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The Socialists are the latest group to fail to form a government in Greece. It looks like it is back to the polls. The main problem is that it is likely the next tranche of the bailout (4.5B EURO) will be withheld pending the outcome. In that event, Greece would, at least technically, default on it's obligations.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

I had not yet heard the Socialists had failed I thought perhaps there might have been a slim chance they could have carried it.........Ah well, back to another election and more expenditure that other eurozone members may eventually have to pay.

You would think a group of intelligent adults....[and I hate using both the latter words in connection will politicians!]... would have enough sence to see the suffering their country is going through. Frankly Greece seems to be in desperate need of another Lord Byron, and while he did little more than inspire, it was that inspiration that was needed, then and perhaps now?

Huanga.

If the parties that came first and second in the election could not form a coalition, the Socialists had no chance.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

This is the (translated via Google) text of a letter, sent by Tsipras (head of the Socialists), to various European luminaries.

Letter from the President of the Group SYRIZA MCM , A word Tsipras

the European Commission President Jose Manuel Barroso
the President of the European Council Van Rompuy
the President of the European Parliament Martin Schulz

Notification:

President of European Central Bank Mario Drago
President of the Eurogroup Jean-Claude Juncker

Athens, Thursday 10 May 2012

Dear Mr. President,

I am sending you this letter after receipt of the exploratory mandate from the Greek President to ascertain the possibility of forming a Government enjoying the confidence of Parliament, under our Constitution. This letter builds upon the previous letter I sent on 21 February.

The vote of the Greek people Sunday May 6th nullifies/delegitimizes/makes illegal the political Memorandum of Understanding / Memorandum of Economic and Financial Policy signed by the previous Papademos government and the leaders of two political parties that had guaranteed the parliamentary majority of his government. Both parties recorded a loss of roughly 3.5 million votes, totaling 33.5% share of total votes.

Please note that before this, the MoU / MEFP had already been delegitimized in terms of its potential for economic success. But it's not just that the Memorandum of Understanding / MEFP failed to achieve its own objectives. It has also failed to address the structural imbalances and inequalities of the Greek economy. SYRIZA noted over the years the inherent weaknesses of the economy. All governments who work closely with the European Union ignored our recommendations for specific reforms.

Please also note that because of the policies of the Memorandum of Understanding / MEFP, Greece in 2012 is the only European country to endure its fifth successive year of deep recession during peacetime. Moreover the Bond Exchange Program (PSI) has failed to ensure the long-term viability of Greek debt which continues rising as a share of GDP. Austerity can in no way be the cure to recession. Therefore the immediate, socially just, reversal of the continuous decline of our economy is imperative.

We must urgently ensure economic and social stability in our country. For this purpose, we must take every political initiative to reverse the austerity and recession. Because apart from the lack of democratic legitimacy, continuing a program of internal devaluation is leading economy to catastrophy without creating conditions for recovery. The internal devaluation tends to lead to a humanitarian crisis.

Thus we need to rethink the entire context of the existing strategy, since it not only threatens Greece's social cohesion and stability, but is also a source of instability for the European Union and the EuroZone itself.

The common future of the European peoples is under the threat of such catastrophic choices. It is our deeply held belief that the economic crisis is of a European nature, and thus the solution must be found at the European level.

Sincerely,

Alexis Tsipras

President K.O SYRIZA

Vice President of the European Left Party

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

Ahoj Peter!

Thank you for posting that letter.

It sounds eminently reasonable and positive from a party that is labelled as the far left in the Anglo-Saxon press.

This is the party that is likely to come first if there is another round of elections in Greece, so perhaps there is hope after all.

Cheers,

Honza

Those are some strong words if the translation is accurate.

According to Bloomberg, Economists at Citigroup Inc. say the odds of a Greek exit "in the next 18 months are as high as 75 percent."

Those odds are being priced into the market at this time. A lot going on right now. Between the political deadlock in Greece, Hollande's victory in France and last week's revelation about JP Morgan's $2Billion loss from a badly managed trade in their investment office (likely to get worse), the markets are nervous.

The dollar and US debt (also UK and German bonds) are in demand while gold, EURO, equities and most everything else is down.

David

If you call that 'hope' then you are suffering from the same 'disease' as the writer. If Greece goes down the path of no austerity then 2 things are going to happen. Firstly, Greece will default on it's debts and, secondly, Greece will exit the EURO. Both will be disastrous, at least in the short to medium term, for Greece.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

When all of this is over I wonder who will be held responsible. Will it be the bankers or the politicians or perhaps the media? Although it has been the media that has told us of the greed of the bankers and the ineptitude of the politicians, so that should mean a few brownie points for them.

Sad, but it would appear they are now gearing up to report the first departure of a country from the eurozone. In my mind I have this image of the hundreds of little mini-Murdochs, all rubbing their hands at the thought of the millions they stand to make from the continuing crisis. In this I guess they are similar to the bankers and politicians, their individual politicial preferences come second to the monies to be made?

Such is life.

Huanga,

There lies the problem. If there were accountability perhaps set in some precedence then we probably wouldn't be in this mess. Here in the States the Politicians are in the Bankers pockets and vice versa.
If I balanced my check book like our Politicians did, I'd be in prison. If and when they get caught they'll get the slap on the wrist and don't do it again speech. We have a saying here, "Justice is for those who can afford it".

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"Life is a tough Teacher, it gives you the test first and the lesson later"
Anonymous

[speculation]

Greece holds fresh elections.

Again, no conculsive results, various attempts to form a government fail.

Greece withdraws from Euro under pressure from within and without; the announcement is timed for a Friday evening to give the markets time to "digest" the news over the weekend.

At the point of exit, Greece introduces the "New Drachma" valued at 1:1 with the Euro.

On the first Monday, the New Drachma falls heavily in value, and alongside this there is a slight recovery in the Euro.

For a period of time, Euro banknotes overprinted "New Drachma" are used, until new notes can be printed.

Within 6 months, the New Drachma is worth less than 1% of its original value and the Greek economy is in ruins.

Still a viable government cannot be formed and further elections are scheduled.

Within a further 6 months, there will be a military government in Greece.

[/speculation]

Out of the mouth of babes.

http://www.youtube.com/watch?v=axS-QdUkMqk

Describes how the loss of control of your national financial soviergnty effects your local economy.

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Please learn me.

"who will be held responsible?"

For what? The treaty of Rome (1955 or so), the Common Market, the admission of the "olive oil economies", or the Common currency?

Actually, the original idea of a common European market is pretty good. Reduced tariffs and customs cooperation between members; Same for common technical and safety standards to open markets; Expedited work permits; Mutual currency support; Law enforcement cooperation; etc, etc. Benelux was a first attempt for those with long memories.

But trying to get all the current countries using one currency, with all risks we are now seeing, was folly. Anyone who has visited both Northern and Southern Europe will have seen that. To expect that every country would abide by what were essentially Teutonic rules was short sighted. Interesting that in the run-up to the single currency, it was often referred to as the "Euro-Mark".

To me, Germany is the principal country responsible. Simply put, they wanted to control Europe.

I think your speculation is closer to truth than we may realize.

Optimists

Now give us the bad news- the impact on the Euro and the dollar as Greece defaults on all its debts, including the billions owed to the ECB and the IMF.

Gavin,

Not too far off from possible. However, I doubt Greece will have the luxury of picking the day to switch currencies. They will have to act hastily to avoid bank runs.

If the Euro were to trade on its new fundamentals, I agree, it should experience a bit of a recovery, however, there will be panic in the markets and NOTHING will trade on its fundamentals. The increased uncertainty of the Euro's future will likely cause it to crash.

Also, if Greece quits the Euro it will cease being the focus of the news as attention turns immediately to the other Southern Eurozone nations and Germany's response.

Let's not forget that defaults and currency devaluations are not rare (unfortunately) and that every country that went down this path experienced a return of economic growth, eventually.

The sun will continue to rise, the clouds will depart, ...

David

Everybody ready ?

Here we go then, let the panic commence! Didn't think that Spain would be the second domino but the knock on has already hit the Nikkei for the largest fall since last August.

This should in fact as I have mentioned many times bring Gresham's Law into the public eye as I think you will see the Bank runs that have been rolling in at around 700 million Euros A DAY since May 6th and without Greshams Law bringing Drachmas into circulation the money will simply run out.

The flow of euros into depositors' hands ultimately originates at the European Central Bank, and the ECB is no doubt very nervous about continuing to supply them for fear of huge, open-ended exposure to a Greece that is potentially on its way out. The ECB may already be rationing euros to Greece. If that continues or scales up, we are then talking about effective capital controls—the ATMs no longer dispense euro notes—and more pressure for the introduction of alternative scrip in Greece.

Exit, in other words, becomes a fait accompli.

Plenty of financial news today, Northern Rock is 2Bn down, Santander UK and 16 Spanish banks have been downgraded by Moody's( If anyone out there actually trusts their ratings agencies anymore!), and more banking directors finally attacking the system we have, rather than the idiots running it.

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Looking for South Korea up to 1884-1951,North Korea 1st issue 1946-1957,China 1898-1912 and P.R.C 1963- 1980,Thailand 1883- 1918, Commonwealth QV Issues.

A few facts and statistics about derivatives, to give you more pause for thought, excerpted from commentary by Canadian David Chapman:

"...Global banks, especially the large US money center banks, are major players in the global derivatives market. The Bank for International Settlements (BIS) estimates the size of this market at $708 trillion. Some believe it is actually over one quadrillion dollars. To put that in perspective, the world's GDP is estimated at only $70 trillion and US government debt is $15 trillion. The global derivatives market is 10 times the size of world GDP.

The top five US trading institutions in the derivatives market are JP Morgan Chase, Citigroup, Bank of America, Goldman Sachs, and Morgan Stanley. Together they account for 96% of all derivatives outstanding in the US market, estimated at $231 trillion by the US Comptroller of the Currency. The largest is JPM, with over $70 trillion of derivatives; it has assets of $1.8 trillion.

Derivatives are notional amounts so in that respect they are not comparable to assets. But they do have considerable risk. There are four main types: futures and forwards, swaps, options, and credit derivatives. The latter category includes the aforementioned CDSs. Of the total US banking position, interest rate swaps is the largest, making up some 63% of all derivative contracts. There are netting agreements between the major players in the industry such that some 92% of contracts are covered by the netting benefit.

Derivatives trading and other trading operations make up a considerable percentage of the banks' revenues. That is why trading operations are so lucrative and why the players in the industry get paid huge bonuses as a result. Goldman Sachs is the biggest trader on the street and there have been years where the trading operations made up over 70% of its revenue. In a bad year trading revenue can result in losses, as Hong Kong Shanghai Bank USA (HSBC) found out last year in the third quarter.

Derivatives do pose potential huge risks to the banks' capital. According to the US Comptroller of the Currency the total percentage credit exposure to capital of JPM as of December 31, 2011 was 256%. Total credit exposure for all contracts was $348 billion although half of that is covered by netting agreements. The odds of all of them collapsing at once are supposedly low, but if everything went wrong at once JPM's capital would be wiped out twice over. Goldman Sachs' total percentage credit exposure is even larger, at 794%..."

I find it hard to not beleive this crash was enginered, all the rich seem to be getting richer and we so called poor are worse of than ever. Every time things like this happen they get richer surely not chance?
Sceptic petec

Damn .. I've been tossing these into my junk boxes!

I could buy dinner with them soon.

uhm... what are the chances (including the coins) these will be "reused" IF the country/countries do exit from EURO?

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Mint, or used?

What are the chances? About zero. All those were demonetised. Any country leaving the EURO will issue new currency and will leave all the old money in it's demonetised state.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

I think most states would issue new currencies though I wouldn't be suprised if just a few reverted to their old notes and coins. German banks have always accepted their old Deutchmarks in exchange for Euros and still have 13.31 billion marks still missing and very valid indeed. Spanish, Irish, Austrian and Luxembourg (notes only) banks also will take and exchange their old currencies indefinitly.

http://www.thelocal.de/national/20120101-39851.html

http://www.bundesbank.de/bargeld/bargel ... ndm.en.php

The Deutsche Bundesbank has guaranteed that all German mark in cash form may be changed into euros indefinitely, and one may do so at any branch of the Bundesbank in Germany. Banknotes can even be sent to the bank by mail.

On 31 December 1998, the European Central Bank (ECB) fixed the irrevocable exchange rate, effective 1 January 1999, for German mark to euros as DM 1.95583 = €1.

Clones ( an Irish Village ) has started using the Punt again and Bristol along with some other English towns are issuing local currency that can only be used locally. I'm sure some Spanish towns such as Mugardos have also started using the peseta for change again.

Time for one country to be brave and bring back the Denarius!

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Looking for South Korea up to 1884-1951,North Korea 1st issue 1946-1957,China 1898-1912 and P.R.C 1963- 1980,Thailand 1883- 1918, Commonwealth QV Issues.

Do you want the Roman Empire back as well?

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

Thats an excellent idea Peter. The G1 to 7 could dance along the Appian way. Preceeded of course by G8 Mrs Merkyl, and the vestal virgins delicately tossing euros to the left and to the right.

Huanga.

This is the real reason for a possible "domino effect" in euro-zone. If Greece proves that there is life after euro, then more countries will be tempted to exit.

The dollar is doing well

As is normal in these circumstances, there has been a flight to quality, to the safe haven of the USD (Treasuries in particular).

The AUD has fallen below parity (currently at US$0.9864). Fundamentals haven't changed, but the outlook in Europe sure has. I am sure the Federal Reserve would prefer to see the USD lower than it is, given the weakness in the US economy.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

What will collapse first ... the Euro ... or Faceplant (.... ooops, I meant 'Facebook')?

Now there was a ridiculously over-hyped IPO!

Well, the Euro was down a half-cent against the dollar over the last 24 hours BUT Facebook was down 11%.

Love your comment..what a headline it would be...

"Facebook does a Faceplant"

To return to the heading!

Its difficult to understand how the politicians and bureaucrats of the UE can be so divided. Are they really so detached from the ongoing crisis that threatens to disintegrate their individual countries, that they really cannot see what is going on around them. Or is their salary and perks so great that they neither feel nor fear what may happen?

I listen to them and all I hear is the Germans demanding that austerity continue, or the Greeks and others complain it is too much, and must be relaxed or re-vamped. As a body the politicians of the UE seem united only on one word..... Growth!

However, they seem unable to explain how that growth will come to Europe. In any industry they would care to name, the Japanese and the Koreans can do it better and cheaper, and if they want it cheaper that them. Then the Chinese and the Indians will find a way.

The only growth that appears on the horizons for Europe and North America is employment opportunities wearing a blue uniform, and learning the correct way to use a baton.

Still, I enjoy a visit there now and again and perhaps one day some enterprising UE bureaucrat will ask the Republics of South America how they used to grow bananas!!

Huanga.

Huanga, the Western developed countries cannot compete on labour costs. However, most of the new technologies and advances in existing technologies arise from those countries, the USA in particular.

Compared to Australia, where we have not had a recession in 2 decades, the US manufacturing sector is vibrant!

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

Peter, when they start growing bananas. They may have too!



....and yet they have a major unemployment problem. Perhaps they too should be looking at what new technologies can be applied to banana growing?
However todays possible clash of Teutonic will meeting Gaulish socialism should be interesting.

Huanga

Huanga, a couple of comments



I notice also that the Madame Le garde is now calling for a change in direction towards 'growth', how having to change her stance and make that comment must have hurt her credibility- and Merkel.

Another opinion on the collapse of the dollar from Moneynews.com

http://finance.uncommonwisdomdaily.com/ ... ec=4857107

I love conspiracy theories.

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"Life is a tough Teacher, it gives you the test first and the lesson later"
Anonymous

I don't even know where to start with that video. Let's just settle on one aspect only. The Chinese government is able to report economic figures, like GDP, less than a month after the end of the period being reported. In Australia it takes at least 6 weeks for the Bureau of Statistics to compile the same sort of data!

It is generally accepted that the Chinese figures are approximations only and do not reflect reality, yet they are quoted as fact in the video. The reality is that nobody, not even the Chinese central government, knows exactly what the economic performance is.

Then there is wages growth. The overwhelming majority of Chinese workers could not dream of earning the wages available in the USA. Quoting wage growth comparisons as some sort of shocking statistic, in such circumstances, is laughable. Most Chinese wages could double tomorrow and still be a fraction of what most Americans earn.

Just one last thing, the quoted Chinese unemployment rate. The huge population of rural poor may be considered 'employed', but I bet they would want better if the opportunity came along!

Conspiracy theories indeed! I hope there aren't too many who hitch their financial wagon to this guy!

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

maszki. The video is a sales pitch..pure and simple, and looking to seperate like minded republicans from their cash by the over used scare tactics. I would not pay to much attention to it.

Meanwhile back at the 'Wee in Brussels' ranch!!......The much expected clash of the German Frau. and the French socialist failed to happen. Instead there was civil meeting of a limp looking hamburger and an underdeveloped tadpole! So much for a clash of titans!!

The valkyries must be running out of tissues in trying to stem poor old Bismarks tears, and I could not begin to think what Napoleon wherever he is....if anywhere, would now be calling Hollande?

As for any progress. Procrastination and the word.... 'growth', again!!

Huanga.

I thought this was a nifty cartoon, although (I confess) I'm not sure how to interpret it...

Nice, the rest of the Euro Zone against Germany. Plays on the fact that Germany is the primary (possibly now the sole) driver behind the drive for austerity. Germany wants Europe to get it's house in order, lest the contagion spreads there. The Bond markets (seen as the executioner) is being hit by the French suggestion that austerity is not required.

Unfortunately, as I suggested would happen, we have politicians promising the electorate that everything will be OK and that austerity is not needed. That is, they can have their cake and eat it too! They will promise the earth to get elected. Once elected, however, they will either have to change their rhetoric or spend for 'growth'. There is only 2 ways to do this; Overturn the mandate of the ECB and print money, or, get out of the Euro and print money domestically.

Unfortunately, the reality is much more bleak. The sooner countries like Spain and Italy are able to assert the competitive advantage of a currency worth less than a German one the better. Or so it seems to me. From a German perspective, such a solution is far less palatable.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

I traveled extensively in Spain, less in Italy and occasionally in Greece before the Euro in the '70's and '80's. Their currencies rose and fell but they did quite well moving at slightly slower pace the the almighty Reichsmark.

A monthly crisis or so, their currency falls making their exports more attractive and imports more expensive. They either sorted their problems or did not. What's wrong with that? It will probably return to that scenario one of these days.

And, I lived in France during that time and the Franc was not that much stronger either.

“More than any time in history mankind faces a crossroads. One path leads to despair and utter hopelessness, the other to total extinction. Let us pray that we have the wisdom to choose correctly.” Woody Allen.

Update: US$ still OK.

Another fascinating theory is now being predicted by another financial wizard. This one predicts that Greece will depart the euro on June 18th. The banks will close for a week, and then reopen to a new currency called the 'Geuro! The company of 'Integral Asset managemnet' predict that the initial exchange rate will be two geuros to one euro.

The same company believes that the present scare tactics being used to suggest that the whole of the eurozone could collapse, because of the introduction of a new Greek currency, is just that. Scare tactics! Similar to the Y2k millenium bug that once predicted aircraft would fall from the sky!!

While I have nothing like there knowledge of finance? I'm inclined to believe they may have the scare tactics bit right. As for their predictions, who knows?

Meanwhile, countries throughout Europe and no doubt beyond, are said to have begun to inplement plans for an expected departure. In addition, international companies who have dealings with or branchs in Greece, are reported to be preparing for the social unrest that is expected. I would think that a fairly wise move.

and............

Part two or three of the euro saga still has Spain, Italy, and others patiently waiting in the wings for their turn to become immortalised in the financial history of the world.

Huanga.

Interestingly, the opinion polls are now favouring the pro-bailout parties. I suspect many Greeks are starting to realise what will likely happen if there is either an inconclusive result, or an anti-bailout government, after June 17.

Still 2 weeks till the election and things can and probably will change a few times between now and then.

If there is to be exits from the EURO (which I think will happen), the process has to be orderly and well managed. Otherwise utter chaos and disaster will probably ensue.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

Well, I don't know what is going to happen- except that my wife and I are going on a cruise through the Greek Islands 1 to 11 June and we are going to dump all our euros. Methinks an opportunity exists to purchase stamps for my collection ( she who must be obeyed keeps muttering about ROME and SHOES) before the Euro is worthless (down to 1.25 against the $US which is worthless anyway)

This is really strange -- a little piece of Ireland already disavows the Euro, aided by Uncle Sam. See:

http://www.EmbraceThePunt.com

The "punt" was the Irish unit of currency just before the Euro, and "Clones" is a town in the Border Regions, near the southernmost tip of Ireland.

Ahoj doug!

Since IR£1 = €1.27, trading them at €1.20 seems like another Thatcherite scam to me.

Cheers,

Honza