GREECE IMMOLATION.
GREECE IMMOLATION.
Greece has a financial problem, so goes the current verbiage that is chewed over by the economic pundits of the financial press and played with by European politicians.
NO ‘it’ does not have a problem, the problem is one that was created for it by others to which ‘it’ fell for to achieve an expansive European vision. The problem now is looking for ownership of the problem and the ownership rest with European governments and financial markets to solve. Whichever way the problem is solved it will eventually fall onto tax payers, higher prices and falling income streams of European society but solve it they must.
In viewing the machinations of the ECB, EMF, IMF and governments , they have not woken up to the fact that we are at the beginning of is a fight against a war. It is an economic one first that will be costly to resolve but far less costly or destructive than what is it to follow if it not headed off!
So far, European governments are trying to stave off a default with Greece to stop the contagion from spreading to the other Euro countries. Nevertheless, it is not just the Euro that will be under threat, the global economy will again be thrust to the brink of failure, yet so far the problem is still being seen as a local European one and is being reluctantly restrained by the indecisive governmental bale-out loans. It is preposterous that this situation is allowed to be seen this way. The laxity of the financial regulation that allowed financial markets to create the initial CC is being given a guaranteed ride of sovereign security; ‘they’ are not being made to feel the pain. It would be preferable to make a financial hit across all sectors by making them take a “haircut” on their lending or for the players ECB / IMF etc absorb the losses. The situation is far too dangerous to allow a break down of economic trust and rampant austerity to take hold.
The superficial analysis of the Greece problem and the fall-out of the weak attempts to delay what may be inevitably a bad process for Greece, is contained in the elements that make up the financial crisis of Greece. The Bank of International Settlements (BIS) indicated that, Italian banks held dollars E1.5bn of Greek debt, France E10.4bn, DGR E15.9bn of sovereign bonds and the UK E2.34bn. European banks have E36.1bn, the ECB E32.6bn in Greek bonds and there are lofty exposures in other EC and non-EC banks. This exclude credit default swaps created as an insurance against a Greek default that increasingly may be difficult for those ‘banks’ that hold the CDS to pay up on the insurance bet, if or when it is called. This builds up to a substantial debt for Greece to deal with and by many measures makes it impossible for it to repay. Austerity to impoverishment is not the answer.
Just now the EU and other players are trying to hold the game together and offering up funds to bale out the current tragedy. Many take the view that this problem is one for the Euro countries to sort out (excluding the UK) and not external players. The lead to generate a bale-out is taken by Germany and France, being the main funders, a position that is causing Germany some irritating concern as the biggest donator. Much is made of the rising angst of the financial moral dilemma. Forgive or punish Greece’s financial exuberance, what happens next and to whom.
That the EU is calling for deep austerity in Greece as a condition of EU bale-out is taken as little more than not adding to the problem of European banks (France, Germany) that have without due diligence lent to Greece. The bale out funds are used to pay off interest accruing on loans and meet revenue cost. The last thing the euroland wants is a dismantling of the euro currency and the inevitability of fallowing avalanche defaults, if Greece is forced out.
By most account Greece has little chance to pay back it creditors with debt standing at 150% (of GDP @ E211bn) and no real means of generating sufficient resources to rely on (other than selling off the country’s assets and ‘silverware’)
The crises is not just or only a Greece crises, it is one that is to affect all Europe that has had a stake in the catastrophic cause of the crises. Ever since the creation of the EU it has consistently ignored the prime issue for sovereignty & fiscal connectivity in favor of pushing on with the ‘project’, the unification of the whole of Europe without instigating such connectivity. The inclusion of Greece into the EU in 2000 was masked by the efforts to deceive any scrutiny of the rational for expansion. At the time it soon became apparent the EU banks and financial advisers had colluded in creating a over generous assessment of Greece economic standing, underestimating its budget deficit debt ratio to GDP, ignoring probity and cultural fiscal impropriety to allow Greece to join the EU game.
Now the game is up and the exuberance of the Greece spending time is over. The gamble that growth would continue for the fore seeable future was based on unreliable data and chosen financial ignorance. It was a belief that many countries held to and is exposing them now to the weakness of their own positions.
The problem of Greece is a problem that will continue to infect countries and financial markets. It is symptomatic of an underlying problem that has been allowed to grow in other countries and they equally have to start addressing their own indebtedness. For Greece none of the options seem pleasant:- default, leave the Euro, ring fence the debt to be pared back over time underwritten by the ECB with a right down, the “haircut option”. Or keep paying up to an orderly wind up or restructure the euro to a core 1st tier euro – the prime countries that meet the debt to GDP ratio and a 2nd tier with a lower level tied to the 1st tier.
Best case is that the EU will pick up the tab and play for time to allow the debt to wither down even if it means a restructure of the debt by a right down to creditors. Worse case, as is the situation now, imposing austerity has no effect, Greece cannot trade out, the debt just grows and social disorder become more violent and disconnected from the fiscal issues. This may be the unappealing prompt to a forced realignment of the ‘Greece’ Euro, disconnecting it from the hard Euro but supported by the ECB, EMF, IMF. When this happens, the fall out will move to the other ‘pigs’ and unfortunately will also see a rise to a higher level of trans migration pressure.
All the main players are missing the point of this debacle and find it difficult to do what is necessary. It would seem that they will only be able to move when a financial immolation occurs, unfortunately they cannot see it coming, do not know how fast it can happen and how far it will spread.
For all your sakes, sort the problem out.
© Renot 2011
47110800
Greece has a financial problem, so goes the current verbiage that is chewed over by the economic pundits of the financial press and played with by European politicians.
NO ‘it’ does not have a problem, the problem is one that was created for it by others to which ‘it’ fell for to achieve an expansive European vision. The problem now is looking for ownership of the problem and the ownership rest with European governments and financial markets to solve. Whichever way the problem is solved it will eventually fall onto tax payers, higher prices and falling income streams of European society but solve it they must.
In viewing the machinations of the ECB, EMF, IMF and governments , they have not woken up to the fact that we are at the beginning of is a fight against a war. It is an economic one first that will be costly to resolve but far less costly or destructive than what is it to follow if it not headed off!
So far, European governments are trying to stave off a default with Greece to stop the contagion from spreading to the other Euro countries. Nevertheless, it is not just the Euro that will be under threat, the global economy will again be thrust to the brink of failure, yet so far the problem is still being seen as a local European one and is being reluctantly restrained by the indecisive governmental bale-out loans. It is preposterous that this situation is allowed to be seen this way. The laxity of the financial regulation that allowed financial markets to create the initial CC is being given a guaranteed ride of sovereign security; ‘they’ are not being made to feel the pain. It would be preferable to make a financial hit across all sectors by making them take a “haircut” on their lending or for the players ECB / IMF etc absorb the losses. The situation is far too dangerous to allow a break down of economic trust and rampant austerity to take hold.
The superficial analysis of the Greece problem and the fall-out of the weak attempts to delay what may be inevitably a bad process for Greece, is contained in the elements that make up the financial crisis of Greece. The Bank of International Settlements (BIS) indicated that, Italian banks held dollars E1.5bn of Greek debt, France E10.4bn, DGR E15.9bn of sovereign bonds and the UK E2.34bn. European banks have E36.1bn, the ECB E32.6bn in Greek bonds and there are lofty exposures in other EC and non-EC banks. This exclude credit default swaps created as an insurance against a Greek default that increasingly may be difficult for those ‘banks’ that hold the CDS to pay up on the insurance bet, if or when it is called. This builds up to a substantial debt for Greece to deal with and by many measures makes it impossible for it to repay. Austerity to impoverishment is not the answer.
Just now the EU and other players are trying to hold the game together and offering up funds to bale out the current tragedy. Many take the view that this problem is one for the Euro countries to sort out (excluding the UK) and not external players. The lead to generate a bale-out is taken by Germany and France, being the main funders, a position that is causing Germany some irritating concern as the biggest donator. Much is made of the rising angst of the financial moral dilemma. Forgive or punish Greece’s financial exuberance, what happens next and to whom.
That the EU is calling for deep austerity in Greece as a condition of EU bale-out is taken as little more than not adding to the problem of European banks (France, Germany) that have without due diligence lent to Greece. The bale out funds are used to pay off interest accruing on loans and meet revenue cost. The last thing the euroland wants is a dismantling of the euro currency and the inevitability of fallowing avalanche defaults, if Greece is forced out.
By most account Greece has little chance to pay back it creditors with debt standing at 150% (of GDP @ E211bn) and no real means of generating sufficient resources to rely on (other than selling off the country’s assets and ‘silverware’)
The crises is not just or only a Greece crises, it is one that is to affect all Europe that has had a stake in the catastrophic cause of the crises. Ever since the creation of the EU it has consistently ignored the prime issue for sovereignty & fiscal connectivity in favor of pushing on with the ‘project’, the unification of the whole of Europe without instigating such connectivity. The inclusion of Greece into the EU in 2000 was masked by the efforts to deceive any scrutiny of the rational for expansion. At the time it soon became apparent the EU banks and financial advisers had colluded in creating a over generous assessment of Greece economic standing, underestimating its budget deficit debt ratio to GDP, ignoring probity and cultural fiscal impropriety to allow Greece to join the EU game.
Now the game is up and the exuberance of the Greece spending time is over. The gamble that growth would continue for the fore seeable future was based on unreliable data and chosen financial ignorance. It was a belief that many countries held to and is exposing them now to the weakness of their own positions.
The problem of Greece is a problem that will continue to infect countries and financial markets. It is symptomatic of an underlying problem that has been allowed to grow in other countries and they equally have to start addressing their own indebtedness. For Greece none of the options seem pleasant:- default, leave the Euro, ring fence the debt to be pared back over time underwritten by the ECB with a right down, the “haircut option”. Or keep paying up to an orderly wind up or restructure the euro to a core 1st tier euro – the prime countries that meet the debt to GDP ratio and a 2nd tier with a lower level tied to the 1st tier.
Best case is that the EU will pick up the tab and play for time to allow the debt to wither down even if it means a restructure of the debt by a right down to creditors. Worse case, as is the situation now, imposing austerity has no effect, Greece cannot trade out, the debt just grows and social disorder become more violent and disconnected from the fiscal issues. This may be the unappealing prompt to a forced realignment of the ‘Greece’ Euro, disconnecting it from the hard Euro but supported by the ECB, EMF, IMF. When this happens, the fall out will move to the other ‘pigs’ and unfortunately will also see a rise to a higher level of trans migration pressure.
All the main players are missing the point of this debacle and find it difficult to do what is necessary. It would seem that they will only be able to move when a financial immolation occurs, unfortunately they cannot see it coming, do not know how fast it can happen and how far it will spread.
For all your sakes, sort the problem out.
© Renot 2011
47110800
Labels: EU., Greece, Immolation
posted by Renot at 12:26 am
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