks are responsible.

Likewise, the Chicago school system—whose budget is already cut to the bone—must pay over $200 million in termination penalties on a Wall Street deal that had Chicago schools paying $36 million a year in interest-rate swaps.

A deal involving interest-rate swaps that Goldman struck with Oakland, California, more than a decade ago has ended up costing the city about $4 million a year, but Goldman has refused to allow Oakland out of the contract unless it ponies up a $16 million termination fee—prompting the city council to pass a resolution to boycott Goldman. When confronted at a shareholder meeting about it, Blankfein explained that it was against shareholder interests to tear up a valid contract.

Goldman Sachs and the other giant Wall Street banks are masterful at selling complex deals by exaggerating their benefits and minimizing their costs and risks. That’s how they earn giant fees. When a client gets into trouble—whether that client is an American homeowner, a US city, or Greece—Goldman ducks and hides behind legal formalities and shareholder interests.

Borrowers that get into trouble are rarely blameless, of course: They spent too much, and were gullible or stupid enough to buy Goldman’s pitches. Greece brought on its own problems, as did many American homeowners and municipalities.

But in all of these cases, Goldman knew very well what it was doing. It knew more about the real risks and costs of the deals it proposed than those who accepted them.

“It is an issue of morality,” said the shareholder at the Goldman meeting where Oakland came up. Exactly.

http://robertreich.org/post/124342268010

[boutons_deux]

Gaius Publius: Goldman Sachs – Masters of the Eurozone (http://www.nakedcapitalism.com/2015/07/gaius-publius-goldman-sachs-masters-of-the-eurozone.html)



http://www.nakedcapitalism.com/wp-content/uploads/2015/07/Goldman-Sachs_Pg-12-eurozone-graphic.jpg

Interesting headline, yes? I have a two-point intro and then the piece.

First, when a “private” group’s chief individuals flow back and forth constantly between government and that group, the group can be said to be “part” of government, or to have “infiltrated” government, or to have been “folded into” government. (Your phrasing will be determined by who you think is the instigator.)

For example, a network of private “security consulting” firms does standing business with the (Pentagon’s) NSA, and by some accounts performs 70% of their work (http://www.democracynow.org/2013/6/11/digital_blackwater_how_the_nsa_gives). Are those firms part of the NSA or not? Most would say yes, to a great degree. It’s certain that the NSA would collapse without them, and many of these firms would collapse without the NSA (though many have other … ahem, international … clients, which starts an entirely different discussion).

As another example, the role of mega-lobbying firms as a fourth branch of government (http://downwithtyranny.blogspot.com/2015/07/the-augean-stable-how-corruption-has.html) was explored here. Same idea.

In the case of the security firms, one might say they have been “folded into” government. In the case of the lobbying firms, one might say they have “infiltrated” government. I hope you notice the difference; both modes of incorporation occur.

Second, consider how in general the “world of money” and the parallel world of “friends of money” — its enablers, adjuncts, consiglieri and retainers — flow in and out of the world of government, of NGOs, of corporate boards, of foundation boards, attends Davos and the modern Yalta (YES) conference, and so on. Now consider how someone like Hillary Clinton — not money per se, though she has a chunk, but certainly a “friend of money” — ticks off most of those boxes (https://www.clintonfoundation.org/) (foundation board, corporate board, government, Davos, Yalta, and so on). There are many people like Hillary Clinton; she’s just very front-and-center at the moment.

What we’re about to see is the infiltration of “friends of money” into key positions in the eurozone, and in particular, the infiltration of friends of money from one huge repository of money and guardian of its perquisites — the megabank Goldman Sachs — into those governmental positions.

“Goldman Sachs Conquers Europe”

I stole the subhead above from the U.K. paper The Independent. I’m not sure it’s a metaphor. Check the chart at the top and notice how many Goldman Sachs alumni are actually in charge of economic policy in Europe, much like GS alumni are in charge (literally) of economic policy in the U.S. government.

Which suggests the questions:



Where are the current loyalties of these Goldman Sachs employees?
Does Goldman Sachs run economic policy in the U.S.?
Does Goldman Sachs run economic policy in the eurozone?


http://www.reuters.com/article/2015/07/23/us-usa-hospital-medicaid-insight-idUSKCN0PX0CY20150723?feedType=RSS&feedName=healthNews

[Winehole23]

German Minister of Finance Wolfgang Schäuble was prepared “to give Greece €50 billion” had Yanis Varoufakis, his Greek counterpart at the time, agreed to his country leaving the eurozone, a high level source who recently spoke to Schäuble has revealed.

The German minister was described by the source like “a true European” who had nothing against Greece, but favoured harsh medicine for a good cause.


Schäuble was reported to assume that the leftist Syriza government would favour leaving the eurozone, a move consistent with its ideology. And he was prepared to put money on the table to encourage it to take this step
.

Schäuble was quoted as asking how much Greece wants to leave the euro (http://www.mediapart.fr/article/offert/939ade5c660de9062b48f55f2ab1ad2c) by France’s Mediapart. This is said to taken place before the 5 July referendum, in which a vast majority of Greeks rejected the international creditors’ proposals.


But according to the information obtained by Heard in Europe, Schäuble had in mind a concrete figure – €50 billion – had Syriza opted for Grexit.

http://heardineurope.blogactiv.eu/2015/07/20/schauble-was-ready-to-give-greece-e50-billion-to-quit-the-euro/

[Winehole23]

IMF draws a line in the sand over debt relief:


The IMF has indicated it will not take part in a third bailout for Greece unless a deal is reached on making Athens' debt sustainable, a move that underlines the difficulty of reaching an overall agreement by next month's deadline.

"The IMF can only support a programme that is comprehensive," an IMF official told journalists on Wednesday reports (http://in.reuters.com/article/2015/07/30/us-eurozone-greece-imf-idINKCN0Q421920150730) Reuters.


The official also said there was "no expectation" that talks over the coming weeks will reach the stage that allow the IMF to approve a new programme.


Meanwhile the FT reported that an IMF board meeting on Wednesday concluded Athens' high debt and poor level of implementing reforms means it is not eligible for a loan.


The conclusion means that while the Washington-based Fund will take part in bailout negotiations - which started earlier this week in Athens - it will potentially not decide whether to agree to the programme for several months.


A summary of Wednesday's board meeting, seen by the FT, says the IMF will only take part once eurozone lenders have "agreed on debt relief".

https://euobserver.com/economic/129808

[boutons_deux]

disaster/vulture capitalism: predatory banks make BAD risky loans that go into default, banks bailed out, borrower gets screwed, gets its assets taken over by vultures.

Greek MOU foresees rapid sale of ports, grid operator, airports

Greece (http://www.reuters.com/places/greece) will move rapidly to privatize its ports, regional airports and its power grid operator under a memorandum of understanding (MOU) agreed with its international lenders.

According to the 29-page MOU, a copy of which was obtained by Reuters, Greek privatization proceeds, excluding bank shares, are expected to total 6.4 billion euros between 2015 and 2017.

The MOU lists a range of measures that the Greek government must implement in order to obtain a new three-year bailout program that is expected to total roughly 85 billion euros.

http://www.reuters.com/article/2015/08/12/us-eurozone-greece-bailout-idUSKCN0QH16520150812?feedType=RSS&feedName=topNews

[Winehole23]

Perhaps the best way to show what a mess Europe is in is the €3 billion deal they made with Turkey head Erdogan, only to see him being unmasked by EU archenemy Vlad Putin as a major supporter, financial and who knows how else, of the very group everyone’s so eager to bomb the heebees out after Paris. It could hardly have been more fitting. That’s not egg on your face, that’s face on your egg.


But Brussels thinks it’s found a whipping boy for all its failures. Greece. It’s fast increasing its accusations against Athens’ handling of the 100s of 1000s of refugees flooding the country. Everything that goes wrong is the fault of Greece, not Brussels. The EU has so far given Greece €30 million in ‘assistance’ for the refugee crisis, while the country has spent over €1.5 billion in money it desperately needs for its own people. But somehow it’s still not done enough.


The justification given for this insane shortfall is that Greece doesn’t blindly follow all orders emanating from Europe’s ‘leaders’. Orders such as setting up a joint patrol of the Aegean seas with … yes, Erdogan’s Turkey. Where Greece gets next to nothing as the children keep drowning, Turkey gets €3 billion and a half-baked promise to join the Union sometime in the future.


Which was never going to happen, the EU would blow up before Turkey joins and certainly if it does, and most certainly now that Russia’s busy detailing the link between the Erdogan cabal and Europe’s supposed new archenemies -move over Putin?!, which, incidentally, are reason for France to ponder a kind of permanent state of emergency; ostensibly, this is Hollande’s way of exuding confidence. ‘We must protect our way of life’.


Given Schengen -while it lasts-, which effectively erases all frontiers, this de facto means permanent emergency across the entire EU. And that, to a degree, though the two may seem unrelated, plays into the EU’s insistence to station foreign border guards (military police) at Greek borders. A, we can’t put it in different words, completely insane demand to which Alexis Tsipras’ government has apparently even acceded.


Insane because once you have foreigners deciding who can enter or leave your country, you’re effectively a country under occupation. It really is that simple.http://www.theautomaticearth.com/2015/12/greece-is-a-nation-under-occupation/

[Winehole23]

We are not specialists in the Greek constitution -terribly hard to read-, but we very much question whether an elected government can decide to give up its nation’s sovereignty this way. Two -related- issues here are: 1) does the EU have the legal capacity to force this (EU border guards agency Frontex) on a member state, and 2) does Tsipras have the legal capacity to sign over the sovereignty of his country to foreigners?


Brussels may claim that Athens voluntarily ‘invited’ in German and Polish ‘officers’, but that’s far short of even half the story. EU countries have been complaining about the way Greece has dealt with the refugee crisis, stating that it is not capable of protecting its borders, which it ‘should’ under Schengen.


Nonsense of course. Athens is very capable of protecting its borders, but it has stated -quite correctly, it would seem- that it protects its borders from enemies, and the refugees are not enemies. The reason the refugees keep arriving -and/or drowning-, mind you, has a lot more to do with Angela Merkel’s ‘invitation’ for them to come, and with Turkey’s eagerness to let them leave, than it does with anything Greece has done. Or not done.


But that’s not what Brussels talks about. Far from it. The EU claims it has the power to take over, even if Greece would resist. Reuters quotes a EU official as saying: “One option could be not to seek the member-state’s approval for deploying Frontex but activating it by a majority vote among all 28 members..”



In other words, if 15 countries vote to occupy Greece, it’s a done deal.same

[Winehole23]

Norbert Haring, Chairman of the ECB shadow council, on who's running the show in the Europe:


In November, 2002, two of the most significant flagships of the financial press, the German Handelsblatt and the American Wall Street Journal, had a brilliant idea: we will create, they said, a "shadow council", consisted of some of the most important academic economists, but also economists from the private sector. The council will conduct monthly meetings prior to the ECB board of directors, for the purpose to suggest whether the base interest rate should be increased, reduced, or, remain stable.

Despite the fact that this council has no institutional characteristics, its existence as a consulting tool was planned by the Maastricht Treaty. Soon, it was transformed into an informal "institution", the decisions of which are reaching the headquarters of the ECB in Frankfurt.


Essentially, the target of this shadow council, as was mentioned sometime by Wall Street Journal, was to build a bridge for the big gap between the British central bank and the German Bundesbank.


From the first day, Handelsblatt's Norbert Häring, has been set the president and coordinator of the council. He participates in every meeting, without the right of voting. When I met him a few days ago in Brussels for the filming of the documentary This is not a coup (http://thisisnotacoup.com/), I was prepared to face another passionate supporter of the European institutions. Speaking at phone, however, he warned me that his view does not express the decisions of the shadow council. But there was nothing that could prepare me for the "bombs" he would attempt to plant at the euro-system foundations.



At the start of the interview, he told me that “It is scandalous the fact that a central banker, like Stournaras, can state publicly that he had blocked the attempt of the [Greek] government to create a parallel currency, without ending in prison.” He also said that “This time, we don't have a silent coup”, like in the case of Cyprus, Italy, or, Ireland, “but a real coup that violates the responsibilities of the central bank and interferes [with] the political life of a country.”



According to Häring, the ECB has been transformed now into a powerful player who speaks directly with the biggest banks of the planet without being controlled [...] by the institutional tools of the EU. He explains to me that “The so-called independence of the ECB and of national banks is iconic. The fact that the elected governments are not able to affect ECB's decisions means that the influence of other players increases. I refer of course to the big financial institutions. ECB always lies on the side of the big banks.”



According to Häring, ECB is able now to decide whether will sustain a government in power, or, will let this government collapse under the pressure of the markets - and that's exactly what happened with Berlusconi administration in Italy.


He says that “The national central banks consist part of the ECB system and have a terrifying ability to blackmail governments.” Through the exchange of big bond packages, they provoke big interest rate fluctuations, forcing governments to give them anything they want in return. At the same time, “they continuously give information to the ECB, through which it can blackmail the governments.”


http://failedevolution.blogspot.gr/2016/01/the-head-of-ecb-shadow-council-confirms.html

[Winehole23]

IMF admits it threw Greece under the bus to save banks and the Euro, and gravely miscalculated the pain it would cause:


The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.


This is the lacerating verdict of the IMF’s top watchdog on the fund’s tangled political role in the eurozone debt crisis, the most damaging episode in the history of the Bretton Woods institutions.





Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located








It describes a “culture of complacency”, prone to “superficial and mechanistic” analysis, and traces a shocking breakdown in the governance of the IMF, leaving it unclear who is ultimately in charge of this extremely powerful organisation.
The report by the IMF’s Independent Evaluation Office (IEO) (http://www.ieo-imf.org/ieo/pages/CompletedEvaluation267.aspx) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way European Union insiders used the fund to rescue their own rich currency union and banking system.

http://www.telegraph.co.uk/business/2016/07/28/imf-admits-disastrous-love-affair-with-euro-apologises-for-the-i/

[Winehole23]

The three main bailouts for Greece, Portugal and Ireland were unprecedented in scale and character. The trio were each allowed to borrow over 2,000pc of their allocated quota – more than three times the normal limit – and accounted for 80pc of all lending by the fund between 2011 and 2014.

[Winehole23]

The IMF persistently played down the risks posed by ballooning current account deficits and the flood of capital pouring into the eurozone periphery, and neglected the danger of a "sudden stop" in capital flows.






“The possibility of a balance of payments crisis in a monetary union was thought to be all but non-existent,” it said. As late as mid-2007, the IMF still thought that “in view of Greece’s EMU membership, the availability of external financing is not a concern".
At root was a failure to grasp the elemental point that currency unions with no treasury or political union to back them up are inherently vulnerable to debt crises. States facing a shock no longer have sovereign tools to defend themselves. Devaluation risk is switched into bankruptcy risk.


“In a monetary union, the basics of debt dynamics change as countries forgo monetary policy and exchange rate adjustment tools,” said the report. This would be amplified by a “vicious feedback between banks and sovereigns”, each taking the other down. That the IMF failed to anticipate any of this was a serious scientific and professional failure.

[Winehole23]

While the fund’s actions were understandable in the white heat of the crisis, the harsh truth is that the bailout sacrificed Greece in a “holding action” to save the euro and north European banks. Greece endured the traditional IMF shock of austerity, without the offsetting IMF cure of debt relief and devaluation to restore viability.


A sub-report on the Greek saga said the country was forced to go through a staggering squeeze, equal to 11pc of GDP over the first three years. This set off a self-feeding downward spiral. The worse it became, the more Greece was forced to cut – what ex-finance minister Yanis Varoufakis called "fiscal water-boarding".


“The automatic stabilisers were not allowed to operate, thus aggravating the pro-cyclicality of the fiscal policy, which exacerbated the contraction,” said the report.





The attempt to force through an "internal devaluation" of 20pc to 30pc by means of deflationary wage cuts was self-defeating since it necessarily shrank the economic base and sent the debt trajectory spiralling upwards. “A fundamental problem was the inconsistency between attempting to regain price competitiveness and simultaneously trying to reduce the debt to nominal GDP ratio,” it said.


The IMF thought the fiscal multiplier was 0.5 when it may in reality have been five times as high, given the fragility of the Greek system. The result is that nominal GDP ended 25pc lower than the IMF’s projections, and unemployment soared to 25pc instead of 15pc as expected. “The magnitude of Greece’s growth forecast errors looks extraordinary,” it said.

[ElNono]

^ People in South America seen that movie before. That's why I was saying that Greece should've exited then.

[Winehole23]

Galbraith expressed his “epiphany” already in 2010 that a “market-based” solution was a euphemism for anti-labor austerity and a reversal of political democracy. “In a successful financial system, there must be a state larger than any market. That state must have monetary control – as the Federal Reserve does, without question, in the Untied States.” That was what many Europeans a generation ago expected – for the EU to sponsor a mixed public/private economy in the progressive 20th-century tradition. But instead of an emerging “European superstate” run by elected representatives empowered to promote economic recovery and growth by writing down debts in order to revive employment, the Eurozone is being run by the troika on behalf of bondholders and banks. ECB and EU technocrats are serving these creditor interests, not those of the increasingly indebted population, business and governments. The only real integration has been financial, empowering the ECB to override national sovereignty to dictate public spending and tax policy. And what they dictate is austerity and economic shrinkage.


In addition to a writeoff of bad debts, an expansionary fiscal policy is needed to save the eurozone from becoming a dead zone. But the EU has no unified tax policy, and money creation to finance deficit spending is blocked by lack of a central bank to monetize government deficits under control of elected officials. Europe’s central bank does not finance deficit spending to revive employment and economic growth.


“Europe has devoted enormous effort to create a ‘single market’ without enlarging any state, and while pretending that the Central Bank cannot provide new money to the system.” Without monetizing deficits, budgets must be cut and the public domain sold off, with banks and bondholders in charge of resource allocation.
http://michael-hudson.com/2016/10/review-of-james-galbraith-welcome-to-the-poisoned-chalice-2016/

[Winehole23]

As long as “the market” means keeping the high debt overhead in place, the economy will be sacrificed to creditors. Their debt claims will dominate the market and, under EU and ECB rules, will also dominate the state instead of the state controlling the financial system or even tax policy.

[Winehole23]

On the surface, the troika’s “solution” – paying creditors by bleeding the economy – seems obviously self-defeating. But this seeming failure appears to be their actual aim: foreclosure on the assets of the indebted economy’s public sector under the banner of its version of R2P: Responsibility to Privatize. For Greece this means its ports, islands and tourist centers, electricity and other public utilities.


The ECB and IMF accelerated Greece’s economic collapse by demanding a rise in the VAT from 23 percent, making tourism in the islands more expensive. “The plain object of the creditors’ program is therefore not reform,” Galbraith points out. Instead of helping the economy compete, “Pension cuts, wage cuts, tax increases, and fire sales are offered up on the magical thought that the economy will recover despite the burden of higher taxes, lower purchasing power, and external repatriation of profits from privatization.” Privatized public utilities are turned into “cash cows” to enable buyers to extract monopoly rents, increasing the economy’s cost of living and doing business.

[Winehole23]

The IMF, ECB and EU bureaucracy have acted together to collect the bad debt left over from their reckless 2010 bailout of French, German, Dutch and other bondholders. In behavior reminiscent of Allied demands for unpayably high German reparations in the 1920s, their demands for payment are based on predatory junk economic theory claiming that foreign debt of any magnitude can be paid by imposing deep enough austerity and privatization sell-offs.

[Winehole23]

The euro’s creation can best be viewed as a legalistic coup d’état to replace national parliaments with a coterie of financial managers acting on behalf of creditors, drawn largely from the ranks of investment bankers. Tax policy, regulatory and pension policies are assigned to these unelected central planners. Empowered to override sovereign self-determination and national referendums on economic and social policy, their policy prescription is to impose austerity and force privatization selloffs that are basically foreclosures on indebted economies. Galbraith rightly calls this financial colonialism.

[Winehole23]

If European Left does not succeed in creating an alternative to eurozone austerity, right-wing nationalists will lead a withdrawal campaign.