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Thread: Black Monday 2: Economic Boogaloo

  1. #481
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    Quote Originally Posted by publius View Post
    The rumor mill is hot with a tale, which you can take with a healthy grain of salt but nonetheless should be aware of, of leaks from two "top Wall Street firms" that are said to be in possesion of the default timetable for Greece. That is, the secret plan. According to the tale, just as I suspected, Germany wants Greece out of the euro, and wants to "amputate and cauterize" Greece from the body Europa. "Cauterizing" consists of stopping the super-Lehman contagion that a Greek default might trigger, much worse than the 2008 meltdown, and they want to have that plan in place before they pull the trigger. D-day is supposedly the weekend after Friday, March 23rd, with default announced after the close of business, and the cauterizing carried out over that weekend.

    Again, just a rumor.
    So what's the wait?
    Shift as much as possible of the debt from private to public in the meantime?


    Guess, one of the firms is Goldman Sachs?


    Peter

  2. #482
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    I don't know who one of the "top firms" is supposed to be, but if it were true, if anyone would know about it, it would be Goldman Sachs.

    A possible reason for the wait is to get some plan in place to contain contagion, to stop another Lehman event. In the minds of the financial elite, letting Lehman go is seen as a massive mistake, and they'll do anything, including selling the first born children to stop another one. The fear is that a Greek default would be Lehman 2.0 and on steroids, Super-Lehman.

    It's becoming painfully clear that the only option is indeed default, and even the elite, the wizards of smart, are realizing that. Debt slavery is not to going to work, and Greece will be destroyed in probably some violent revolution if they keep it up (which will be an even worse default, of course). But if they do default, then that will trigger a cascade of other panics and failures. So, try to figure out something (including selling your first born, law and ethics and everything else be damned) to ringfence it off.

  3. #483
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    Or could it be that the 'wizards of smart' have another purpose.
    To run Greece into the ground as a warning example to others.
    They wouldn't want there to be any doubt that not paying your debt is bad.

    A bit of incentive to others.. :-)

  4. #484
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    Quote Originally Posted by baskerbosse View Post
    Or could it be that the 'wizards of smart' have another purpose.
    To run Greece into the ground as a warning example to others.
    They wouldn't want there to be any doubt that not paying your debt is bad.

    A bit of incentive to others.. :-)
    I dunno, they might decide/realize that it's better to go bankrupt and start over. I advocated this in the previous thread and the response was that it would destroy the system... which was rather my point. The system is already broken, instead of limping along pretending that it can still work, we just need to start over with something new. The US is in a unique position of power because of the reserve currency, which makes it want to resist change; however, even in a collapse the US has vast resources that would give it a head-start in any new system. So, prolonging the fall of western capitalism* won't make a difference, unless the rest of the world blames the US, or a cabal of American financiers. So, maybe the "leak" of German intentions is intended to defray those suspicions (and it may not be a false rumor but conveniently true). In other words, this signals the beginning of the end, the exit strategies leading to the Post-(Financial)-Apocalypse.

    *I mean that in a historical and economic sense, not a political demagoguery.
    Et tu BAUT? Quantum mutatus ab illo.

  5. #485
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    And here's another Germany really wants Greece to default story:

    http://www.telegraph.co.uk/finance/f...-the-euro.html

    Note he mentions the rumors on Wall Street of default around March 20, when a big debt payment is due. The 23rd is the Friday of that week.

  6. #486
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    Quote Originally Posted by baskerbosse View Post
    Or could it be that the 'wizards of smart' have another purpose.
    To run Greece into the ground as a warning example to others.
    They wouldn't want there to be any doubt that not paying your debt is bad.

    A bit of incentive to others.. :-)
    While the bondholders would love to be paid in full, they are not that high on the totem pole of priority really. The main reasons are fear of contagion, crashing the system, and then the main thing for the EU elite, the Eurocrats as it were, is they don't want to admit failure. The EU was their grand project and Greece defaulting and leaving the monetary union would be a failure of the grand system, the utopian vision they've worked all their lives to put together. Their whole world would come crashing down and so they resist the handwriting on the wall at all costs.

  7. #487
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    It's getting to the point where it isn't handwriting but rather vary large, easy to read, flaming block letters.
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  8. #488
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    I've been concerned that brinkmenship has been practiced for almost two decades, so I am plesently surprised that collapse is still in the future by at least one day. Employment increases are because the population has increased, corrected by showing the employed percentage of the population, but not corrected to show the average age of both the work force and the population has increased. Likely fewer paid over time hours are being worked. More hourly people work less than a 40 hour week. More people are not reporting all their income = tax avoidance. More seniors are working well past age 65. Teen age employment is dropping. Perhaps 10% of the young adults are essentially unemployable due to drug addicton, bad habits, bad attitudes, and health problems up from about 5% 20 years ago. Neil

  9. #489
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    Quote Originally Posted by neilzero View Post
    Employment increases are because the population has increased, corrected by showing the employed percentage of the population, but not corrected to show the average age of both the work force and the population has increased. Likely fewer paid over time hours are being worked. More hourly people work less than a 40 hour week. More people are not reporting all their income = tax avoidance. More seniors are working well past age 65. Teen age employment is dropping. Perhaps 10% of the young adults are essentially unemployable due to drug addicton, bad habits, bad attitudes, and health problems up from about 5% 20 years ago. Neil
    The simple fact is there is both fewer jobs and fewer good jobs, but you're right that there's no simple explanation. There is both a shortage of jobs and a shortage of workers, which doesn't make sense unless one looks at the details. There are jobs for people who have special and or high qualifications, such as engineers and CNC machine operators. To become an engineer I'd have to go back to college for a couple years and hope I pass higher math. To become a CNC machine operator, I might find that guy who was offering to do on the job paid training with a guaranteed $13/hour position, but even if the owner is still offering that deal, it's less than I made in retail support before I got a degree and is not enough to pay back my student loans (especially since I'd have to move into a higher rent area) and may ruin my chances to ever get a higher paying office job ever again. I don't think that I or other people are ready to give up and resign ourselves to a permanently downgraded fate.

    Likewise, some people have reported that we are in the Great American Speed-Up and others have responded that it's a slowdown, either of which may be true depending on the job. Where people can be pushed harder, they are, but where specialists must be kept in case something comes up, they are twiddling their thumbs at their desks.

    I also think some people are getting frustrated with job boards due to business opportunities presented as jobs and outright job scams. There's not much that's more disheartening than being told you're special only to show up and find lots of people are being "hired" in a throw-away one-size-fits-all "job" that's predicated on the premise of "throw 'em against the wall and see what sticks." But I digress.
    Et tu BAUT? Quantum mutatus ab illo.

  10. #490
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    Quote Originally Posted by publius View Post
    And here's another Germany really wants Greece to default story:

    http://www.telegraph.co.uk/finance/f...-the-euro.html

    Note he mentions the rumors on Wall Street of default around March 20, when a big debt payment is due. The 23rd is the Friday of that week.
    LOL, you gotta love the way the BAUT server abbreviates the URL.
    Et tu BAUT? Quantum mutatus ab illo.

  11. #491
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    so where do we put our savings during March,... Euros are out, GBP dragged too, USD has its own problems too, Swiss Frank?? Krone?? physical Gold?? Tents and water bottles?

  12. #492
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    I wouldn't be surprised if gold spikes around that time.

    NB! For investors: If you lose money based on that statement don't come whining to me, you wouldn't have given me any of your profits if you'd made a killing on it.
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  13. #493
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    As a friend of mine states: "
    Free advice is worth exactly what you pay for it."

  14. #494
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    More of the same, blaming unemployment on old people refusing to retire/die. Actually, we should blame their parents for failing to instill in them an ethic that could have prevented this, but I won't expand on that as it may violate the rules.
    Et tu BAUT? Quantum mutatus ab illo.

  15. #495
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    And Greece is now saved again for the umpteenth time. Party on, Dow 13K.

  16. #496
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    How long before the first reports that Greece has not actually been saved?
    I may have many faults, but being wrong ain't one of them. - Jimmy Hoffa

  17. #497
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    Quote Originally Posted by Extravoice View Post
    How long before the first reports that Greece has not actually been saved?
    March 24th.
    Et tu BAUT? Quantum mutatus ab illo.

  18. #498
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    There's an election coming in April, and the current government will be thrown out according to the polls (they'd chop off their heads if they could). The center is falling apart, and support is splintering between parties on the two extremes. Expect the eurocrats to try to pull something to postpone those elections.

    GDP is collapsing and unemployment is surging. The last figures showed a rough 7% drop in GDP, and that's an actual year over year figure, not an an annualized quarterly change (and that incidently was -7% in the last quarter as well). Unemployment hit 20.9%. And youth unemployment (age 25 and below) is just under 50%. 50%! The GDP drop was over *twice* the projections (which projected a 3% GDP drop and a return to growth soon after). The drop over the year is amazing. Unemployment was around 13%+ I believe, so that's an increase of 7 percentage points in one year.

    This deal just imposes more of that debt slavery. Even if the current projections are correct, debt to GDP will still be 130% by 2020. In reality it will be much worse than that of course. There will be a revolution at the ballot box in April, and if they try to stop that, there will soon be a real revolution, if not one anyway.

    I think the powers that be realize all that, save for perhaps a few who have gone delusional in trying to hold on to the EU dream and they're just trying to hold it together long enough to prepare, to "cauterize" the amputation(s) that will be needed.

  19. #499
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    An apropos of nothing, Iceland just got back into investment grade territory in the ratings (just got upgraded to the lowest level that is still considered investment grade, outlook positive) and unemployment is down to 6%. They extended the middle finger to imposed debt slavery. Of course, Greece in not Iceland, but at this point, to save themselves, extending that middle finger of default is their only option. It won't be rosy, but the current path of debt slavery is certain doom.

  20. #500
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    To see what I mean about debt slavery, the deal includes a provision requiring Greece to pass a law giving debt service priority over everything else, and to further that, require them to set up an "escrow account" independent of all other accounts for that debt service, and have the operations surpervised by the EU. That escrow account must hold enough cash for 3 month's future debt service.

    So, as revenue comes in, a fraction large enough to build up and maintain that 3 month buffer must go the escrow account first, controlled by the EU, without exception, and anything left over can then fund the rest of the government, everything else.

    That's the deal the Greek government has accepted.

  21. #501
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    The hacker group Anonymous just hacked the Greek Justice Mininstry's web site and put up a list of demands. Last I checked, they had removed the hacked page buy you were redirected to some generic page by the hosting service.

    At any rate they put up a list of demands, including that the government resign and hold elections immediately, and all "Troika" officials be kicked out, and no more money be paid to the bondholders and all that. If the demands aren't met, they threaten to hack into the government accounts and delete all taxpayer information, making it impossible to collect taxes.

  22. #502
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    Quote Originally Posted by publius View Post
    The hacker group Anonymous just hacked the Greek Justice Mininstry's web site and put up a list of demands. Last I checked, they had removed the hacked page buy you were redirected to some generic page by the hosting service.

    At any rate they put up a list of demands, including that the government resign and hold elections immediately, and all "Troika" officials be kicked out, and no more money be paid to the bondholders and all that. If the demands aren't met, they threaten to hack into the government accounts and delete all taxpayer information, making it impossible to collect taxes.
    Wow that could be the first real internet revolution and we know from recent USA experience that they could do it too!

  23. #503
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    And we learned what the bond market thought of the Greek deal:

    http://www.bloomberg.com/quote/GGGB1YR:IND

    The 1yr is now at 753% with a high of 770%.

    As I've rambled about before, when yields get this high, it's just sort of ridiculous. It's not a real interest rate in the normal sense, just a recovery value, how many cents on the dollar/euro somebody will pay for the paper. The simple 1yr zero coupon price fraction formula is just 1/(1 + r). As that goes to zero (bond is worthless), the yield r goes to infinity -- when that fraction gets low, small changes in price cause huge swings in 'r'.

    Thus, when yields are 750%, the price is 1/8.5 = 12%, 12 cents on the euro (that ignores any possible coupon, but the effect is small for 1yr and when r is large compared to the coupon). You'll find that across the curve, the discount is about the same, even though the yield figure looks to vary widely (that's the effect of the longer duration and the coupon compounding).

    And then some reporter at the Financial Times got a leaked internal memo from the EU on this mess which shows the EU elite know exactly what we've been discussing, that austerity is going to kill Greece and the economic performance will be much worse than the public projections they've put out. Even the most optimistic real projection has debt to GDP at 160% in
    2020.

    And their other big conclusion in the not-public report is that Greece is going to be shut out of the markets for years and thus Greece will be on the EU dole for the foreseeable future. Would you lend money to Greece under the current status quo? They know nobody will. The bond market's reaction today just confirms that conclusion.

  24. #504
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    Quote Originally Posted by publius View Post
    If the demands aren't met, they threaten to hack into the government accounts and delete all taxpayer information, making it impossible to collect taxes.
    With all due respect, I think that's a pretty optimistic definition of the word "impossible" there.

  25. #505
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    Quote Originally Posted by publius View Post
    The hacker group Anonymous just hacked the Greek Justice Mininstry's web site and put up a list of demands. Last I checked, they had removed the hacked page buy you were redirected to some generic page by the hosting service.

    At any rate they put up a list of demands, including that the government resign and hold elections immediately, and all "Troika" officials be kicked out, and no more money be paid to the bondholders and all that. If the demands aren't met, they threaten to hack into the government accounts and delete all taxpayer information, making it impossible to collect taxes.
    And so they've taken the terrorist mantle upon themselves.

    They're threatening actions that'll directly harm the majority of the civilians in the country.
    I'll have the shears ready in case I ever meet one, as these are people that need to have their fingers cut off.
    Last edited by HenrikOlsen; 2012-Feb-22 at 09:29 PM.
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  26. #506
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    I don't think they have anywhere near the capability to pull off something like that and are just a bunch of malcontent idiots sitting around in their mothers' basements who fancy themselves revolutionaries.

  27. #507
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    Which doesn't mean they shouldn't have their fingers cut off for making that threat.
    They have by their actions declared their belief in preemptive vigilantism, it's only fair they get a taste of what that actually means.
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    Chase after the truth like all hell and you'll free yourself, even though you never touch its coat tails. Clarence Darrow
    A person who won't read has no advantage over one who can't read. Mark Twain

  28. #508
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    Quote Originally Posted by HenrikOlsen View Post
    And so they've taken the terrorist mantle upon themselves.

    They're threatening actions that'll directly harm the majority of the civilians in the country.
    I'll have the shears ready in case I ever meet one, as these are people that need to have their fingers cut off.
    Revolutions are rarely, technically legal.
    Et tu BAUT? Quantum mutatus ab illo.

  29. #509
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    But the terrorist label has the advantage that it currently negates most civil and legal rights and privileges and these <nasty word>s took on the mantle voluntarily.
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    Being ignorant is not so much a shame, as being unwilling to learn. Benjamin Franklin
    Chase after the truth like all hell and you'll free yourself, even though you never touch its coat tails. Clarence Darrow
    A person who won't read has no advantage over one who can't read. Mark Twain

  30. #510
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    Quote Originally Posted by HenrikOlsen View Post
    But the terrorist label has the advantage that it currently negates most civil and legal rights and privileges and these <nasty word>s took on the mantle voluntarily.
    Without getting into a political debate, I'll say that I'm not sure if "terrorist" has been defined yet. However, if we take it at a purely semantic view, it would seem to denote the use of actual terror. In other words, it is violence where the psychological effect is more important than the physical/tangible damage. What Anonymous is doing would seem more like vandalism than terrorism. Perhaps the defining characteristic is whether or not the majority of the population of Greece would be terrified or happy to hear that the government tax system that takes their money has been sabotaged.
    Et tu BAUT? Quantum mutatus ab illo.

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