Surprise Greek referendum risks blowing up euro zone

Moderators: Elvis, DrVolin, Jeff

Surprise Greek referendum risks blowing up euro zone

Postby Jeff » Mon Oct 31, 2011 6:36 pm

Michael Babad
Globe and Mail Update
Last updated Monday, Oct. 31, 2011 6:06PM EDT

Don't take this to mean that I think George Papandreou is wrong with his surprise move to put the euro debt accord to a referendum. But it is an extremely risky strategy that threatens an already fragile monetary union.

Greece's Prime Minister said today his government will put the rescue package to a referendum and a confidence vote, saying he trusts in the decision of the Greek people.

But with Greeks so wildly opposed to Mr. Papandreou's austerity plan - strikes and demonstrations have been frequent and widespread - one can't help but wonder about the outcome.

Indeed, a fresh survey published on the weekend showed 60 per cent of Greeks aren't keen on the bailout plan struck last week at an EU summit in Brussels, which followed tense negotiations and inspection of Greece by the so-called troika of the EU, European Central Bank and International Monetary Fund.

The plan would see Greece's debt-to-GDP level fall to 120 per cent by 2020, but that's going to take a lot, given the country's bleak economic outlook. Also in the plan are measures to shore up euro zone banks, push holders of Greek debt to take a huge hit, and boost the region's bailout fund, known as the EFSF.

Is Mr. Papandreou risking the entire bailout process with his referendum plan, the first vote of its kind in Greece in almost four decades?

"Given the terms of the bailout package it is the democratic thing to do, given the loss of fiscal sovereignty to the troika until 2020," said CMC Markets analyst Michael Hewson.

"But if Greece votes no, where does that leave Europe and their place in the euro?" he told me. "It could herald the beginning of the break-up of the euro."

...


http://www.theglobeandmail.com/report-o ... le2220106/
User avatar
Jeff
Site Admin
 
Posts: 11134
Joined: Fri Oct 20, 2000 8:01 pm
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby seemslikeadream » Mon Oct 31, 2011 7:09 pm

Image
A man displays a postcard-sized poster depicting German Chancellor Angela Merkel in a Nazi uniform with a swastika surrounded by the EU stars, in Athens October 28, 2011. Despite a deal clinched on Thursday at an EU summit to cancel half the value of Greece's 200 billion euro debt in the hands of private bondholders, many Greeks are deeply resentful of what they see as foreign meddling in their affairs, reviving memories of the wartime Nazi occupation. EU paymaster Germany, which has been vocal in demanding economic and fiscal reforms in return for its financial support, has become a target for demonstrators' derision. The accompanying words read "From Hitler to Merkel" and "Citizens Movement Porta-Porta".
Image
Image
An anti-austerity protester holds a Greek flag reading "Not for sale'' before a scheduled military parade in the northern Greek city of Thessaloniki, Friday, Oct. 28, 2011. Thousands of anti-austerity protesters in this city forced the cancellation of Friday's annual military parade commemorating Greece's entry into World War II. The demonstrators heckled President Karolos Papoulias and other attending officials, calling Papoulias a traitor.
Mazars and Deutsche Bank could have ended this nightmare before it started.
They could still get him out of office.
But instead, they want mass death.
Don’t forget that.
User avatar
seemslikeadream
 
Posts: 32090
Joined: Wed Apr 27, 2005 11:28 pm
Location: into the black
Blog: View Blog (83)

Re: Surprise Greek referendum risks blowing up euro zone

Postby gnosticheresy_2 » Tue Nov 01, 2011 10:14 am

Paul Mason wrote:Greek referendum is coin-flip on euro exit

The Greek referendum call is, while it lasts, effectively a plebiscite on euro membership.

Papandreou announced on Monday that he would put a hard-fought rescue deal to a referendum
I say "while it lasts" because the opposition is mobilising a parliamentary manoeuvre to bring down the government, which may succeed - returning Europe to its status quo of containable trauma.

If Greeks reject the 50% controlled default on the debts they owe to the banking sector, then the arithmetic I revealed on Newsnight on the eve of the Euro summit comes into play - without a 50% haircut, and a further 130bn euro bailout, on top of 110bn, Greek debt spirals out of control and the country goes bust.

At this point the value of the debt falls to maybe 10% of its face value and Greece has broken all the rules of euro membership.

The euro leaders will be faced with the option of a forced transfer of taxpayers' money to shore up the entire Greek economy with no surety, and no "local representatives" as currently planned. Or Greece leaves the euro.

Most political economists I speak to believe this has been the logic all along, and brave though it has been for Prime Minister George Papandreou to try and buy time to do a proper structural reform of Greece, the implosion of Spain and Italy has robbed him of that time.

Greeks - even those fiercely opposed to Pasok from the left and right - are resigned to the fact that the country faces years of painful restructuring. The real question at issue is a) under whose control and b) in whose interest?

It is for this reason that, while the Greek CP wants out of the euro, the growingly influential far left parliamentary group SYRIZA does not, and neither does the hard-right religious party LAOS. Everybody can see that an external devaluation will be chaotic, painful and cause its own kind of social unrest, just as the attempted internal devaluation is doing.

But events are moving fast. Even as the Greek centre-left toys with the concept of repudiating "odious" debt, as per Latin America in the 1990s, the debt is being concentrated into the hands of other sovereigns - the European Central Bank (ECB), the International Monetary Fund (IMF), other governments…

The reason the markets are scared is not just because of the difference between 50% and 90% default, it is because in the old scenario (AKA the one we agreed on last Thursday morning!) this sovereign-held debt was out of the reckoning. An "Oxi" vote (it means "No" and was scrawled on thousands of banners hung from balconies last Thursday) would signal default across the whole range of debt, causing new turmoil for European states.

What caused Mr Papandreou's sudden move? Even some of the MPs closest to him had no idea it was going to happen.

Many of my Twitter correspondents suggest it was the vehemence of "Oxi Day" last week, leading to clashes between parading soldiers and protesters and local Pasok politicians getting hounded off the parades.

Pasok remains a very well rooted social democratic party, with multi-generational networks inside every village, if the village guys start ringing up and saying - there is no way we can hold it - Mr Papandreou is politician enough to hear this.

Another potential reason is capital flight. Anecdotal evidence suggests that the Greek elite is buying up property in London just as fast as they can find berths in Poole for their yachts. They are voting with their spinnakers, on the basis that the game is up. In any future Greece on offer they will have to start paying taxes and they do not want to.

One banker told me the Greek super-rich have mostly left.

The one thing governments have that investment banks do not is intelligence services with the power to wiretap people. If you ever wonder why serving politicians go grey so quickly it is in part because they see the intelligence. So Mr Papandreou may have looked at the file and said, I can't sell this to my party, nor to my voters, and the business elite are emigrating en masse so throw the dice.

Referendums are, always, basically a coin-toss, an all-chips on the black romantic gesture. Right now the scale of EU-level mobilisiation to dissuade Mr Papandreou is huge.

But if Greece votes no - and goes for euro-exit - there are several plans in the process of being published that explain what you have to do. Close the banks for days, ration food and energy, institute strict capital controls - with most probably a few fast patrol boats at Glyfada harbour to check every departing yacht for cash and bonds.

Later you get massive devaluation, with inflation, your non-sovereign debts become instantly doubled so you cannot pay them (i.e the stock of Greek private debt to external lenders, for example, or, intra-corporate debts).

Finally you get the chance to become competitive again. (I base this on SOAS professor Costas Lapavitsas upcoming document, which he has verbally outlined to me).

However, despite this very, very unappealing prospect, you are at least in control of your own economy and you do not have foreign civil servants dictating what ministers can do.

One reason so many Greeks have told me this route is impossible is because there is no Kirchner - no left-leaning autarchic politician who can pose as the tribune of the nation and create a narrative around the default process, as Nestor Kirchner did in Argentina. Nobody on the right wants to do it either. And that is Mr Papandreou's gamble - that nobody outside the KKE will present a coherent alternative to a yes vote, and that the KKE does not want power.

That is how it looks from the balcony of a small hotel in Cannes this morning. When the politicians get here, I will let you know what the whites of their eyes are telling me.

http://www.bbc.co.uk/news/business-15539350
User avatar
gnosticheresy_2
 
Posts: 532
Joined: Mon Jan 01, 2007 7:07 pm
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby JackRiddler » Tue Nov 01, 2011 10:55 am

.

Ha, that author references but sees no need to explain Oxi Day, so allow me to point out that Greece may be the only country in which the "Day of NO!" is a national holiday. (It commemorates the nation's response to an Italian ultimatum in October 1940, which led to the failed invasion by Italy and later the all-too effective one by the Wehrmacht.)

Can you imagine that, you positive thinkers?

Yeah, so now we're hearing all about the terrible consequences of a No vote.

But a Yes vote means debt slavery for generations, privatization of everything, and a country run by remote control by banks in Frankfurt, Paris, London and New York. Also, a signal to the rest of the world, especially the Indignados and Occupy movements: Surrender, Dorothy!

Still, the odds favor a No, and you gotta wonder why Papandreou would go for it. I'm of several minds on the question. Does he think his side can fix it? There's a history of leaders successfully browbeating the people and turning these kinds of referenda on EU or NATO dictates into squeakers. All bets are off, in the country that coined the word for sophistry. Does he think this is the only chance he has not to be swept away? Is it a hail-mary to evade his responsibility and save his own credibility (regardless of the result) in the certain knowledge that default will come anyway down the line, so he might as well not look like a tyrant now? Obviously, staving off calls for new parliamentary elections, including in his own party, is a factor. Is it actually his tricky way of bowing to the Troika officially (who knows how tightly they may have his balls and those of all his associates in a vice?) while allowing Greeks to tell the Troika to fuck off in plainer language?

Dunno. I'm very much surprised.

That talk above about "no Kirchner figure in Greece" is nonsense, since five weeks before Kirchner became the sixth Argentinean president in five weeks I very much doubt Kirchner himself imagined that he was a "Kirchner figure," or soon to become the president. He was that only because he was willing to rise up to the level of his own people, to whom the real credit belongs.

After 70 years of perpetual opposition and agitprop (with occasional periods of just plain being on the rack) I can imagine the KKE is reluctant about a governing role, and no doubt nervous about what the intelligence arms of Greece and many other countries might do to them if they dared. I can also imagine they'll get over it. This is one case where I wouldn't blame them if they looked for a way to find the "center."

In parliamentary elections, one of which I saw, Greeks vote by choosing their preference from a set of preprinted paper ballots representing different parties, folding it, and putting it in a box. The counting is by hand, with multiple parties present. A small and very political country, you know? Honestly, I don't know if this procedure has changed in the last 10 years, but given the Greek sense for political history and all-too profound awareness of election-rigging stretching back to long before Alcibiades, I doubt it.

.
Last edited by JackRiddler on Tue Nov 01, 2011 11:02 am, edited 1 time in total.
We meet at the borders of our being, we dream something of each others reality. - Harvey of R.I.

To Justice my maker from on high did incline:
I am by virtue of its might divine,
The highest Wisdom and the first Love.

TopSecret WallSt. Iraq & more
User avatar
JackRiddler
 
Posts: 15983
Joined: Wed Jan 02, 2008 2:59 pm
Location: New York City
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby semper occultus » Tue Nov 01, 2011 10:57 am

:popcorn:
User avatar
semper occultus
 
Posts: 2974
Joined: Wed Feb 08, 2006 2:01 pm
Location: London,England
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby seemslikeadream » Tue Nov 01, 2011 11:20 am

Government in Greece Nears Collapse Over Referendum
By NIKI KITSANTONIS and RACHEL DONADIO
Published: November 1, 2011

ATHENS — The Greek government was plunged into chaos on Tuesday and faced an imminent collapse, as lawmakers rebelled against Prime Minister George Papandreou’s surprise call for a popular referendum on a new debt deal with Greece’s foreign lenders

Such a collapse would not only render the referendum plan moot, it would likely scuttle — or at least delay — the debt deal that was agreed on in Brussels last week, putting Greece on a fast track to default and possible exit from the monetary union of countries sharing the euro currency.

Analysts said that Mr. Papandreou’s call for a referendum was a last resort, meant to gain broader political support for the unpopular austerity measures in the deal without forcing early elections that would only worsen the country’s political and economic turmoil.

But after weeks of mounting pressure, one Socialist lawmaker quit the party to become an independent, reducing Mr. Papandreou’s majority to 152 seats out of 300 in Parliament, and another six Socialists wrote a letter calling on Mr. Papandreou to resign and schedule early elections for a new government with greater political legitimacy. Together, the developments made it doubtful whether his government would survive a confidence vote planned for Friday.

Meanwhile, the center-right opposition New Democracy party on Tuesday stepped up its calls for early elections. Its leader, Antonis Samaras, has opposed most of the austerity measures the government accepted in exchange for foreign financial aid. Mr. Samaras has said that if he were in power, he would try to renegotiate the terms of Greece’s arrangement with its principal foreign lenders, known as the troika: the European Union, the European Central Bank and the International Monetary Fund.

“Mr. Papandreou, in his effort to save himself, has presented a divisive and extortionate dilemma,” Mr. Samaras said on Tuesday. “New Democracy is determined to avert, at all costs, such reckless adventurism.”

Mr. Samaras declined to say whether he would ask his 85 members of Parliament to resign, a move that would lead to the dissolution of Parliament and a snap election. The next general election was not due until 2013, when the Socialists’ four-year-term expires. Mr. Samaras is expected to clarify his stance at a meeting of his party’s parliamentary group on Wednesday.

European leaders have repeatedly dismissed Mr. Samaras’s notion of renegotiating Greece’s deal with its lenders, saying that trying to do so would be damaging and would throw away months of work on a plan to keep Greece from defaulting.

Mr. Papandreou’s announcement of a referendum took Greek lawmakers by surprise, just a s it did political leaders and investors across Europe. On Tuesday, the state television channel Net reported that even the finance minister, Evangelos Venizelos, had not been informed in advance about the referendum, although he was aware of plans for a confidence vote.

Mr. Venizelos was taken to a hospital Tuesday morning, complaining of stomach pain. Doctors said he had an inflamed appendix. He is the latest in a string of governing party officials to be rushed to hospitals in recent weeks. One Greek negotiator had a heart attack in Brussels last week.

On Tuesday, European leaders said the deal reached last week to write down 50 percent of some Greek debt was the best available way to build a financial “firewall” that would keep Greece’s troubles from causing a damaging run on other shaky European economies like that of Italy.

The political instability in Greece has long dismayed European officials. In a statement, the president of the European Commission, Jose Manuel Barroso, and the president of the European Council, Herman Van Rompuy, said that Europe’s plans to protect other vulnerable members were “more necessary than ever, without delay.”

“We are convinced that this agreement is the best for Greece,” they added. “We fully trust that Greece will honor the commitments undertaken in relation to the euro area and the international community.”

In Greece, Mr. Papandreou’s referendum proposal seemed to be his last, best hope. His political capital has dried up, and he faces intense anger from voters who have been squeezed to the breaking point by the austerity measures demanded by Greece’s foreign lenders.

“Papandreou could not take more political punishment,” said George Kirsos, a political analyst and the owner of the Athens City Paper. “We have a strange situation: Everyone’s cursing the government, and everyone expects the government to do the job by itself — to reorganize the economy, to cut the deficit, to make a deal with the Germans — but at the same time, nobody helps him.”

“All parties and all media criticize the government,” Mr. Kirstos added. “So Papandreou, in a sense, tried his best to do the referendum to force the parties, the media and the citizens to undertake their own responsibility. The referendum is a yes or no issue: Either you are in favor, or you decide that you say goodbye to the euro zone.”

Charged by Europe with dismantling the welfare state they helped create, many of Mr. Papandreou’s Socialist members of Parliament feel they too have reached their breaking points.

Vasso Papandreou, a prominent member of parliament and a former minister who is not related to the prime minister, called on Greek President Karolos Papoulias to order the formation of a unity government ahead of early general elections. “Bankruptcy is imminent,” she said. Earlier this month, Ms. Papandreou said she would vote for a new raft of austerity measures, but that it would be “the last time” she supported the government unconditionally.

“The current government has none of these necessary prerequisites. Today’s government policy is asphyxiating. Day by day the country is experiencing collapse, lawlessness and absence of government,” they added.

If Mr. Papandreou’s government falls, it would not be the first one in Europe to be toppled by the austerity demanded by European debt relief. In Ireland and Portugal governments that accepted bailouts from the European Union and the International Monetary Fund fell, and last month the Slovakian government fell over whether to participate in the European Union’s rescue package.

Niki Kitsantonis reported from Athens and Rachel Donadio from Rome. Stephen Castle contributed reporting from Brussels.
Mazars and Deutsche Bank could have ended this nightmare before it started.
They could still get him out of office.
But instead, they want mass death.
Don’t forget that.
User avatar
seemslikeadream
 
Posts: 32090
Joined: Wed Apr 27, 2005 11:28 pm
Location: into the black
Blog: View Blog (83)

Re: Surprise Greek referendum risks blowing up euro zone

Postby DrVolin » Tue Nov 01, 2011 6:57 pm

I secretly hope that this is Panpandreou decloaking. Or it might be the last card he has to play to get a better deal for himself. Lets see if they actually go through with it.
all these dreams are swept aside
By bloody hands of the hypnotized
Who carry the cross of homicide
And history bears the scars of our civil wars

--Guns and Roses
DrVolin
 
Posts: 1544
Joined: Sat Sep 15, 2007 7:19 pm
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby ninakat » Tue Nov 01, 2011 8:50 pm

GREEK MILITARY CHIEFS REPLACED
November 2nd, 2011

Via: Telegraph:

As Greek poltics grew ever more chaotic strong political protests erupted as the government moved to replace military chiefs with officers seen as more supportive of George Papandreou, the prime minister.

In a surprise development, Panos Beglitis, Defence Minister, a close confidante of Mr Papandreou, summoned the chiefs of the army, navy and air-force and announced that they were being replaced by other senior officers.

Neither the minister nor any government spokesman offered an explanation for the sudden, sweeping changes, which were scheduled to be considered on November 7 as part of a regular annual review of military leadership retirements and promotions. Usually the annual changes do not affect the entire leadership.

“Under no circumstances will these changes be accepted, at a time when the government is collapsing and has not even secured a vote of confidence,” said an official announcement by the opposition conservative New Democracy party.

“It has no moral or real authority any more, and such surprise moves can only worsen the crisis currently sweeping the country”.

Flashback: Greece: Possibility of a Military Coup?
User avatar
ninakat
 
Posts: 2904
Joined: Tue Nov 07, 2006 1:38 pm
Location: "Nothing he's got he really needs."
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby DrVolin » Tue Nov 01, 2011 8:55 pm

whoa. Seven Day in May, Hellenic style?
all these dreams are swept aside
By bloody hands of the hypnotized
Who carry the cross of homicide
And history bears the scars of our civil wars

--Guns and Roses
DrVolin
 
Posts: 1544
Joined: Sat Sep 15, 2007 7:19 pm
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby JackRiddler » Tue Nov 01, 2011 9:41 pm

.

Fuck. Can't be good. Are they planning a coup, or is he planning a coup? I'll call some knowledgeable cousins tomorrow and see what's known about it.

.
We meet at the borders of our being, we dream something of each others reality. - Harvey of R.I.

To Justice my maker from on high did incline:
I am by virtue of its might divine,
The highest Wisdom and the first Love.

TopSecret WallSt. Iraq & more
User avatar
JackRiddler
 
Posts: 15983
Joined: Wed Jan 02, 2008 2:59 pm
Location: New York City
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby Jeff » Tue Nov 01, 2011 10:18 pm

The military will calm the markets.



Papandreou, you really should have been ahead of the curve, man.
User avatar
Jeff
Site Admin
 
Posts: 11134
Joined: Fri Oct 20, 2000 8:01 pm
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby bks » Tue Nov 01, 2011 11:33 pm

]Look, this is no time for democratic measures to be insisted on. There are serious matters on the table. You want to leave a country's fate to its own people?


Εάν η ψηφοφορία θα μπορούσε να αλλάξει κάτι θα ήταν παράνομες


Or, failing that, you have a coup.
bks
 
Posts: 1093
Joined: Thu Jul 19, 2007 2:44 am
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby smiths » Tue Nov 01, 2011 11:50 pm

the mirror seems the most excited in its coverage, 'coup'
Greece bailout referendum plunges eurozone into crisis
Jason Beattie, Daily Mirror 2/11/2011
there were fears last night of a possible military coup.
Worried Defence minister Panos Beglitis is said to have recommended replacing the leaders of the country’s armed forces.
He described the military establishment as a “state within a state”. Greece was ruled by a junta of colonels from 1967 to 1974.
...
Defence minister Mr Beglitis is said to have proposed the military changes at a meeting this week of the Government’s Foreign Affairs and Defence council.
Posters of generals have started to appear on the streets of Athens in a sign that some people want the military to take over.
http://www.mirror.co.uk/news/politics/2 ... -23531350/


bloomberg seems pretty matter of fact about the replacement of top military during national crisis
Papandreou Replaces Greek Military Chiefs, Defense Ministry Says
By Natalie Weeks - Nov 2, 2011 6:19 AM GMT+0800
Greek Prime Minister George Papandreou approved changes to the leadership of the nation’s armed forces at a meeting of the Foreign and Defense Council in Athens today.
The Chief of National Defense, Greek Army General Staff Chief and the heads of the Air Force and Navy were replaced, while 12 other commissioned officers were relieved of their duties, according to an e-mailed statement from the Athens- based Defense Ministry today.
http://www.bloomberg.com/news/2011-11-0 ... -says.html


reshuffle, umm
GREECE REPLACES ARMED FORCES CHIEFS
21:45 01 NOV 2011
(AGI) Athens - The government of Greek prime minister George Papandreou has replaced the country's armed forces chiefs. The Greek government, which is under growing pressure to solve the country's debt crisis, has reshuffled its military chiefs. A state security council meeting, convened by prime minister Papandreou, replaced the Chief of the General Staff, and the Army, Navy and Air Force heads and discharged a dozen officers.
According to sources of the Defence Ministry, the reshuffle was previously scheduled. Opposition parties strongly criticised the move. . .
http://www.agi.it/english-version/world ... ces_chiefs


a formerly decent australian news org covers a military reshuffle in the business section of its latest news
Greece reshuffles military chief amid crisis
November 2, 2011 - 7:42AM
Greece on Tuesday reshuffled its military chiefs amid a political crisis that could see a government downfall following a controversial decision to put an EU debt rescue deal to a referendum.
A state security council under Prime Minister George Papandreou replaced the heads of the general staff, the army, navy and airforce, and discharged a dozen army and navy officers, the defence ministry said in a statement.
A defence ministry source told AFP that the reshuffle was previously scheduled and not linked to political developments.
But opposition parties attacked the government over the move.
"You're finished, hands off the armed forces," said conservative New Democracy shadow defence minister Margaritis Tzimas.
"There is no government in the country, one by one its lawmakers are jumping ship," Tzimas said, calling the reshuffle "undemocratic".
The other parties also questioned the government's motives.
"This heightens the climate of uncertainty and concern among public opinion," said the Democratic Left party.
http://www.smh.com.au/business/world-bu ... 1muen.html


the Guardian includes it almost as an afterthought
Greek leader's referendum bombshell shocks ministers at home and abroad
Helena Smith in Athens, Tuesday 1 November 2011 21.38 GMT
In a day of dramatic twists marked by defections from his party, calls for early elections, mounting concern over Greece's financial future and even a complete change of guard in the country's military top brass, Papandreou was attempting to weather the storm that has erupted in the wake of his announcement to hold a referendum on whether to accept the debt deal assembled by the EU and IMF last week.
http://www.guardian.co.uk/world/2011/no ... sfeed=true
the question is why, who, why, what, why, when, why and why again?
User avatar
smiths
 
Posts: 2205
Joined: Wed May 18, 2005 4:18 am
Location: perth, western australia
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby vanlose kid » Wed Nov 02, 2011 5:22 am

JackRiddler wrote:.

Fuck. Can't be good. Are they planning a coup, or is he planning a coup? I'll call some knowledgeable cousins tomorrow and see what's known about it.

.




*
"Teach them to think. Work against the government." – Wittgenstein.
User avatar
vanlose kid
 
Posts: 3182
Joined: Wed Oct 17, 2007 7:44 pm
Blog: View Blog (0)

Re: Surprise Greek referendum risks blowing up euro zone

Postby RocketMan » Wed Nov 02, 2011 5:44 am

Paul Krugman: Eurodämmerung

Things are falling apart in Europe; the center is not holding. Papandreou is going to hold a referendum; the vote will be no. Italian 10-years at 6.29 at pixel time; that’s a level at which the cost of rolling over the existing debt will force a default, even though Italy has a primary surplus. And with everyone simultaneously pushing for fiscal austerity, a recession seems almost certain, aggravating all of the continent’s problems.

I’ve been charting this trainwreck for a couple of years, and am feeling too weary to trace through it again right now. Let’s just say that the euro was an inherently flawed idea that can work only given a strong European economy and a significant degree of inflation, plus open-ended credit to sovereigns facing speculative attack. Yet European elites embraced the notion of economics as morality play, imposing across-the-board austerity, tightening money despite low underlying inflation, and have been too concerned with punishing sinners to notice that everything was going to blow apart without an effective lender of last resort.

The question I’m trying to answer right now is how the final act will be played. At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.

It all sounds apocalyptic and unreal. But how is this situation supposed to resolve itself? The only route I see to avoid something like this involves the ECB totally changing its spots, fast.
-I don't like hoodlums.
-That's just a word, Marlowe. We have that kind of world. Two wars gave it to us and we are going to keep it.
User avatar
RocketMan
 
Posts: 2812
Joined: Mon Mar 10, 2008 7:02 am
Location: By the rivers dark
Blog: View Blog (0)

Next

Return to General Discussion

Who is online

Users browsing this forum: No registered users and 33 guests