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Re: EU rolls over!
I think it is a bit early to say the EU has caved in.
Barely mentioned in the text is that an agreement is being worked out where the EU will wind up with supervisory powers over individual nations' budgets.
If this is indeed true, then Germany might indeed cough up some bailout money in return for direct control over recalcitrant debtor nations' spending.
But it is not clear that this would be agreeable - for one thing even France might wind up being supervised under such an arrangement. -
Re: EU rolls over!
"I think it is a bit early to say the EU has caved in."
lol, what do you think caveing in would be?Comment
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Re: EU rolls over!
Originally posted by rabot10 View Post
Absolutely inevitable. And I wouldn't say they just caved in. The surprising thing to me was how far they went. Three austerity budgets in three months for the Greeks. They got their pound of flesh, and then some.Comment
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Re: EU rolls over!
Caving in would be coughing up the 200B to 300B euros necessary to roll over all the Greek debt set to mature in the next 3 years.Originally posted by rabot10
What I see is a short term posturing - the Germans know they can string Greece along for some time to see if Greece is really serious about budget reform.
Getting some legal fingers on Greece's internal budget pulse - that would be a big bonus. No more murky EU 'debt ceilings' which are unenforceable.Comment
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Re: EU rolls over!
Things still seem in quite a state of flux. This item probably didn't need a whole new thread:Originally posted by c1ue View Post
http://www.itulip.com/forums/showthread.php?t=14785
but contains reports of apparent denials from the German Finance Ministry...Comment
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Re: EU rolls over!
What an utter mess. I'm not sure they could have scripted it better for a movie. I say kick back and watch the show, but I know our own "show" is going to make this look like an opening act.Originally posted by GRG55 View PostComment
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Re: EU rolls over!
It's quite a show alright, but I'm still trying to figure out if we are watching non-scripted episodes of "Survivor", or re-runs of "Gilligan's Island"...Originally posted by jpatter666 View Post
I believe there's quite an expectation difference between Europe and the USA. Part of this is shaped by the diametrically opposed fears in Germany and the USA - the former fearing inflation and the latter another deflationary depression. In addition, most of Europe is familiar with very slow growth rates and unemployment chronically in the 10% +/- range...that was pretty well the situation in France and Germany for much of the current decade before the financial crisis started in earnest in the summer of 2007.
That's why I think GaveKal made the correct call on Europe several years ago - the German obsession with fiscal deficits is going to force a deflationary recession across the Euro currency zone.Comment
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Re: EU rolls over!
More reports of "backtracking" by Germany...Originally posted by GRG55 View PostAnd from Mega's favourite financial journalist...Papandreou Seeks EU Aid Mechanism at Summit, Challenging Merkel
March 18 (Bloomberg) -- Greek Prime Minister George Papandreou set a one-week deadline for the European Union to craft a financial aid mechanism for Greece, challenging Germany to give up its doubts about a rescue package...
...Greece pinned its hopes on the Brussels summit as German officials voiced qualms about an EU-led rescue, potentially backtracking on a commitment hammered out by finance ministers just three days ago. Greek bonds and the euro fell.
Germany, after endorsing the use of European channels on March 15, is now openly talking about an IMF-led solution.
Attempting a rescue of Greece “without the IMF would be a very daring experiment,” Michael Meister, financial affairs spokesman for German Chancellor Angela Merkel Christian Democratic Union, said in an interview yesterday. “Nobody apart from the IMF has these instruments.”...
Euro Weakens as Greek Aid Plan Falters; Stocks, Crude Decline
March 18 (Bloomberg) -- The euro weakened and Greek stocks and bonds fell on concern a bailout plan for the region’s most indebted country is unravelling...
...Greece should turn to the International Monetary Fund if it needs aid, Michael Meister, a lawmaker with Chancellor Angela Merkel’s Christian Democratic Union, said in an interview in Berlin...
...“It appears that the rift between Greece and Germany is much deeper than assumed and Greece could be much closer to turning to the IMF than previously assumed by the market,” a team led by Hans Guenter Redeker, global head of foreign- exchange strategy at BNP Paribas SA in London, wrote in a report today. “This brings the recent optimism regarding the euro to an abrupt halt.”...
The proposed EU Greek bail-out cannot simply bypass German law
By Ambrose Evans-Pritchard
Does nobody read German any more? Nearly all the reports on Europe’s bail-out for Greece appear to be coming from Paris, or Madrid, or sources within the Brussels apparatus determined to seize on the EMU crisis to advance the “Project”, this time by leaps and bounds towards fiscal federalism.
This cannot possibly be done without German backing, so it is academic what these people think or want. As of today, German finance minister Wolfgang Schauble has not yet agreed to anything beyond a last resort rescue “if insolvency were imminent” and if there were to be a threat to the “financial stability of the euro area as a whole”. That raises the bar very high.
He cannot go further because any bail-out for Greece would breach the EU’s no-bail-out-clause, and would therefore violate the German Grundgesetz, or constitutional law. Eurosceptics in Germany already have their fingers on the trigger, waiting to launch a court challenge if the line is crossed. Quite why markets/pundits seem to assume that the EU can just finesse this with its usual creativity — dare I say, its fundamental lawlessness — is beyond me. Germany is a serious country. The law matters...
...As an aside, I happen to think that the German/EU policy of enforcing a ferocious fiscal squeeze on half Europe is demented and destructive. This Hooveresque strategy will tip these countries into a debt spiral, along the lines described by Irving Fisher in Debt Deflation Causes of Great Depressions (Economica, 1933). It will prove self-defeating, starting with Greece, which will see its public debt galloping up to 135pc of GDP this year. The policy will rebound against German exporters and Germany’s under-capitalized banks, ultimately dragging the entire eurozone into a deflationary swamp. Note that core inflation fell to a record low of 0.8pc in February. France’s Christine Lagarde is right to complain that Germany’s policy of perpetual wage-squeeze and export fetishism is untenable, and ultimately ruinous for monetary union...
Last edited by GRG55; March 18, 2010, 06:59 AM.Comment
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Re: EU rolls over!
Yep. I don't see it happening and reiterate my initial view that Greece will be "sacrificed" to encourage Spain, Italy, et al to get their respective houses in order.
A German-led bailout of Greece is politically impossible for Merkel.
Essentially, Germany has called Greece's IMF bluff. Very soon now we'll see where the cards fall. Greece is stating today that the high interest rates (6% is high???) are making the austerity program impossible to implement.Comment
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Re: EU rolls over!
It is also important to keep in mind that the knock down effects of Greece (and the rest of the PIIGS) is not a bad thing for Germany.
An overly strong euro is something which Germany greatly dislikes - Germany is unwilling to print to reduce the strength of the euro but simultaneously doesn't enjoy the impact of a strong euro on German exports.
Were I a nasty minded type - and I am - I would act exactly as Germany has: maintain maximum uncertainty about Greece to simultaneously ensure no bailout, while at the same time holding out a carrot for Greece to Latvianize itself.
If Greece goes through with the Latvianization, all well and good - the ongoing EU subsidy drain into Greece can end.
If not, trickle the 'assistance' to help your own banks transition out of Greek debt while simultaneously enjoying the benefit of a weaker euro on your exports.Comment
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Re: EU rolls over!
Ye Gods he sounds somewhat desperate to get some money quick smart.
The hairs are standing up on the back of my neck- never a good omenComment
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Re: EU rolls over!
Hello Dominique, George here.
Everything's fine, thanks...other than Athens, which is a bit of a mess after the latest street parties. I really do wish the students would go back to smashing plates in restaurants, instead of store windows in Kolonáki.
I meant to call earlier, but when I tried to get your number from Sarkozy and then Trichet, can you believe it, both of them denied having it. Angela finally had Schäuble find it for me.
The Germans? No, they haven't changed their tune. Are we really sure the Germans are Europeans? They are so different from the rest of us. Work, work, work all the time. Silvio's probably right...too much pickled cabbage.
Yes, I know Sarko, Jean-Claude, José Manuel, Prodi and the others keep saying all the right things...but every time I tell them "Show me the money", they hang up. At least Angela and her henchman banker Weber are straight up with me...they said they wouldn't even lend us a Mercedes hubcap on our credit.
Listen, I called to confirm that Ada has the beach house ready, and we're both looking forward to seeing you this weekend. Don't forget to bring your swimsuit and your chequebook. Damn good thing the Indians paid cash for all that gold you sold them last year...El-Erian Says IMF to Aid Greece After ‘Chicken’ Game
March 18 (Bloomberg) -- The International Monetary Fund will come to the rescue of debt-strapped Greece after a “game of chicken,” according to Mohamed El-Erian, co-chief investment officer at Pacific Investment Management Co.
“The IMF will come in, but it’s going to be a bumpy process,” said El-Erian, who is also chief executive officer of Newport Beach, California-based Pacific Investment Management Co., in an interview on Bloomberg Radio. “There is no immediate solution. Don’t underestimate the game of chicken between Greece, the EU and the IMF.”
Greece’s Prime Minister George Papandreou set a one-week deadline for the European Union to craft a financial aid mechanism for Greece, challenging Germany to give up its doubts about a rescue package...
...“Europe cannot come up with the financing that Greece needs and Europe cannot impose conditionality on Greece,” El Erian said. “We have seen the movie over and over again where a country runs into a fiscal issue. The key thing for investors is to not to rush in on the first evidence of anything, but to wait. This is a very complicated process of bringing together enough domestic support for a meaningful adjustment process and financing.”
German Chancellor Angela Merkel, who says Greece won’t need a bailout, told parliament in Berlin yesterday that in the absence of a European lender of last resort, calling in the IMF “would probably have to be the way out right now if action were to be taken.”...
Last edited by GRG55; March 18, 2010, 10:25 PM.Comment
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Re: EU rolls over!
Looks like a FIRE-era version of the Maginot Line is now under construction...:pOriginally posted by GRG55 View Post
Sarkozy Opposes IMF Greek Loan, Widens German Rift
March 19 (Bloomberg) -- President Nicolas Sarkozy opposes Germany’s push for an International Monetary Fund loan to Greece, pitting the euro area’s biggest members against one another over a rescue plan...
...The French official’s remarks, coming the week before a European summit in Brussels, follow a shift by German Chancellor Angela Merkel toward an IMF-led package for Greece, which is struggling to reduce Europe’s biggest budget deficit. Merkel said this week that calling in the IMF “would probably have to be the way out right now if action were to be taken.”...
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Re: EU rolls over!
All over the world, in every way, on every day, the solution to too much debt is...more debt...:rolleyes:Originally posted by GRG55 View Post
Barroso wants EU to agree loans for Greece
(Reuters) - European Commission President Jose Manuel Barroso urged EU member states on Friday to agree a standby aid package Greece after Athens said it could turn to the IMF for help.
Barroso said the 16 countries that share the euro currency should be ready to make coordinated bilateral loans to Greece to help it reduce its budget deficit and refinance its debts, which are nearing 120 percent of gross domestic product...
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