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Posts Tagged ‘Germany’

Albanian extremist groups cause reaction in Greece | Serbianna Analysis

Posted by satyrikon στο Σεπτεμβρίου 2, 2012

The AK-47 was first adopted in 1949 by the Sov...

The AK-47 was first adopted in 1949 by the Soviet Army. It fires the 7.62x39mm M43 round. (Photo credit: Wikipedia)

Sep 2, 2012

Ioannis Michaletos Balkanalysis Editors and Contributors Ioannis Michaletos

By Ioannnis Michaletos

Since 2010 and the beginning of the Greek debt crisis which has resulted in an outright economic depression in the country, the Greek security services have investigated around the potential of extremist groups, in this particular case, Albanian ones; taking advantage of the situation for either criminal or nationalistic purposes. The research has provided data of increased importation of armaments into the country, as well as, the formation of close-knit potential extremist groups within the Greek territory that are for the moment in communication with other cells in Albania and elsewhere.
In late August 2012, a video that briefly aired on YouTube showed a band of around 5 Albanians in a mountainous location near Kukes in Albania, firing against a Greek flag with AK-47 (Chinese type) and issuing threats for mass assassinations of Greek citizens, as well as arsons. Incidentally, there were several arson cases in Greek forests during the summer period, and also in FYROM and Serbia and a number of local pundits blamed -amongst other- Albanian extremist groups as responsible for such illicit actions.

The video where the Albanian group was firing rounds with Kalashnikov was clad in paramilitary summer uniforms, with the insignia of the “SS”, a reminder of the 21st Waffen – Gebirgs – Division der SS Skanderbeg that was established in April 1944. Forensic security analysts in Greece have assured that this video was made for the purposes of “psychological warfare” and should be related with the inner workings of Neo-Nazi Albanian tendencies of extremist groups that are scattered between Albania, Kosovo and FYROM.

In Greece, a group of Albanians residing in the Kalavryta region of North-Western Peloponnese and in the Menidi outskirt of Athens reposted the video through their Facebook accounts. Subsequent investigation by the Greek state security revealed that the group was in the process of evolving into an extremist one as well, by mimicking the Neo Nazi tendencies of those in the original video. Scores of photo material was confiscated and one person was deported for being without legal documentation in the country. What’s most important though is that a wide-scale mobilization in the security forces was enacted in order to disband other groups before they became a threat in terms of social stability.

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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 Αύγουστος 22, 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 Αύγουστος 13, 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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Draghi – We Will Continue to Fight Until Everyone is Dead | ZeroHedge

Posted by satyrikon στο Ιουλίου 28, 2012


A week ago I cut a EURUSD short position that was well into the money. (Link) I was concerned that “something” might happen that could make a mess. I listed a number of concerns that might have caused a flip-flop, but Mario Draghi talking, was not on my list. Of course, that is precisely what happened. I’ve read what Mario said a number of times, I think there is no substance to his words.

«The ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough»

I’m reminded of an article I wrote more than two years ago titled, Sarkozy Will Get “Stuffed” (link). The occasion was a stupid remark made by then French President Nicholas Sarkozy regarding some new measures that would, once and for all, end the run on the bond markets of Europe:

“We will confront speculators mercilessly. They will know once and for all what lies in store for them.”

This didn’t work out so well for poor old Sarko. The speculators ended up crushing him, and he lost his job. Draghi will suffer the same result.

Mario must be saying to himself,

“If only I can just get the Spanish Ten-year back to 6%, all will be well again”.

I think he’s nuts. Spain’s problem is its competitiveness. The domestic economy will never recover without a currency devaluation (and debt restructuring). If Mario has his way, Spain will suffer from a decade of recessions with unemployment over 20%. How could he possibly call that outcome a success?

On Friday we got some clarification of what exactly Draghi has up his sleeve when he promised, “It will be enough”. From Bloomberg:


Bond buys? Rate cuts? New LTRO? That’s Draghi’s bazooka? These things have been tried in the past and have failed. These steps might buy the EU a few weeks (or hours?) of market relief, but they have no chance of turning the EU around.

There is still a market-based system that exists in the world of central bank manipulation. In the end, market forces always prevail. The outcome for the Euro will be no different. Draghi thinks he has the power to thwart the markets. He does not have that power. Draghi is either bluffing or lying, that or he is a blind as a bat.



FX Note:

An interesting outcome of the Draghi comments is that the Euro ended the week north of 1.2300 (up 1.5%). Whatever chance the EU may have, it is dependent on a weaker Euro exchange rate. In my book, Mario’s words have set the EU back, not forward.

A week ago I swore (Link) I would be out of FX until we got into late August. The silliness of the last few trading days changed my mind. I bet all of my recent FX gains on a short EURUSD option strategy. I missed a big blip that got the Euro above 1.2400, and ended up with a fill a bit over 1.2300.

My thinking is that someone in Germany is going to say:

“Sorry Mario, you can’t have our cake and eat it too.”

As if on cue, this article appeared in Germany’s Handelsblatt today:


μέσω Draghi – We Will Continue to Fight Until Everyone is Dead | ZeroHedge.

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Replacing government 101: Syrian rebels learn democracy in Germany — RT

Posted by satyrikon στο Ιουλίου 28, 2012

Ready for democracy? Syrian rebels. (AFP photo / Bulent Kilic)

Ready for democracy? Syrian rebels. (AFP photo / Bulent Kilic)

A group of top Syrian opposition figures took courses in governing a country in Berlin. The training, partially sponsored by the US State Department, is meant to come in handy after the Bashar al-Assad regime falls.­The group consisted of over 40 individuals, including Syrian defector generals and members of the Muslim Brotherhood. They learned economics, law, security practices and other areas of governance, which would be needed in the transition period.

“We created a framework that basically made it possible for Syrian participants to focus on the kinds of challenges that would emerge in the course of a transition in each of those issue areas,” Senior adviser at the US Institute of Peace, Steven Heydemann told ABC explaining the program.

Part of the training involved a visit to the German authority responsible for the files of Stasi, according to a Haareеtz report. The Soviet-era secret police was dismantled and several of its officials prosecuted after the reunification of the country. The experience may be useful for the Syrian rebels, should they be required to decide how to deal with the numerous secret service organizations currently existing in Syria.

Neither the American nor the German government was directly involved in the secret program called “The Day Thereafter: support for a democratic transition in Syria”. Germany, however, was being kept informed and provided logistical support, while the Americans partially funded the training via the State Department.

Other backers of the program are the US Institute of Peace, the German Institute for International and Security Affairs, as well as the Swiss Foreign Ministry and Dutch and Norwegian non-governmental organizations.

Organizers stressed that their effort is not aimed at overthrowing the Assad government, but rather is a contingency for a scenario in which it happens.

Earlier a number of American and European government officials said President Bashar al-Assad has no future in Syria and must step down.

μέσω Replacing government 101: Syrian rebels learn democracy in Germany — RT.

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Posted by satyrikon στο Ιουλίου 27, 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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Markel Majority Fades As Internal Revolt May Signal ‘Referendum’ | ZeroHedge

Posted by satyrikon στο Ιουλίου 15, 2012

Merkel-citronpresser (Photo credit: hoppetossen)

Despite assurances that «we always get the majority we need» by Frau Merkel, the FT reports that the Bundestag’s vote this Thursday (expected to come down in favor of the bailout) will not gain the so-called ‘Chancellor’s majority’. While she retains an overall majority of 19 (from the ranks of her own Christian Democratic Union, its Bavarian sister party, the Christian Social Union, and the liberal Free Democratic party in her coalition), the recent ESM vote saw 26 of her supporters rebel (voting ‘Nein’ or abstaining) – though ended up being passed thanks to support from SPD and The Greens. While a ‘Chancellor’s majority’ is not required to approve the EUR100 billion Spanish bailout, «Anything other than a chancellor’s majority is a defeat, and a sign of the erosion of the power of the chancellor,» which leads us down the path we have noted previously of the inevitability of a referendum-like vote next year (which may just be the leave-the-Euro-coz-that’s-what-the-people-want ‘out’ Germany has been looking for). Certainly, the vote is no panacea (politically or economically) as Jens Weidmann notes that the bailout would be more effective ‘conditions’ were applied across Spain, adding that «It would have a positive effect on the bond market if investors saw that the conditions… went beyond the banking sector».

μέσω Markel Majority Fades As Internal Revolt May Signal ‘Referendum’ | ZeroHedge.

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Will Tsipras Blow Up Europe? | ZeroHedge

Posted by satyrikon στο Ιουνίου 17, 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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Greece — What Matters And What Does Not | ZeroHedge

Posted by satyrikon στο Ιουνίου 16, 2012

From Mark Grant, author of Out of the Box

Greece—What matters and What does Not

The bond market is heading East while the equity markets heads West because they have two totally different focuses at present. I have seen this often enough in my almost four decades on Wall Street and I am always amused when this differentiation takes place. It is really just a reaction to what either market is staring at that causes this phenomenon to take place and, eventually, one market proves to be correct while the other gallops along to catch up. The stock markets seem buoyed by the possibility of the more EU friendly government to win this Sunday’s election and they are taking comfort in the hope for support of the world’s major central banks and the possibility of more easing; a new or redefined QE3. The fixed income people are concentrating on the possibility of a systemic financial shock, the recession in Europe that will affect the United States and the plight of the European banks. In my experience the bond markets generally get it right and get there first and I expect nothing different this time.

Let us calmly consider the facts as we can ferret them out and change our focus to reality and not what we are spoon fed by the Europeans. Greece has a total debt of about $1.3 trillion. This is composed of their sovereign debt, which Europe counts, and then their $90 billion in derivatives, their Federally guaranteed regional debt, their sovereign guaranteed bank and corporate debt, their obligations to the EU and finally their loans at the other central banks. It is just simple addition and not my opinion; I am just counting all of the liabilities while Europe does not. Then if you take their GDP and divide it by their total debt you get a debt to GDP ratio of around 453%. You may claim, and somewhat correctly, there is value in some of their assets which would be an off-set in case of actual default but the problem here is that they are a sovereign nation so how one would lay claim to any Greeks assets would be quite problematical.

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Greek Stock Market Soars On Speculation Tsipras Bluffing | ZeroHedge

Posted by satyrikon στο Ιουνίου 14, 2012

Something amusing happened in today’s global capital markets: while European bond markets, especially in the periphery, are sliding following the Spanish downgrade and the Italian bond auction, one market has soared: that of Greece, which is up nearly double digits (not all that meaningful when you are at 20+ year lows), and whose bankrupt and deposit-free banks are up 20%. Which in turn is pushing US futures higher despit the Spanish record yield. What has caused this spike? Nothing but more political rhetoric and jawboning. Specifically, overnight Kathimerini reported that «Stefanos Manos, the leader of the small liberal party Drasi, claims that leftist SYRIZA will not scrap Greece’s bailout if it comes to power because it is the only way it can guarantee salaries for its supporters in the civil service.» Well, yes. Tspiras never said he will scrap the bailout. He merely said that he will end the memorandum in its current format. The decision then, and as always, would lie with Germany and the ECB, what to do about this latest Nash Equilibrium defection. In other words, the ultimate decision-maker was never Tsipras, and in fact even ND’s Samaras has repeatedly said he would renegotiation the terms of the Greek bailout. But in this centrally-planned, robotically-traded market, confusion over cause and effect is to be widely expected.


“SYRIZA has taken over, mainly from PASOK, the patronage of the status quo created by labor groups,” he told party supporters during a rally on Wednesday night.


On Thursday, Manos repeated his position in an interview with Skai TV. «SYRIZA’s customers are the civil servants, public enterprise employees and academics. [Alexis] Tsipras has to ensure that he can pay their wages. I wouldn’t worry at all [about the bailout being rejected].»


Manos said that the real issue at these elections was not whether parties favour the memorandum or not. “The issue is restoring the balance between the rights and responsibilities of the privileged in the public sector and those without privileges in the productive sectors of the economy,” he said.


Drasi is cooperating with pro-business Dimiourgia Xana (Recreate Greece) and the Liberal Alliance for the June 17 elections.

So propaganda aside, what did Tsipras really say? Well, fast forward 2 hours in the same Kathimerini which reports


SYRIZA leader Alexis Tsipras says that if his party comes first in Sunday’s elections, it will signify the end of the EU-IMF memorandum but the leftist added that he is prepared to negotiate a new deal with Greece’s lenders.


In an interview aired on Antenna TV on Thursday morning, Tsipras said that voters, not SYRIZA would decide if the terms of Greece’s bailout should be cancelled. “The memorandum will be repudiated by the people’s vote, not us,” he said.


Tsipras said that he wants the policy of internal devaluation to stop but that he is prepared to discuss all these issues with Greece’s eurozone counterparts.

In other words, as explained over the past 2 months, the Greek politicians will likely send a bid for memorandum renegotiation in either case. What happens then is out of their hands. The bigger question is whether Germans will have the stomach for Greek bailout #3. If one judges by the comments after yesterday’s Die Ziet article, and by the emergence of the #StoppESM twitter hashmark, futures have much more to be worried about than what some C-grade politician in Greece has to say.


Greek Stock Market Soars On Speculation Tsipras Bluffing | ZeroHedge.

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