Leaders of the euro area’s wealthier nations are increasingly raising a provocative question: Might the common currency now be strong enough to end the bailout agony and let Greece go?
The short answer is no. In fact, the euro area is probably more vulnerable to a Greek disaster than ever.
Until recently, European officials dismissed the idea of Greece leaving the euro as unthinkable. They seemed to recognize that such a move would amount to mutually assured destruction. Aside from the horrendous legal complications, the exit of one country would raise concerns that further departures would tear apart the euro -- a fear that would become self-fulfilling as market turmoil overwhelmed governments’ finances.
Now, officials in Germany and other northern European nations are saying a disorderly Greek default and return to the drachma aren’t so unthinkable after all. Last week, German Finance Minister Wolfgang Schaeuble said the euro area was now better equipped to handle the potential repercussions than before. Luxembourg Finance Minister Luc Frieden also chimed in. Of course, this could all be a bluff, designed to pressure Greek leaders into accepting harsher austerity measures.
Face Value
Maybe, but such ruminations need to be taken at face value. With Greece’s outlook darkening and everyone suffering from bailout fatigue and political pressures back home, the idea might gain momentum even after the ink on the latest inadequate deal has dried. Finance ministers from all 17 euro-area countries are scheduled to meet today in Brussels to finalize a Greek aid package, after Greece yesterday identified 325 million euros ($427 million) in spending cuts to secure a bailout.
On the surface, Europe is looking more resilient than it did only a few months ago. Business confidence in Germany is on the rise. The European Central Bank has calmed markets by providing nearly 500 billion euros in emergency three-year loans to the region’s banks. Yields on Italian and Spanish bonds have fallen, creating the impression that investors are less concerned about troubles in Greece spreading to those countries.
The improvement, though, is largely cosmetic. The ECB has brought down bond yields by offering banks a no-brainer trade: Buy European government bonds yielding more than 5 percent with money borrowed from the central bank at a rate of 1 percent. The resulting demand from banks has buoyed bond prices and helped Spain and Italy issue more new debt. It also leaves financial institutions -- and the ECB itself -- more exposed to losses in the event of sovereign defaults or renewed market turmoil.
The banks’ exposure wouldn’t necessarily be a problem if overall confidence in financially strapped countries was genuinely recovering. Sadly, that’s not the case. In Italy, capital flight to other European countries is accelerating. At the end of December, the net claims of euro-area central banks on the Bank of Italy stood at nearly 200 billion euros, up from 89 billion euros in October and 19 billion in July. Such liabilities arise when Italians move their money out of the country, or when foreign investors stop putting theirs in.
Death Toll Mounts in Syria, Officials Killed
Opponents of Syrian President Bashar al-Assad’s rule stepped up their deadly attacks against government officials as the violence of the past 11 months pushes the country toward civil war.
Gunmen killed Syrian Public Prosecutor Nidal Ghazal, Judge Mohammed Ziyadeh and their driver in Idlib, the official Syrian Arab News Agency said.
The international community is divided on how to resolve the conflict as the daily death toll mounts. Forces loyal to the president are using tanks and artillery to try to crush a rebellion aimed at toppling Assad’s regime. Syrian government forces killed 27 people across the country yesterday, Al Jazeera reported, citing activists.
“I’m worried that Syria is going to slide into a civil war,” U.K. Foreign Secretary William Haguetold the BBC’s Andrew Marr show yesterday.
Army General Martin Dempsey, the chairman of the U.S. Joint Chiefs of Staff, said yesterday on CNN that it’s too early to arm the Syrian opposition, because it’s difficult to identify.
“I think intervening in Syria would be very difficult,” he said on CNN’s “Fareed Zakaria GPS.” Syria is “an arena right now for all of the various interests to play out. And what I mean by that is you’ve got great power involvement: Turkey clearly has an interest, a very important interest,Russia has a very important interest, Iran has an interest.”
11 comments:
mugabe - I meant that regardless of time frame, you read the indicators about the same.
The length of time used in the chart of course influences the indicator, as you say, the Daily based on shorter term indicators will look much different from a many year Weekly and Monthly chart.
Deciding to set your stop is of course a prime concern, an art really, of balancing your risk tolerance vs being overly fearful.
For example, do you get stopped out after a5% or 10% correction, even though the longer term chart may still look favorable?
Adjusting your stop levels at times is difficult, and you partly have to fly by gut feel there based on your reading of the latest chart.
I like the headline, it's not waht is good for Greece, it is what is good for Banksters, that is of prime concern.
Looking at Iceland, it is obvious that the best course for Greece is total default, which wipes out the foreign debt, and sets up their economy for recovery - whether they leave the EUro or not, that is another issue that can be a separate question.
But to EUro "officials", who must support the German and French etc Banksters, what is best for Greece is of little concern. Their "best case" still has Greek debt at 120% of GDP by 2020, which is absurd.
http://www.zerohedge.com/news/wti-passes-105-guardian-says-military-action-likely-would-send-crude-soaring
I hear a lot of talk lately about not attacking Iran, perhaps the realisation that $150 + bbl oil would cause an instant global Depression is sinking in.
Or maybe the sad fact that Saudi Arabis's brave words about filling the gap left by Iran oil not going to EUrope (but intead gong to India and China) - are but empty promises, and they do not have the fabled "reserves" on hand anymore. WHich seems likely, since their production has declined steadily since 2009 despite (or maybe causing) rising prices.
Let's face it, Isarael has been rumored to be attacking Iran about every 6 months or so since roughly '07. Bad ideas have a long shelf life.
I am wading through Janet Tavakoli's book and the out right lying and disreputable business practices would boggle your mind. No wonder Ken Lewis resigned from BofA. Hank Paulson did things that should put him and AIG execs in jail forever. Everyone lied or hid the truth. It is pitiful the what went on and how many criminal walk the streets after stealing millions. It is beyond GS and JPM. It was systemic of the whole industry.
GAW like you always say "No bankster will be left behind." All the gangsters on the streets and in jail could not steal as much money as these guys did from the American Taxpayer. Obama you should be ashamed. I already know that Bush is a psychopath and has no conscience. Bernanke and Geithner are not stupid, they are complicit in this rape of the country.
Re stops, I think the longer your time frame, the more flexible your stops. The key issue re how much money you make or lose overall is how much of your trading capital is deployed at any time, and the size of each position. The precent loss on the trade versus your initial position is imo a secondary point.
Re position size, the standard seems to be to risk between half and 2 per cent of your entire trading account on a trade: this is your maximum loss, not the position size (unless it's an option where you could easily lose 100%). I tend to be more in the half a percent range.
The whole mnoey maangement aspect vis a vis total account size is crucial.
From Aussie Uni: Moore's Law No More
Single-Atom Transistor May Beat Moore’s Law
By Reg Gale - Feb 20, 2012 11:16 AM ET
Scientists have taken an early step toward surpassing the limits of a technological principle called Moore’s Law by creating a working transistor using a single phosphorus atom.
The atom was etched into a silicon bed with “gates” to control electrical flow and metallic contacts to apply voltage, researchers reported in the journal Nature Nanotechnology. It is the first such device to be precisely positioned using a repeatable technology, they said, and may one day help ease the way toward creation of a so-called quantum computer that would be significantly smaller and faster than existing technology.
Moore’s law states that the number of transistors that can be placed on an integrated circuit doubles every 18 months to two years, and it’s predicted to reach its limit with existing technology in 2020. Cutting the size of a transistor to a single atom may defeat that concept.
“We really decided 10 years ago to start this program to try and make single-atom devices as fast as we could, and beat that law,” said Michelle Simmons, director of ARC Center for Quantum Computation and Communication Technology at the University of New South Wales, Australia. “So here we are in 2012, and we’ve made a single-atom transistor roughly 8 to 10 years ahead of where the industry is going to be.”
Bloomberg or smh.com.au or Nature
Icelandic Anger Brings Debt Forgiveness
By Omar R. Valdimarsson - Feb 20, 2012 11:01 AM ET
Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.
Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.
Go Iceland!!
If I had any debts I don't think I would be inclined to pay them on a national scale. Imagine what the primary dealers feel right now buying US debt knowing full well it can never be repaid. I guess it is like others have said here. Once I owe more than I can pay then it becomes the borrowers problem rather than mine.
The very nature of debt is that it cannot be repaid. You're smart, QB, so you probably realize this, but I like to restate it every now and then.
Money is borrowed into existence when a person or corporation or government takes out a loan. That money has to be paid back, but with __% interest, paid in money that does NOT exist. It's as impossible as violating the Laws of Thermodynamics. All you can do with debt is extend it with new loans, shift it to someone else or default on it.
The same goes for governments' debt as it does for individuals'. The notion of "paying off the national debt" would mean that the money supply would vanish. Alan Greedscam alluded to this, in his cryptic way, when he testified to Congress about the dangers of Bill Clinton's U.S. government budget "surpluses" (which they actually weren't, but that's another rant.) Only, the debt could not be paid off, because the money to pay the interest on it does not exist. Can't pay off a 105% debt when all the money that there is totals only 100%, knowwhatI'msayin'.
All this conceptual talk about repayment of debts, whether they are Greece's or the entire systems, is ultimately pointless. Sooner or later, there will be a bunch of little "zaps!" as individual bits of debt are defaulted on, or a GIANT ZAP!!!! as it all goes down. The fallout will be enormous, because for every bond that vaporizes and screws over a banker, there goes the savings account or retirement fund or promise of Medicare to keep an old person alive. Every one of us who has a piece of paper currency in their pocket is a counterparty.
We're all screwed. It's just a matter of when and how. Then again as Keynes said, in the long run, we're all dead. Might as well enjoy what we have, while we still have it, those of us who are lucky enough to have something. And if you're reading this, you're lucky enough to have electricity, a computer, some education that allowed you to read it, and the spare time in which to do so. YOU WIN!
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