Greece part II

[Hullygully]

I would be very grateful if we could keep this about Greece, and those (two) who want to dance up and down jibing at Claig and calling her a fool and a kremlinbot and an anti-semite, start their own thread for that purpose.

Cheers

Its that EU Europhile Junkers geezer whose appointment Cameron recently opposed, and everyone said he was wrong to, as didn't have enough support from others - who so luvs us that he has tried to force a 1 billion Greek bill down (or up?) our knickers.

A non handbagged wielding "No, no, no".

Yes, that's an attempt to have us on the hook via the same EFSM that was supposed to be obsolete after 2013

The biggest error Syriza made - and it's a corker - was IMO their dishonesty in not levelling with the Greek people about what the options actually were: debt colony, or drachma. They seem to continue to believe even now that they should be able to have their baklava and eat it. I don't blame the Germans for saying Nein.

But the root of the problem is not either with the Germans, who wanted one thing, or the Greeks, who wanted another: it's that they've all got themselves into a system that is unable to contain the democratic wishes of its multiple electorates, and doesn't have a mandate to turn them all into one big electorate. They have to sort this out soon, and unwind to a Europe of fellowship and trade from this ridiculous half-arsed attempt at a superstate, or the nasty national stereotypes we've seen so much of lately will just get worse and worse. And then the big winners EU-wide will be the Blood and Country type nationalists. And then we're all fucked

Greece borrowed money from private banks including but not limited to Goldman Sachs, Deutsche Bank, BNP Bank Paribas, Credit Agricole etc. They made the loans knowing there was a risk that Greece could default. That the interest rates were north of 5% reflected those concerns. Where the Eurozone went wrong was in paying those debts to the private banks, thus nationalising those debts and privatising the profit. Those who made that decision should be named, shamed and put in front of a jury, but they won't because they're all bankers seeking to protect other bankers.

It's utterly shameful that already impoverished Greek citizens should be forced to pay for the errors of the unelected Troika.

DoctorTwo ..."Greece borrowed......." and the accuracies of your post, ends roughly around there.

The Western bank 'bail outs' by governments were mainly to provide much needed liquidity to the Western banking system after the interbank markets closed - I see no evidence Western governments said to the named banks above 'let us take those Greek loans/bonds off of your books'.

Therefore as few western banks have a significant exposure to Greece (other than the 'vulture funds' whose business it is to BUY distressed debt no one wants at very low prices) when western banks from 2008 were writing off/taking the hits of bad loans, they would have had to cut THEIR OWN Greek losses, with every other loan/investment.

The "5% Greek interest rate" to (in your mind) determine blame for investing in Greece, is relative, to the time line to the historic low yields Greek government bonds reach, to the 10-17% their 10-year bond has traded at over the past few years.

But even then, means nothing, as the western banks are not whining about their original loans/ investments, you are.

FYI Investment Banks DO NOT just sit on shit credit decisions they made on loans or bond purchases, they closely follow the risk exposure they have intra day, never mind every few years as the numb-nuts would like us to believe - so either they would have sold out their position to the market place, and/or used the price volatility and traded in and out from their original holding, to 'average down' their original 'in' price.

Investment banks ARE accountable for their business decisions; to their OWN shareholders that footed the bill/profits, not the international court of ignorance, with little knowledge of how markets work, making up stories to fit their little blame game.

So why do the Troika OWN Greece debt/loan exposure?

Anything to do with the first two Greek bailouts?

Who forced the banks to sell the debt?
Investors don't give money away. They expect a return.

Methinks it is banks who want to have it both ways -- who is it again who has taxpayers across Europe in hock up to their eyeballs and their grandchildren's eyeballs thanks to the notion that certain entities are too big to fail?

'they've all got themselves into a system that is unable to contain the democratic wishes of its multiple electorates, and doesn't have a mandate to turn them all into one big electorate. They have to sort this out soon, and unwind to a Europe of fellowship and trade from this ridiculous half-arsed attempt at a superstate, or the nasty national stereotypes we've seen so much of lately will just get worse and worse. And then the big winners EU-wide will be the Blood and Country type nationalists. And then we're all fucked.'
Well said OTheHugeManatee.

mathsanxiety .... re your first two points.

The whole business of Investment Banking is assessing, managing and pricing risk, on a minute by minute basis with market making positions/inventories and daily to a year ahead or more ahead, on loans and strategic bond holdings.

So when an investment bank establishes a 'long' or 'short' bond market position e.g. the Greek Government, there has to be a strategic reason among several scenarios that DAILY can affect a bonds price; its bonds may look cheap or expensive to similar rated governments and/or the Investment bank is taking a short to medium term view that the credit rating may change, it may also have a potential up/down domestic currency move overlay etc etc etc.

Next you need to understand an Investment Bank is involved in bonds, equities, FOREX and often Commodities and Fund Management, each an individual profit/loss, each trading across a 24-hour time zone, each doing possibly thousands of deals a day servicing their institutional clients.

So the bond division, with markets moving all the time due to currency, political and supply concerns, making tight bid/offer prices (often in very large size) every minute of the day to its clients - could make a daily big profit or loss in Greek bonds, that might be offset by a profit or loss in other countries government bonds - but all shareholders expect and will see, is that the risk is being properly MANAGED daily and the end of year P&L for that division, if they want a break down of the consolidated P&L of the several divisions.

In other words, there is no reason to EVER expect that an investment bank falls in luv with Greek (or any other) loans/bonds and hold them to destruction, or that there will ever be 'inquests' in a large loss, UNLESS the bank/dealer has gone beyond permitted/pre set risk tolerancies/trading limits.

P.S. The reason an investment bank making market prices to institutional investors e.g. pension funds, will tend to daily hold any given governments bonds, is it it much easier to make a price if holding a position, or want to establish one, based on the bank view that day e.g. to be 'long' or 'short' that particular governments bonds.

So conceivably, an investment banks exposure to Greece or any other governments bonds for months, could be 'short', in which case when the price goes down, they MAKE money for shareholders, which may or may not have offset a previous loss - but all part of the business of making tight bid/offer prices to their institutional clients, hence no inquest.

What a bloody mess.

OK so now Greece has been brought to it's knees. Their brinkmanship to try & force EU/Germany to capitulate has backfired massively. I honestly believe they'd have got a better deal had they engaged proactively rather than like a spoilt teenager being told he's not getting his allowance anymore. That destroyed trust and the EU creditors as a result have imposed a deal so harsh that even the IMF are against it.

That really doesn't help the Greek's at all. Germany is now the bad guy, an image they were desperate to avoid.

And the UK? We have a real chance here to show some leadership & compassion here. Instead of trying to win some respect for our renegotiations on Europe by positively using the EFSM for Greece, we're once again stood at the sidelines going "Not my problem mate".

Greece is supposed to be our friend right? They're in the EU & NATO. Yes, they've been acting like a petulant teenager recently and right now they've been humiliated and brought to their knees as a result. As a friend what we should be doing now is offering a bit of help.

Longer term creditors will have to accept a haircut on their debts. Maybe now is the right time and maybe the UK as a major EU member and non Euro member is in the right position to have those conversations with the other Euro states. Their debts are unsustainable. Before wasn't the right time to talk about them whilst Greece was still making unreasonable demands. But maybe now is the right time to start thinking about it.

Have RTFTd since my work trip to sunny Surbiton.

Agree with Manatee completely - Syriza should have honestly laid the cards out: democracy in other EU countries prevents us from getting a good deal (if it weren't for those pesky voters, I'm sure Greece would have secured greater debt relief & a more lenient bailout), the choice is super austerity or we leave the Euro, have a decade of hard, hard pain, default, and slowly slowly work our way back.

But people don't want to hear two options, both comprised of total pain. And political parties exist to win elections, so there's a big motivation to tell people what they want to hear (not just in Greece - all across Europe).

Claig - yes, the Russian army is in Ukraine, the underequipped underfunded (thanks to ongoing corruption & several western countries guaranteeing its territorial integrity) Ukrainian army can't compete. Also, hoardes of actual neo-nazis, sorry Serbian nationalists, are descending to fight on the Russian side: www.reuters.com/article/2014/03/14/us-crimea-volunteers-idUSBREA2D0C020140314.

Bunch of charmers, sure you'll agree.

niceguy2 ... I agree with you, other posters (and the IMF) that creditors will have to accept debt haircuts, restructuring and god knows what else, but NOW is not the time when the Greek people are only just accepting that there is NO soft option and accept they WILL stay in the Eurozone.

Get the deal signed, the banks salvaged as best they can, measures put in place to GROW then economy, and a year or so down the line (or whenever Germany has an election out of the way) revisit the deal with the mandate to reward 'good' debt management, rather than those who a week ago were happy to default.

'UK leadership' with a current £70 billion annual overspend and many UK citizens thinking that they can spend £1 billion far better than the Greeks, is reminding the Eurozone that in 2010 they signed that they are soley responsible for their own internal shite. IMO

Germany has been shown to be the bad guy and the EU has been shown to not be in full control of its union. The EU has been shown to be nowhere near as cohesive a union as the United States. The EU Project has been fatally wounded and the house of cards will collapse over the coming years.

The EU mandarins pretended that there would be no debt relief and that it was all just austerity. Germany and the European taxpayer will have to pay if they want to keep their dream alive.

The elites have mortally wounded the EU.

Here is the IMF raising the temperature and showing the world the weakness of the EU.

"IMF stuns Europe with call for massive Greek debt relief

'There would have to be a very dramatic extension with grace periods of 30 years on the entire stock of European debt,' the fund says.

The International Monetary Fund 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 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.
...
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.
...
“There would have to be a very dramatic extension with grace periods of, say, 30 years on the entire stock of European debt,” it said.

Debt forgiveness alone would not be enough. There would also have to be “new assistance”, and perhaps “explicit annual transfers to the Greek budget”.

This is the worst nightmare of the northern creditor states. The term "Transfer Union" has been dirty in the German political debate ever since the debt crisis erupted in 2010.

The underlying message of the report is that Greece is in such deep trouble that it cannot withstand further austerity cuts. This is hard to square with the latest demands by EMU creditors for pension cuts, tax rises, and fiscal tighting equal to 2pc of GDP by next year.

Nobel economist Paul Krugman said the cuts are macro-economic "madness" in these circumstances."

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

And you can see that the whole thing is political and the USA is favorabke to Syriza in some ways and the USA benefits. Of course some UK elites benefit too. A lot of the economic top brains in Syriza come from an English educational background. There was another one on Channel 4 News last night, a Professor from London, and he said that Syriza may surprise the world in the coming months.

"The backdrop to this sudden shift in position is almost certainly political. It follows an intense push for debt relief over recent days by the US Treasury, the dominant voice on the IMF Board in Washington."

...
"It appears that powerful voices in global capitals and on the IMF board have since demanded that the Fund go back to the drawing board.

Its conclusions validate what Greece’s Syriza government has been saying all along. The debt cannot be repaid. Any formula that fails to recognize this merely stores up an even bigger crisis down the road."

Germany and the EU have been played, they are both the longterm losers.

The end of austerity was never on the cards because the elites benefit from austerity, but the end of the EU Project or its weakening is on the cards because the real elites benefit from that too.

What Syriza surprise the Greek professor from London meant, we can only guess. But I wouldn't be surprised if it is a Grexit. The panic that that will engender in EU political circles will be like nothing we have seen so far. You ain't seen nothing yet. The game continues, the elites laugh.

Never mind the stroppy teenager metaphors.

I just have an image of a big chess game where the pawns are unaware of most of the pieces, let alone the actual players with the overview of the situation

Sorry, is there a one line summary within all that quantity over quality 'gloop'?

I don't accept this whole "elite" thing. It's just trying to find a bogeyman. Greece have been the architect of their own demise for some time. Whilst the other countries like Portugal, Latvia, Spain etc went through similar. They took the painful medicine and are coming through the other side. Greece did not.

They kept borrowing, kept kicking the can down the road and elected Syriza who promised things they couldn't possibly promise. Their toddler like attempts at negotiations have burned all trust. I mean come on. They started bringing up WW2 in an attempt to shame Germany. That's like reminding your mum she's a cheating whore whilst at the same time asking to borrow some cash. Hardly a clever tactic.

My main thoughts I guess is that we (the UK) could play the smart long game here and build some brownie points to get some respect for our own negotiations.

We're not being asked to hand over £850million. We're being asked to guarantee that amount in the event Greece doesn't pay up. And that's a totally different situation. It's the same confusion as the banking bailouts. The taxpayer didn't fork out trillions. They guaranteed trillions in the rare event that all the toxic loans went bad. In reality it didn't and we even made a small profit on it. Same here really. Let's help a friend out.

'Sorry, is there a one line summary within all that quantity over quality 'gloop'?'

"The backdrop to this sudden shift in position is almost certainly political. It follows an intense push for debt relief over recent days by the US Treasury, the dominant voice on the IMF Board in Washington."

Kepp your eye on the elephant in the room, not the parties around the negotiating table. This is a geopolitical game.

'I mean come on. They started bringing up WW2 in an attempt to shame Germany.'

The whole game is to highlight and exacerbate the tensions within the EU to show that it is a house of cards and can never work. The only solution for the EU political class is to now try and rush through closer union and create a European Treasury etc. But after this display of what Nigel Lawson called "the Eurozone's contempt for democracy", non-metropolitan elite political parties in Europe will not accept it. It is the beginning of the end of the Eurozone and then the political union.

'My main thoughts I guess is that we (the UK) could play the smart long game here and build some brownie points to get some respect for our own negotiations. '

But you have to ask what is in the interests of the UK elites? I think they don't agree with what you think is important. They see things differently.

'Let's help a friend out.'

It has political implications. If it happens, it will show that we are powerless and have to do what the EU says, just as we have to do foreign aid spending. The political consequences are huge because Farage will not fail to exploit it and we have a referendum coming up that the metropolitan elite wants to win.

but Niceguy doesn't believe that there are elites, they are just Ickean fantasies along with the reptilians, right Niceguy?

is there a one line summary

you Isitmebut
asking for a one line summary
thats rich!

Seumas Milne in the Guardian is a top guy, a top brain, PPE Oxford.

This is the headline of one of his articles

"Syriza can’t just cave in. Europe’s elites want regime change in Greece"

www.theguardian.com/commentisfree/2015/jul/01/syriza-cave-in-elites-regime-change

If he says there are "elites", that's good enough for me.

This is what Seumas Milne says at the bottom of his article

"Either way, any Greek euro deal that fails to write off unrepayable debt or end the austerity squeeze will only postpone the crisis. If the Syriza government survives, it will have to change direction. Its fate, and its chaotic confrontation with the eurozone’s overlords, is going to shape all of Europe’s future."

Germany has no choice but to pay up or the EU elites' dream will fail. Of course, it will fail anyway, but Germany either pays, extends and pretends or sees it failure happen sooner.

Well I have asked who these elites are - and no one seems to have an answer. I find it hard to believe in something with no evidence they actually exist and no suggestion as to who they are...

Do you know who they are, Suzanne?

Like I said, the EU's actions are almost entirely explicable via working out how various leaders will get re-elected.

Claig, Germany's not paying, that's the point - the IMF keeps talking about badly needed debt relief but Merkel wants to be re-elected. She's in hock to that democracy you like so much.

If Seamus Milne believed in fairies, would you believe in fairies too?

'If Seamus Milne believed in fairies, would you believe in fairies too?'

I would certainly look into it further.

'Germany's not paying'

Wait and see, when the dust settles, a month down the line.