Greek crisis at the tipping point

Greek crisis at the tipping point

finance.fortune.cnn.com

Have Europe's leaders kicked the Greek can as far as it will go?

Unnervingly, it is starting to look like the answer may be yes. Policymakers this week failed yet again to take decisive action on Greece's debt crisis, rattling markets and prompting billionaire George Soros to brand officials' failure to restructure Greek debt a "mistake."
The central problem -- beyond Greece's running out of money again -- is a standoff between bailout-shy politicians and instability-fearing central bankers.

(visit the link for the full news article)

I'm interested in the result of this. If the central bank and the politicians do not form some type of bailout (which is a temporary solution), and the EU has essentially given up on the situation, what does this mean for the state of Greece? The riots, the massive unemployment rates, and speculators are all having their toll on Greece. What does this mean for the rest of the European Union, and more importantly the World Economy.

These are interesting times that we live in, and I'd love to hear some of your speculations and or economic theories and how they play into this very important situation that is currently developing.

finance.fortune.cnn.com
(visit the link for the full news article)

I started a thread on this in the Global Meltdown forum, citing the same article. But in addiition to this article, the following too has some rather concerning commentary on the situation...


Greek Crisis: Commissioiners 'fear future of the eurozone'

EU commissioners have a "profound sense of foreboding" about Greece and the future of the eurozone, a leaked account of a meeting has suggested.

The account, seen by BBC News, said this was in reaction to the "damning failure" of eurozone ministers to agree a new bail-out for Greece last night.

It was written by an official who attended Wednesday's gathering of commissioners in Brussels.

The author warned that the markets would now "smell blood".

The European Commission said it would not comment "on anonymous interpretations of meetings".

The document said that the planned second Greek financial rescue package on top of last year's 110bn-euro (£161bn; £98bn) bail-out would dominate the forthcoming European Council meetings next week.

It added that any default on Greek government debt - as espoused by Germany - would leave the Greek banks insolvent and "threaten the viability of the ECB [European Central Bank] itself" which owns 49bn euros of Greek bonds.

European Commission President Jose Manuel Barroso was said to be "clearly more worried now than he was a year ago when the sovereign debt crisis first broke".

reply to post by surrealist


Thank you.

More information coming:

www.economist.com...

TODAY has been a nasty day for markets, those in Europe especially. Equities are off. The euro is falling against the dollar. And yields on the debt of euro-zone periphery governments are rising to new heights. The yield on 3-month Greek securities is now over 12%. Markets want nothing to do with Greece if they can help it. European yields have spiked many times before, and each time European leaders have responded with a new bail-out package or other reassurances to prevent Greek panic from fueling a broader contagion. (Over the whole of the crisis, of course, this strategy has been a bit of a disappointment.) So where's this go-round's intervention? Well the trouble at the moment is that Europe's leaders can't agree on one. It has become clear that euro-zone governments will be reluctant to contribute more support to Greece unless its private creditors also take a hit. But there is significant disagreement over how to achieve this haircut. All the plans currently under discussion are nominally "voluntary", but voluntary means different things to different people. The German plan is to convene a meeting of Greece's major private bondholders in order to "convince" them to participate in a debt exchange, in which current obligations are traded for new ones with extended maturities. The upside to this plan is that the more coercive aspects of it are likely to make for a high level of creditor participation, and a correspondingly larger benefit to Greece. The downside, according to critics like the European Central Bank, is that those coercive aspects would practically guarantee that the haircut would be judged a default event, and that, the ECB has maintained, is unacceptably riskly. Their preferred policy is a more honestly voluntary commitment among bondholders to rollover maturing Greek securities into new issues. But many creditors are sure to balk at the request to lend more to the Greek government. If take-up is low, then so too is the impact on Greek insolvency. And there's still a risk that the plan could run afoul of rating agencies, earning the official default stamp. Other troubles complicate the picture. Markets are increasingly worried about bank exposure to Greece. Moody's announced today that it would review the status of several French banks based on their holdings of Greek sovereign debt. The German plan, with its greater hit to creditors, could force European governments to pony up €20 billion or so in funds for bank recapitalisation. And if the ECB responds to a creditor haircut by refusing to take Greek government debt as collateral for new loans, and it has threatened to do so, then euro-zone governments may have to cough up funds to replace the debt now being held for that purpose: totalling perhaps €70 billion. Why would the ECB force governments to do this? Maybe because it thinks it will accelerate fiscal integration. Or maybe because it worries that in the event of a default euro-zone governments will be stuck financing Greek borrowing indefinitely. Oh, and violent protests are wracking Athens today, as Greek demonstrators rebel against enforced austerity. It's not an insoluble set of problems. But given the euro-zone's institutional weaknesses, it's not a walk in the park, either.

Originally posted by TheOneElectric
I'd love to hear some of your speculations and or economic theories and how they play into this very important situation that is currently developing.

I personally think that the banksters should fear more than instability.

I think they should fear the noose being placed around their scrawny f'n necks and then hung by those necks until they are dead. That is what I think the the banksters should fear.

Nooses are recyclable. It's the Green Solution. Save the lead for the pigs.

How could they be out of money if Mr. Soros is still a billionaire?
Taxing the rich solves all problems, right?

What it means is that if Greece falls, others will fall soon after.
It will start a domino effect that can't be stopped. Perhaps another global war.

What should have happened is a restructure like Germany wanted.

The whole Euro idea was a mistake. Europe wasn't ready for a single currency.
There is no single European monetary policy.
Europe is divided politically. This crisis has exposed that in all it's glory.

When the Euro rates were kept low to help the German economy, this wasn't what countries like Greece or Portugal or Spain or Italy needed. This is but one example.

Greece is to Europe as the Bear Stearns crisis was to Wall Street in '08. Beyond the seriousness of the situation for Greece itself, it could set in motion a mauch more significant and destabilizing series of events for the global economy.

Failure to resolve this situation has the potential to bring down the neoclassical model of international finance.

That's fine with me, I'm ready. Bring it.

if greece falls then it seems inevitable to me than spain won't be far behind and if both of them fall then pretty much the rest of europe is probably going to go

And the US is in the short line to follow the way of Spain and Greece and the EU. Soros says it's a mistake? This same guy who is like the king of the Bilderbergers and who systematically collapsed the British economy after conniving to get rich off of it?

I have been musing on an idea for a few weeks re this global mess: DEBT seems to be the problem, and the debt is always increasing because of INTEREST.

I submit that if all debtors, whether householders, corporations, countries, or even BANKS who borrow, simply REFUSED to pay INTEREST, and insist that all moneys paid to date on their "debts" (including paid amortized interest) be applied retroactively to PRINCIPLE ONLY (which, in my case, means I would have already paid for my house and then some), well, then, the banks would have.....well, great big problems.....like, the collapse of their entire structure.

Selling money seems more to me like corruption than capitalism.
Similar to insurance. The idea is to have everybody put a little in the pot, and then when someone needs it, it's there. It wasn't so that the insurance companies, the "escrow agent", if you will, could go out and play with someone else's money and then say .... "oh, hai! say what? you have a major medical emergency? Now? Like, today? Woopsies. Sorry, I spent all your money on lottery tickets. Ha ha! Yeah, dude, you're screwed. Get out of our playhouse."

This nonsense with the US debt crisis and that talking head Bernanke saying Congress "MUST" raise the debt ceiling or the US's credit rating will be hit....Say WHAT? That's so backward and convoluted it's laughable, except that they are dead serious. And that's outrageous, and really, really scary.

What about all the citizens, the working Americans, who tried their best to pay their debts in good faith, and were hacked off at the knees, and then can't get ANY credit? Why did WE all not get a debt increase to save our credit ratings? (Now mind you, I'm not talking about the people who could never have paid back what they were lent -- they should not have been given those loans. I'm talking more about people who had good credit, borrowed a reasonable amount of money, and then lost their means to pay it due to the corruption of the banks and the shortsightedness of the borrowers who thought somehow they'd be able to manage it and the yadda yadda we all know).

I think, given the fact that the Bilderberg group JUST got back home (if they're not jetting off for a world tour while they're already packed)...we can't NOT connect this all.

It's a disaster. It seems to me there's no turning back now. The pieces are in place, the machine is oiled and ready to roll, and the fuel injection button just got pushed.

Sorry for the rant. The OP asked what we think....this is what I think at 4am while it's the darkest hour of the day and my husband, who is a nervous wreck because he can't find work, is enjoying the oblivion of sleep. I try hard not to buy into all the panic and hype and to stay in my critical-thinking/objective place, but frankly, the situation is beyond brushing off as media hype and paranoia. The macrosystem of the global economy is broken. It's broken.

It is broken.

As in: Totalled. Next!!