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Posts Tagged ‘Eurozone’

ΟΙ ΑΝΩΝΥΜΟΙ ΧΑΚΑΡΑΝ ΤΟ ΥΠΟΙΚ-Anonymous Hacks Greek Finance Ministry, Finds «123456» Is Password For 37% Of All User Accounts | ZeroHedge

Posted by satyrikon στο 16 Νοεμβρίου, 2012


anonymous (Photo credit: the|G|™)

While we have yet to go through the thousands of files that hacker collective Anonymous has just released as a result of its hack of the Greek Finance Ministry, an exploit it described as follows: «We gained full access to the Greek Ministry of Finance. Those funky IBM servers don’t look so safe now, do they… We have new guns in our arsenal. A sweet 0day SAP exploit is in our hands and oh boy we’re gonna sploit the hell out of it. Respectz to izl the dog for that perl candy,» what we find even more amusing, if not surprising, is that of the 136 username accounts Anonymous hacked, the password of precisely 50 of them, or some 37% of all workers, is…. 123456 (full list here).

That, together with this archival picture of the inside of the Athens Finance Ministry, explains much more about the current and future state of Greek affairs, than any idiotic Troika/IMF forecast ever could.

As for those curious just what secrets the chaotic finance ministry of the Eurozone’s most insolvent country holds, the downloads are available here and here.

μέσω Anonymous Hacks Greek Finance Ministry, Finds «123456» Is Password For 37% Of All User Accounts | ZeroHedge.

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Posted by satyrikon στο 7 Σεπτεμβρίου, 2012

One look at the short squeeze in the EURUSD, coupled with the endless jawboning out of Europe, and one may be left with the faulty impression that Europe has been magically fixed and that Greece couldn’t be more delighted to remain in the Eurozone. One would be wrong. This is what is really going on in Europe:

As a pharmaceutical salesman in Greece for 17 years, Tilemachos Karachalios wore a suit, drove a company car and had an expense account. He now mops schools in Sweden, forced from his home by Greece’s economic crisis.

“It was a very good job,” said Karachalios, 40, of his former life. “Now I clean Swedish s—.”

That more or less explains everything one needs to know about the «fixing» of Europe.

Of course, those who saw our chart from yesterday which showed Greek unemployment rising by 1% in one month to a record 24.4% will hardly find this surprising.

For all those others who need a personal anecdote to grasp just how fixed Europe is, we hand it off to Bloomberg.

Karachalios, who left behind his 6-year-old daughter to be raised by his parents, is one of thousands fleeing Greece’s record 24 percent unemployment and austerity measures that threaten to undermine growth. The number of Greeks seeking permission to settle in Sweden, where there are more jobs and a stable economy, almost doubled to 1,093 last year from 2010, and is on pace to increase again this year.

“I’m trying to survive,” Karachalios said in an interview in Stockholm. “It’s difficult here, very difficult. I would prefer to stay in Greece. But we don’t have jobs.”

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ΖΑΝ ΚΛΩΝΤ ΓΙΟΥΝΚΕΡ, ΕΝΑΣ ΠΑΘΟΛΟΓΙΚΟΣ ΨΕΥΤΗΣ-The Truth Behind Juncker’s Lies: In The Second Largest Greek City, 1250 Companies Have Shuttered In 2012 | ZeroHedge

Posted by satyrikon στο 22 Αυγούστου, 2012

English: Jean-Claude Juncker at the EPP summit...

English: Jean-Claude Juncker at the EPP summit in October 2010 (Photo credit: Wikipedia)

European viceroy of various neo-colonial territories Jean-Claude Juncker, best known for being a self-professed pathological liar, just concluded a press conference in which he did what he does best: lie. Here is a sampling of the soundbites along with our commentary:

  • EU’S JUNCKER SAYS TRUTH IS GREECE SUFFERS CREDIBILITY CRISIS – coming from a pathological liar, this one is our favorite
  • EU’S JUNCKER SAYS GREECE MUST OPEN UP CLOSED PROFESSIONS.  Chimneysweep? Bootblack? Telegraph Operator? Tax Collector? Prosecutor? Uncorrupted muppet?
  • EU’S JUNCKER SAYS BALL IS IN GREEK COURT; IS LAST CHANCE. The ball will be repoed to the ECB shortly
  • EU’S JUNCKER SAYS BALL IS IN GREEK COURT; not for long: ball will soon be repoed to the ECB

And much more propaganda. Here is the truth. According to Greek Thema, in Thessaloniki, the second-largest city in Greece, so far in 2012, an unprecedented 1,250 companies have shut down. This means no jobs, no tax revenues, no money in circulation. A complete and total economic collapse.

So let us explain: while Greece and Europe may engage in endless check kiting Ponzi schemes: such as the most recent one, whereby Greece promises to pay Germany by issuing bills, bought by its banks, which in turn are repoed to the ECB via the ELA, with the cash used by the country to pay Germany and the ECB, even as Germany’s contingent liabilities get more massive by funding the ECB’s capital, the reality is that unless someone does some work, and creates real wealth, real money, instead of merely shuffling electronic cash from Point A to Point B, while the only thing increasing are German contingent liabilities, aka systemic debt, absolutely nothing will change.

μέσω The Truth Behind Juncker’s Lies: In The Second Largest Greek City, 1250 Companies Have Shuttered In 2012 | ZeroHedge.



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Spiegel: Investors Prepare For Euro Collapse | ZeroHedge

Posted by satyrikon στο 13 Αυγούστου, 2012

BERLIN, GERMANY - JUNE 27:  (From L to R) Effi...

BERLIN, GERMANY – JUNE 27: (From L to R) Effigies in the likeness of German Vice Chancellor and Economy Minister Philipp Roesler, German Chancellor Angela Merkel and German Social Democrats (SPD) Chairman Sigmar Gabriel stand on a truck near the Chancellery on June 27, 2012 in Berlin, Germany. The effigies were part of a publicity campaign by the Initiative Neue Sociale Markwirtschaft critical of German spending policy, especially regarding senior care, parent child care support and proposed Eurobonds. Germany’s upper house of parliament, the Bundestag, is scheduled to vote on Friday whether to ratify the European Stability Mechanism (ESM), the permanent bailout scheme for the euro zone, which many analysts see as crucial to reigning in the current Eurozone debt spiral. (Image credit: Getty Images via @daylife)

Euro ECB

Euro ECB (Photo credit: Wikipedia)

Two years in and they are only starting now? What took them so long. Also, absolutely nothing new here, but merely the latest attempt to shift public opinion and EUR viability perceptions ever so slightly by one of Germany’s most respect magazines. Those whose agenda it is to spook Germany with images of fire, brimstone, and 3-page mutual assured destruction termsheets if the Euro implodes, are now free to take the podium. One wonders: if it wasn’t for the inevitable collapse of the EUR…. the inevitable collapse of the EUR…. the inevitable collapse of the EUR…. the inevitable collapse of the EUR, and of course Paul Ryan, would there be absolutely no news today?

From Spiegel:

Investors Prepare for Euro Collapse

Banks, investors and companies are bracing themselves for the possibility that the euro will break up — and are thus increasing the likelihood that precisely this will happen.

There is increasing anxiety, particularly because politicians have not managed to solve the problems. Despite all their efforts, the situation in Greece appears hopeless. Spain is in trouble and, to make matters worse, Germany’s Constitutional Court will decide in September whether the European Stability Mechanism (ESM) is even compatible with the German constitution.

There’s a growing sense of resentment in both lending and borrowing countries — and in the nations that could soon join their ranks. German politicians such as Bavarian Finance Minister Markus Söder of the conservative Christian Social Union (CSU) are openly calling for Greece to be thrown out of the euro zone. Meanwhile the the leader of Germany’s opposition center-left Social Democrats (SPD), Sigmar Gabriel, is urging the euro countries to share liability for the debts.

On the financial markets, the political wrangling over the right way to resolve the crisis has accomplished primarily one thing: it has fueled fears of a collapse of the euro.

. . .

Banks are particularly worried. «Banks and companies are starting to finance their operations locally,» says Thomas Mayer who until recently was the chief economist at Deutsche Bank, which, along with other financial institutions, has been reducing its risks in crisis-ridden countries for months now. The flow of money across borders has dried up because the banks are afraid of suffering losses.

According to the ECB, cross-border lending among euro-zone banks is steadily declining, especially since the summer of 2011. In June, these interbank transactions reached their lowest level since the outbreak of the financial crisis in 2007.

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Posted by satyrikon στο 9 Αυγούστου, 2012

March 25 - Greece Independence Day

March 25 – Greece Independence Day (Photo credit: Aster-oid)

Wolf Richter   www.testosteronepit.com

A lot of politicians in Germany, but also in other countries, issue
zingers about a Greek exit from the Eurozone and the end of their
patience. But those with decision-making power play for time. They want
someone else to do the job. Suddenly Greece is out of money again.
It would default on everything, from bonds held by central banks to
internal obligations. On August 20. The day a €3.2 billion bond that had
landed on the balance sheet of the European Central Bank would mature.
Europe would be on vacation. It would be mayhem. And somebody would get

So who the heck had turned off the dang spigot? At first, it was the
Troika—the austerity and bailout gang from the ECB, the EU, and the IMF.
It was supposed to send Greece €31.2 billion in June. But during the
election chaos, Greek politicians threatened to abandon structural
reforms, reverse austerity measures already implemented, rehire laid-off

The Troika got cold feet. Instead of sending the payment, it promised
to send its inspectors. It would drag its feet and write reports. It
would take till September—knowing that Greece wouldn’t make it past
August 20. Then it let the firebrand politicians stew in their own

It’s easy to blame the Troika, and it can take the heat. History
searches for the person who is responsible. But the Troika doesn’t have
one. It was designed that way: a combo of multi-layered, undemocratic
structures. And the Troika inspectors, though despised in Greece, are
career technocrats, not decision makers.

So Chancellor Angela Merkel became a substitute. Greek tabloids
treated her like a Nazi heir, with Hitler mustache and all. But she’s
not the decision maker in the Troika, though she is a
contributor. And she—though still unwilling to water down the bailout
memorandum—consistently stated that Greece should remain in the
Eurozone. She doesn’t want to be blamed.

In early July, the inspectors returned to Athens to chat with the new
coalition government and check on progress in implementing the
agreed-upon structural reforms. Soon it seeped out that their report
would paint an “awful picture” [read…. Greece Flails About, Merkel Draws A Line, German Industry & Voters Back Her: It’s Almost Over For Greece].

In late July, the inspectors returned to Athens yet again and left on
Sunday. After another visit at the end of August, they’ll release their
final report in September. A big faceless document on which people of
different nationalities labored for months; a lot of politicians can
hide behind it. Even Merkel. And the Bundestag, which gets to have a say
each time the EFSF disburses bailout funds.

Alas, August 20 is the out-of-money date. September is irrelevant.
Because someone else turned off the spigot. Um, the ECB. Two weeks ago,
it stopped accepting Greek government bonds as collateral for its
repurchase operations, thus cutting Greek banks off their lifeline.
Greece asked for a bridge loan to get through the summer, which the ECB
rejected. Greece asked for a delay in repaying the €3.2 billion bond
maturing on August 20, which the ECB also rejected though the bond was
decomposing on its balance sheet. It would kick Greece into default. And
the ECB would be blamed.

But the ECB has a public face, President Mario Draghi. He didn’t want
history books pointing at him. So the ECB switched gears. It allowed
Greece to sell worthless treasury bills with maturities of three and six
months to its own bankrupt and bailed out banks. Under the Emergency
Liquidity Assistance (ELA), the banks would hand these T-bills to the
Bank of Greece (central bank) as collateral in exchange for real euros,
which the banks would then pass to the government. Thus, the Bank of
Greece would fund the Greek government.

Precisely what is prohibited under the treaties that govern the ECB
and the Eurosystem of central banks. But voila. Out-of-money Greece now
prints its own euros! The ECB approved it. The ever so vigilant
Bundesbank acquiesced. No one wanted to get blamed for Greece’s default.

If Greece defaults in September, these T-bills in the hands of the
Bank of Greece will remain in the Eurosystem, and all remaining Eurozone
countries will get to eat the loss. €3.5 billion or more may be printed
in this manner. The cost of keeping Greece in the Eurozone a few more
weeks. And on Tuesday, Greece “sold” the first batch, €812.5 million of
6-month T-bills with a yield of 4.68%. Hallelujah.

“We don’t have any time to lose,” said Eurogroup President
Jean-Claude Juncker. The euro must be saved “by all available means.”
And clearly, his strategy is being implemented by hook or crook. Then he
gave a stunning interview. At first, he was just jabbering about
Greece, whose exit wouldn’t happen “before the end of autumn.” But
suddenly the floodgates opened, and deeply chilling existential
pessimism not only about the euro but about the future of the continent
poured out. Read….. Top Euro Honcho Jean-Claude Juncker: “Europeans are dwarfs”

μέσω Greece Prints Euros To Stay Afloat, The ECB Approves, The Bundesbank Nods: No One Wants To Get Blamed For Kicking Greece Out | ZeroHedge.

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Posted by satyrikon στο 27 Ιουλίου, 2012

montibond-eurobond (Photo credit: francesco elisei LI)

We discussed the use of Game Theory as a useful tool for analyzing Europe’s predicament in February and noted that it was far from optimal for any (peripheral or core) sovereign to pre-emptively ‘agree’ to austerity or Eurobonds respectively (even though that would make both better off).

This Prisoner’s Dilemma left the ugly Nash-Equilibrium game swinging
from a catastrophic break-up to a long, painful (and volatile)
continuation of the crisis. Recent work by BofAML’s FX team takes this a
step further and in assigning incentives and from a ‘do-not-cooperate’ Nash-equilibrium between Greece and Germany
(no Greek austerity and no Eurobonds) they extend the single-period
game across the entire group of European nations – with an ugly outcome.
Analyzing the costs and benefits of a voluntary exit from the euro-area
for the core and periphery countries, the admittedly over-simplified
results are worrying. Italy and Ireland (not Greece) are expected to exit first
(with Italy having a decent chance of an orderly exit) and while
Germany is the most likely to achieve an orderly exit, it has the lowest
incentive to exit the euro-zone – since growth, borrowing costs, and a
weakening balance sheet would cause more pain. Ultimately, they play the
game out and find while Germany could ‘bribe’ Italy to stay, they will not accept and Italy will optimally exit first – suggesting a very dark future ahead for the Eurozone and with EUR tail-risk so cheap, it seems an optimal trade – as only a weaker EUR can save the Euro.

The cost of insuring against EUR tail risk, which was already in retreat even before the EU Summit, has fallen further since, is at 2 year lows.

Should investors view these developments as a sign that the worst of
the crisis is now behind us, or should they see them as providing an opportunity to pick up cheap EUR tail risk insurance? We would argue for the latter.

To some extent, the drop in tail risk premium is a reflection of the poor performance of tail risk hedges in the past two years.
It is also possible that investors have reduced their exposures to
eurozone assets so much that their need for insurance against EUR
downside risk has simply diminished. We are skeptical about the wisdom
of this consensus. Recent political developments in the eurozone have
given us good reasons to think that the EUR breakup risk is not falling
but rising

We employ game theory and a cost-benefit analysis to explain
why in our view the market may be underpricing the voluntary exit of one
or more countries

Uncooperative outcome dominates

One of the most provocative observations of modern game theory is
that the most likely outcome is not always Pareto optimal. Put
differently, the dominant strategy for game players is not always to
cooperate, even when everyone is better off if they do.

The most famous illustration of this is the Prisoner’s Dilemma.
In this game, two men are arrested. The police offer both men a similar
deal. If one testifies against the other, and the other stays silent,
the betrayer goes free while the one who remains silent gets a one-year
sentence. If both remain silent, they will each get a one-month
sentence. If both decide to testify against the other, each will get a
three-month sentence. Even though both will be better off if they stay
silent, the “Nash equilibrium” is that both men will testify against each other. This is because from the perspective of each prisoner, regardless of what the other person does, he can be better off by betraying...

The prisoner’s dilemma problem can help us better understand the
dynamics of the eurozone crisis, in our view. Below (Table 1), we
present a highly abstract, stylized form of the game that Germany and Greece have been playing for the last two years.
Greece is given two options: austerity or no austerity. Germany also
has two options: Eurobonds or no Eurobonds. For each of the four
possible outcomes, we assign a certain payoff for each country that is
meant to be illustrative, but captures the essence of the different
political/economic considerations of the two countries.


As the payoffs in Table 1 imply, both countries would fare
better if they choose to cooperate (Greece agreeing to austerity while
Germany agreeing to Eurobonds) than if they do not cooperate (no
austerity and no Eurobonds)
. However, Greece would be even
better off if it chooses no austerity but Germany agrees to Eurobonds.
Similarly, the best outcome for Germany is that it opts for no Eurobonds
but Greece chooses austerity. We assume that neither country knows what
the other country is going to do before it has to decide on a course of

It is easy to see that the Nash equilibrium is no austerity and no Eurobonds (uncooperative equilibrium).
This is because from the point of view of Greece, regardless of what
Germany chooses, it will be better off if it opts for no austerity.
Similarly, from the point of view of Germany, regardless of what Greece
does, it will be better off if it chooses no Eurobonds. As with the
Prisoner’s Dilemma, no austerity and no Eurobonds can be shown to be the
Nash equilibrium (using backward induction) even if we were to allow
for the game to be played repeatedly.

In our view, the fact that the dominant strategy for both
countries is not to cooperate is why more than two years into the crisis
Greece is not closer to implementing a credible reform program and
Germany is not any closer to agreeing to Eurobonds

The obstacle is that neither side is able to make a credible pre-commitment to doing the “right thing,” to the extent that there is no enforcement mechanism to ensure that each country lives up to its promises.

The lack of an enforcement mechanism is why the
Germans are demanding that fiscal union will have to precede Eurobonds.
Fiscal union, by taking fiscal policy out of the hands of the national
governments, solves the pre-commitment problem. However, very few
eurozone countries are willing to entertain the notion of giving up
their independent fiscal policy, especially given that, as members of
the monetary union, they do not have recourse to an independent monetary

The economics of voluntary exit

If the eurozone is no closer to a fiscal union and Eurobonds, we need to consider other potential outcomes of the crisis.
Much has been said about involuntary exit from the eurozone , but what
about the chances of a voluntary exit, meaning a country (or multiple
countries) opting to call it quits on its (their) own accord?

A decision to stay or exit should be dictated by a cost and benefit
analysis. What are some of the considerations that should go into such
an analysis? In our view, there are four key questions that will have to be answered before any such decision can be made:

  • What are the chances for an orderly exit?
  • What is the impact on growth following an exit?
  • What is the impact on borrowing costs following an exit?
  • What is the impact on the country’s balance sheet following an exit?

These are all detailed in the paper below…

Final scores

To reach a final tally of the relative incentives that different
countries are facing to voluntarily exit the euro, we add up the
rankings across the above four criteria. For simplicity, we attach the
same weight to each of our four sets of considerations. The results are
in Table 6.
Two very interesting results emerge:

  • Even though much of the market focus on exit risk has been on Greece, Italy and Ireland have the highest relative incentive to voluntarily exit the euro,
    by our analysis. In the case of Italy, it faces a relatively higher
    chance of achieving an orderly exit and it stands to benefit
    significantly from competitive gains, growth gains and even balance
    sheet gains. No wonder former Prime Minister Berlusconi has been
    recently quoted as saying that leaving the euro is not a “blasphemy.”
    Among the peripheral countries, Spain appears to have the lowest
    relative incentive to leave.
  • While Germany is the country most likely to achieve an
    orderly exit from the Euro, it also has the lowest incentive of any
    country to leave
    , in our view. It would suffer from lower
    growth, possibly higher borrowing costs, and negative balance sheet
    effect. Austria, Finland and Belgium don’t have strong incentive to
    leave, either.


Can Germany “bribe” Italy to stay?

What we have established in the previous section is that the incentive to leave the euro varies from country to country. Among the major economies, we believe Italy stands the most to gain from exiting, whereas Germany has the most to lose from exiting.
We would argue for the same reason that Germany would also lose from
the exit of other countries. (Say Italy leaves the euro but Germany
stays. German holdings of Italian liabilities would fall in value,
German exports to Italy would suffer and German companies would now face
more competitive Italian manufacturing firms.) Does this mean
that Germany would be willing to pay a price for Italy (as it has for
Greece, Ireland, and Portugal) to stay in the euro?

Yes, but we would argue that this strategy is not a stable Nash equilibrium. To illustrate this, think of the following game…

What is the Nash equilibrium of this game?

We can use backward induction to solve the game. In period 3, Italy
is clearly better off exiting than staying (after Germany has already
paid the “bribe”), as the payoff for Italy in outcome 4 is inferior to
the payoff in outcome 3. If we can see this, so can Germany in period 2.
Whether it pays or not, Italy will exit in the following period.
Therefore, Germany is better off by not paying. Now in period 1, Italy
can make the informed calculation that Germany will not pay. This means
that Italy has an incentive to exit in period 1. The bottom line
is that the only stable equilibrium of this game is that Italy exits
the euro and, more importantly, it exits already in period 1.

This game and the
analysis in the previous section would suggest that we should not expect
what has already happened between Germany and Greece during the
eurozone crisis to play out the same way for Italy if the crisis
Italy has more incentives than Greece to
voluntarily exit the eurozone, in our view, while it will be more
expensive for Germany to keep Italy in the eurozone. This means that
Italy could be even more reluctant than Greece to accept tough
conditionalities for staying. If our inference turns out to be correct, this could have serious negative implications for markets in the months ahead.

Only a weak EUR can save the EUR

Despite the depreciation of the euro in the last three years, its
trade weighted index is in the middle of its range of the last 30 years,
and still nearly 10% stronger than where it was in 2000. Against the
USD, it is still some 45% stronger than its low in November 2000.

Our analysis makes it very clear that a much weaker EUR may help save
the EUR in the end. For one thing, a much weaker EUR would
significantly reduce the incentive of any country to exit. For example, a
20% depreciation of the EUR against the USD would reduce by nearly half
the loss of competitiveness of Italy to the US since the inception of
the EUR (Chart 6).

Our analysis above
suggests that the eurozone is now facing two paths – break up or accept a
much weaker EUR. To the extent that the first path is likely to be also
associated with a weaker EUR (at least in the transition), it seems
that further depreciation of the EUR is inevitable.

Source: BofAML


Full document here – pdf

μέσω For Italy, It Is Game Theory Over | ZeroHedge.

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One million Euro note obverse

Posted by satyrikon στο 11 Ιουλίου, 2012

One million Euro note obverse

Picture: One million Euro note obverse. Commemorative issue.

One million Euro note reverse

Picture: One million Euro note reverse. Commemorative issue.

One million Euro note obverse detail

Picture: One million Euro note obverse detail

One million Euro note reverse detail

Picture: One million Euro note reverse detail

These high denomination Euro currency notes are said to have been introduced by the Rothschild EuroZone banking cartel to enable suitcase money-laundering, black market liquidity, dark pool financing and élite drug-running operations to keep the major EuroZone banks afloat after the global credit crunch of September 2008.

The particular images above are commemorative versions of the actual notes in circulation. The words «Not legal tender» show on the obverse. And the words «This certificate is backed and secured only by confidence in the European dream» show on the reverse.

At the end of June / beginning of July 2012, the European Central Bank tried to cash a €150 billion tranche of this non-commemorative «legal tender» fiat currency for bailout purposes related to Spain. It failed.

Treasury currency bunkers all over Asia are stuffed full of pallets of shrink-wrapped packages of these high denomination Euro notes. The realisation is dawning in the East, as well as in the West, that these Euros are worthless. They are backed by nothing that is due-diligence tangible in the real-world European economy. They were tendered with fraudulent intent by a rogue faction within the EuroZone banking establishment to sucker Asian creditors.

More background here (10.07.12).

μέσω Alcuin and Flutterby.

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Will Tsipras Blow Up Europe? | ZeroHedge

Posted by satyrikon στο 17 Ιουνίου, 2012

Submitted by John Aziz of Azizonomics

Will Tsipras Blow Up Europe?

The world’s eyes are on the Greek election, and whether or not Greeks will elect New Democracy’s Samaras (widely-assumed to be pro-bailout, pro-status quo), or SYRIZA’s Tsipras (widely-assumed to be anti-bailout, anti-status quo).

The Eurocrats have very sternly warned Greece against voting against austerity. Merkel said:

It is extremely important for Greeks to elect lawmakers who would respect the terms of the bailout.

In recent days, opinion has swung back toward the status quo, with Intrade rating New Democracy’s chances of winning the largest number of seats at 65%, and SYRIZA at just 33%.

While I cannot rule out New Democracy winning, I think that I’d flip those odds. Greece widely reviles German-imposed austerity, but fears the consequences of leaving the Euro — 85% of Greeks want to stay in. A vote for New Democracy would reflect fear of Drachmatization. Meanwhile, a vote for SYRIZA would seem to reflect the idea that through brinkmanship and the threat of Euro collapse, Greece can negotiate their way to a much more favourable bailout position.

So why do I think SYRIZA are the likelier winner? The election is on a knife-edge, so I think the difference might be football.

Greece — against all odds — managed to bumble through the Euro 2012 group stage, beating Russia 1-0 and likely setting up a poetic quarter final against Germany. I think that that victory against Russia will fire enough Greeks to try their luck and assert themselves against austerity.

For Greece, this is an important election. Inside the euro, their heavily state-dependent economy will continue to suffer scathing austerity. Outside the euro, they can freely debase, and — as Nigel Farage has noted — enjoy the benefits of a cheaper currency like renewed tourism and more competitive industry. If Greeks want growth sooner rather than much later, they should choose life outside the euro (and by voting for Tsipras and trying tough negotiating tactics, they will be asking to be thrown out).

But for the rest of the world, and the rest of Europe, this is all meaningless. As Ron Paul has noted, when the banking institutions need the money, central banks — whether it’s the ECB, or the Fed, or the BoE, or a new global central superbank — will print and print and print. Whether Greece is in or out, when the time comes to save the financial system the central bankers will print. That is the nature of fiat money, as much as the chickenhawks at the ECB might pretend to have hard-money credentials.

Tsipras, though — as a young hard-leftist — would be a good scapegoat for throwing Greece out of the Eurozone (something that — in truth — the core seems to want).

The real consequence throughout Europe as austerity continues to bite into state-dependent, high-unemployment economies will be more political fragmentation and support for political extremes, as the increasingly outlandish and unpopular political and financial solutions pushed by Eurocrats — specifically more and deeper integration, and banker bailouts — continue to help special interests and ignore the wider populations.


Guest Post: Will Tsipras Blow Up Europe? | ZeroHedge.

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Citi’s Buiter: Greece will be forced out of the euro regardless of who wins the Sunday elections | ZeroHedge

Posted by satyrikon στο 16 Ιουνίου, 2012

New Democracy. Syriza. Doesn’t matter. According to Citi’s senior political analyst Tina Fordham, chief economist Willem Buiter, and global economist Ebrahim Rahbari, «any new Greek government, regardless of its composition, will struggle with implementation challenges related to the imposition of further austerity measures demanded by the Troika in exchange for further assistance,» and as a result, they «consider it likely that a new troika deal would ultimately fall apart and lead to Grexit.»

Citi notes that there is growing sense among European leaders that «promotion of economic growth can no longer be subordinated completely, even in fiscally unsustainable euro area member states, to the requirements of fiscal austerity,» but no one has any idea what that means.

This seems to be the current thinking, according to Citi:


The only operational, practical consensus on growth is that austerity policies should not be unnecessarily pro-cyclical. If a deficit target is overshot because of bad luck (economic activity and government revenues are weaker than expected despite full adherence to all conditionality) rather than bad faith (there has been a failure to implement agreed measures or policies), the shortfall will not have to be made up immediately – in the original time frame. More time will be given to achieve the original objectives without the need for deeper and faster austerity than originally envisaged. Bad faith (non-compliance) will, for incentive-compatibility or moral hazard reasons, continue to be punished with demand for enhanced and faster austerity.

Warning. Also, reminder: «And of course, reduced austerity does not mean no austerity, let alone the reversal of austerity…fiscal policy will remain contractionary overall – just less contractionary.»

Citi’s doesn’t think Greece is able to handle any more austerity, and its rapidly deteriorating fiscal condition is hastening a day of reckoning. On how and when Greek membership in the euro ends:


A possible trigger would be the determination by the IMF following the first or second assessment, that it cannot disburse its next installment due under the current programme because the Greek programme is not fully funded for 12 months after the assessment. In that case some of the smaller core euro area member states that have made their contributions to the Greek EFSF programme conditional on the IMF disbursing would probably drop out too. The Greek sovereign would then be forced to default. Then the ECB would stop funding the Greek banks through the Eurosystem and through the Greek ELA. With neither the Greek sovereign nor the Greek banks having access to the lender of last resort, we believe Greece would probably leave the eurozone, as some liquidity through the issuance of New Drachma is better than no liquidity.

The Citi team says that «more generally, we are concerned at the prospect of formerly wealthy countries becoming ‘new, critical fragile states.'» This is where things get really messy. They don’t think the ECB, EU, et al. will even let Greece go financially when things get really bad as described above. More like this:


In order to prevent such a scenario, we believe that even if “Grexit” were to occur, Greece would stay in the European Union and receive some form of Troika or other external assistance, most likely through the Balance of Payments facility run by the European Commission and the IMF for non-euro area EU member states. Since 2008, Latvia, Hungary and Romania have been under such programmes. Support from the EIB, and from Structural and Cohesion funds would also be likely to be forthcoming. We would also expect the ECB to continue to support the Bank of Greece after a Grexit. After all, the Greek central bank would exit the Eurosystem with considerable euro-denominated debt to the Eurosystem (this could be its Target2 net debit balance – something around €100bn, or its share of the total losses suffered by the Eurosystem as a result of Greek exit, however this would be established, net of the capital it has paid into the ECB, which would, in principle, be refundable on exit).

And the darkness is spreading through Europe. The «seeds of dystopia» are being planted:


Throughout the euro area periphery, and indeed beyond it in the ‘soft core’ of the euro area, the potential for the so-called “seeds of dystopia” referred to in the WEF Global Risks report remains a key long-term risk to European political stability and competitiveness, as youth unemployment rises and the social contract between states and citizens erodes. The burdens of this adjustment fall disproportionately on young people, as evidenced in youth unemployment exceeding 50% in Greece and Spain and unacceptably high everywhere in the periphery and the euro area at large. We continue to take the view that political change in Europe will continue to take place in the ballot box, but note the rising risk of frequent changes in government, street violence and other upheaval in a more fraught environment undermining both political and social consensus when it is most needed. However, unlike in the Middle East and North Africa, European countries do not have an age pyramid, but rather an inverted one, making it less likely that inter-generational conflict will propel rapid change in political outcomes towards more growth and employment-friendly policies.


Citi’s Buiter: Greece will be forced out of the euro regardless of who wins the Sunday elections | ZeroHedge.

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Here Comes The Mother Of All Rumors: G-20 Sources Say Central Banks Preparing For Coordinated Action | ZeroHedge

Posted by satyrikon στο 14 Ιουνίου, 2012

Update 1: and here comes the revision:


So… if Syriza wins, and Greece leave the Eurozone, there will be a response? Unpossible.

Update 2:



* * *

And the mother of all rumors strikes:


One small problem. Central banks NEVER indicate in advance what they will do. This is merely a desperation attempt to ramp markets into the close, and sucker even more retail into stocks ahead of Sunday. Now we wait for the denial because otherwise some pathetic G-20 leak just made central banks everywhere irrelevant and obsolete: remember what happened to Jamie Dimon when in March he front-ran the Fed…


Here Comes The Mother Of All Rumors: G-20 Sources Say Central Banks Preparing For Coordinated Action | ZeroHedge.

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