Greece

[American Patriot]

Their Market is crashing.

The Parliament over there voted for some kind of government bailout and the Greeks are freaking out.

Apparently 90% or so of the people are AGAINST this vote. Riots are going on RIGHT NOW.

There is a mess going right now. NYSE down over 500 (I think that was what I saw scroll.... )

[Malsua]

The Euro is currently in free fall. I love it. I'm going to Germany again in a week...I hope it gets down to even parity with the dollar.

[American Patriot]

LOL

Rah Rah Ree, Kick 'em in the knee!

Rah rah raz... kick 'em in... the other knee!

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Greek Debt Crisis On Verge Of 'Going Global': Pimco's El-Erian

Published: Thursday, 6 May 2010 | 1:44 PM ET

Problems with Greek debt are about to spread to other countries and could infect the US unless the nation tackles its own mounting problems, Pimco's Mohamed El-Erian told CNBC.

About an hour or so after El-Erian spoke, global stocks sold off sharply with major US averages shedding more than 3 percent.

Speaking as Greek austerity measures won enough votes to be approved by parliament, El-Erian offered a stern warning about the potential of the crisis to escalate into something resembling, though not duplicating, the 2008-09 financial crisis.

"We've seen a crisis start in a country—Greece—become regional, impact the whole of the Euro zone and is on the verge of truly going global," said El-Erian, CEO of the world's biggest bond fund.

He said the debt is a "transmission mechanism to go from country to region to global. So we should take this very seriously."

S&P 500 banks fell financials fell nearly 5 percent as investors worried about the financial system freezing up again, similar to what happened when Lehman Brothers collapsed in September 2008.

One trader who spoke on condition of anonymity said fixed-income desks in Europe shut down early for the day and that "European banks are halting lending now."

Similarly, the US faces a debt burden that, while not as large a percentage of gross domestic product as Greece, is approaching that level and could spark major problems domestically.

"We are not Greece. We have more time. But what the Greek crisis tells you is debt and deficits matter," El-Erian said. "The structure of your deficits matter and the US doesn't have much flexibility."

"Don't underestimate how quickly this can happen," he added. "There are structural headwinds out there and we better get our act together before those structural headwinds become overwhelming."

For now, the Greek crisis actually could provide opportunity in the US as assets in riskier European markets are parked in more secure locations.

The downside is that those assets are largely flowing to US bond markets, while stocks are getting pounded by the uncertainty the crisis has sparked.

"What you see is the system slowly starting to have cascading failures. It's like a pipe that you need to be free-flowing and it starts to clog, and that's a concern," El-Erian said. "This is a shock to the system and it's going to have an impact on valuation."

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From The Times
May 6, 2010
Greece on brink of abyss as three bank workers killed in riots
Philip Pangalos in Athens

• 42 Comments

The President of Greece warned last night that his country stood on the brink of the abyss after three people were killed when an anti-government mob set fire to the Athens bank where they worked.

“I have difficulty in finding the words to express my distress and outrage,” President Papoulias said. “The big challenge we face is to maintain social cohesion and peace. Our country came to the brink of the abyss. It is our collective responsibility to ensure that we don’t step over the edge.”

Violence flared as tens of thousands of striking workers and civil servants took to the streets of the capital and the northern city of Salonika to protest against the Government’s austerity measures.

The demonstrators gathered as George Papandreou, the Prime Minister, was trying to push through parliament tough budget cuts demanded by the European Union and the International Monetary Fund in exchange for a ¤110 billion aid package.

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“We are all deeply shocked by the unjust death of three workers, three of our fellow citizens, who were victims of murderous attacks,” he told MPs.

Mr Papandreou defended the austerity package, which foresees ¤30 billion in savings, mainly from cuts in wages and pensions over the next three years. The Government would not abandon its efforts to save the country from ruin, he promised.

All Greek political parties condemned the riot at the bank and expressed sympathy for the victims. Police said that two women and a man aged between 32 and 36, working for a Marfin Egnatia Bank branch a few hundred yards from parliament, died of smoke inhalation after a small group of extremists on the fringe of the protests broke the windows and tossed in petrol bombs. One of the women was reported to be pregnant.

Although the Athens demonstration was largely peaceful, small groups of left-wing extremists or self-styled anarchists fought with riot police.

Masked youths clashed with police in front of the parliament and some tried to storm the building.

Police responded with teargas and pepper spray. Debris, consisting of rocks, bricks and pieces of marble, which had been used as projectiles against the police, was strewn across Syntagma Square and streets outside parliament. Two buildings were burnt down and dozens of shops and businesses had windows smashed.

Police detained 70 people and 29 police were injured. The violence was the worst in Greece since rioting in December 2008 after a 15-year-old boy was shot by police .

Parliament is due to vote on the austerity measures today.

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Merkel plea to save Europe as contagion hits Iberia

Europe's debt markets are flashing danger signals after spreads on Iberian debt reached the highest level since the launch of the euro and investors rushed for safety into German notes, prompting warnings from German Chancellor Angela Merkel that the European Project itself is at risk.

By Ambrose Evans-Pritchard, International Business Editor
Published: 9:53PM BST 05 May 2010
Comments 139 | Comment on this article


Riot police tackle a fire lit by protestors in Athens

"Contagion pressures continue to rage unabated," said Marco Annunziata, Europe economist at UniCredit. "The flames have rushed through the firewall of the IMF/EU programme for Greece and now threaten other peripheral countries."

"While the sell-off on sovereign bond markets so far remains discriminating, the risk that it might suddenly mutate into irrational panic can no longer be ignored. Eurozone policymakers need to take further steps quickly," he said.


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Mrs Merkel made a moving plea to the Bundestag to support the €110bn (£93bn) rescue for Greece. "Nothing less than the future of Europe is at stake. The happy tale of German history since World War Two and our emergence as a free, united, and strong country cannot be separated from the European Union. We owe decades of peace and prosperity to the understanding of our neighbours," she said.
"Europe today is looking to Germany. As the strongest economy in Europe, Germany has a special responsibility and it takes this responsibility to heart.

"Immediate help is needed to ensure the financial stability of the eurozone. This must be done to avoid a chain-reaction to the European and international financial system, and contagion to other eurozone states. There is no alternative."

Belated support from Berlin has failed to stop the crisis escalating. Spreads on Portuguese 10-year bonds soared to a post-EMU record of 290 basis points above Bunds; Spanish spreads rose to 131. Bank shares in Madrid slid again, with falls of 4.9pc for Banco Popular, 3.6pc for BBVA, and 2.5pc for Santander

Bundesbank chief Axel Weber said there was a "grave threat of contagion", echoing the formula now being used by German officials to justify the rescue. Berlin hopes the wording will head off a legal challenge at the constititional court.

Flight to safety has driven the yield on two-year German debt to an all-time low of 0.59pc. Andrew Guy, managing director of ADG, said the rate had dropped below the three-month euribor rate in a sign of stress. "The last time this happened was August 2007 at the beginning of the financial crisis," he said.

One credit expert said events risk mutating into a full-blown `Lehman disaster' unless the European Central Bank opts for massive bond purchases.

Spreads on Greek debt exploded again as tens of thousands of demonstrators took to the streets and three people died in an attack on the Marfin Bank in Athens. "A demonstration is one thing, murder is quite another," said premier George Papandreou.

The key cities were paralized by a general strike. "The country cannot surrender without a fight," said Yiannis Panagopoulos, head of the GSEE private sector union. Unity fractured further after the New Democracy oppostion party broke ranks and votee against the austerity measures.

Markets view the EU-IMF package for Greece as a politically-shaped response that cannot work because it shuts off the twin cures of debt restructuring and devaluation, leaving the burden of adjustment on the Greek people. If Greeks come to view the plan as a rescue for foreign banks and funds – as many already do – there is no chance of carrying the nation through five years of harsh austerity

Dominique Strauss-Khan, the head of the IMF, admitted that the plan was flawed, telling Le Parisien that the EU was charging excessive interest rates at 5pc. He said Europe must "urgently" create some form of fiscal union to shore up EMU, describing the euro as a half-finsihed job.

Many investors view the EU-IMF plan as a "quick fix" that puts off the day of reckoning. Bill Gross, head of the US bond fund Pimco, said a "restructuring event" was inevitable in the end.

Julian Callow from Barclays Capital said Greece must reduce its primary budget balance by 14.5pc of GDP over five years, a task that is "unprecedented in European experience". The country will end up with a debt of 151pc, even it if complies. Since tax rises and wage cuts entail a protracted slump that crushes tax revenue, Greece may find itself in a deflationary spiral that feeds on itself.

There is mounting concern that the IMF is squandering its fire-power on a dubious plan, rather than ring-fencing Greece with a controlled default and reserving its clout to defend a more credible line on Iberian debt – which is what really matters for Europe's banks. By failing to fix achievable priorities, the IMF risks a drift into deeper crisis.

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U.S. Market’s Stub Toes As Greece Fear Spreads

By: Brady Willett, FallStreet.com
Friday, 7 May 2010

I’ll be the first to admit that I do not know how the Greece debt crisis/saga will end. What I do know is that when the rating agencies first warned on Greece’s debt back in December this should have been when policy makers urgently started to develop contingency options (assuming some were not already in place). And while delaying any bailout may well have been a ploy squeeze as much cooperation from Greece as possible, it is clear with panic spreading from the debt markets to the equity (and countless other) markets that this tactic has been played in full. The 16 euro-zone leaders are meeting today to try and finalize Greece’s bailout and stop contagion.

For his part, ECB President, Jean-Claude Trichet, said yesterday that the bank was not discussing the possibility of purchasing eurozone government debt – “We did not discuss the matter. I have nothing more to say on it”. If Mr. Trichet’s intentions were to frighten already spooked investors, bravo!, although Trichet may have done well to remember how quickly Treasury Secretary Paulson backpedaled when he tried to draw the bailout line in the sand with Lehman (it took 2-days before AIG arrived).

“Either the governing council is guilty of gross dereliction of duty, or the ECB is treating journalists and analysts as ignorant children”. Lombard Street’s Gabriel Stein

Suffice to say, it is definitely time for all parties concerned to realize that the 11-year old experiment that is the Euro is unlikely to last another 11-years without dramatic changes. With many looking for a Greece default/debt restructuring in the years ahead and the reality that any future bailouts efforts could be considerably larger than Greece, exactly what ‘changes’ are required to keep the euro intact are not known at this time…

Stub Quote Nonsense Not Stubby Fingers

One of the first explanations of yesterday’s dramatic plunge in the U.S. markets was that a trader pressed ‘B’ instead of ‘M’ (igniting the sale of a billion+ shares instead of million+ shares in, reportedly, PG). This theory, while still being investigated, does not explain why Accenture Plc, Exelon, and Philip Morris each declined by more than 90% and why the Nasdaq has cancelled trades in hundreds of stocks that crashed by 60% or more.

Common sense suggests that regulators should have quick access to exactly who, or what, was doing the selling as stocks plunged and/or why certain pockets of the market were seemingly completely bereft of any buying. Moreover, if the regulators do not have immediate access to this information the question becomes, why not? Perhaps the SEC will file another lawsuit to divert attention away from its ineptness on this front. After all, it was arguably the SEC that was at least partially responsible for the severity of yesterday’s meltdown:

“Rapid-fire orders trigger what the NYSE calls liquidity replenishment points, or LRPs, shifting the market into auctions. While the system is designed to restore order on the Big Board, trading is so fast during times of panic that orders routed past the exchange may swamp other venues and exhaust buy orders....

That’s when prices may plummet as orders execute against so-called stub quotes from market makers. Brokers can set the quotes as low as a penny a share because they’re never expected to be used.”

And why are stub quotes, which are never expected to be used, placed at all? Because market makers need to deploy such bids to comply with rules and requirements. In the case the Nasdaq, before it filed to relax the rules (SEC filing) a market maker had to maintain quotes that were “reasonably related to the prevailing market”. This is no longer the case and, as TheStreet reported back in August 2007, there have been instances when both the Nasdaq and NYSE Arca both cancelled penny per share trades in an illiquid market (i.e. Comfort USA in August 2007).

It may be a stretch to conclude that regulators made a big mistake by allowing ‘stub quotes’ to take the place of reasonable market making: tighter spread alone may not have prevented yesterday’s debacle. However, the question of whether market makers are trying to make markets or manipulate markets has always been around, and deserves to acquire greater attention thanks to the stub quotes issue.

While stub quotes help explain why ridiculously low bids were in place, they do not explain why anyone/thing was dumping stocks at such low levels. Attempting damage control, NYSE Euronext Chief Operating Officer, Larry Leibowitz, told Bloomberg that the ‘selloff snowballed because of orders sent to venues with no investors willing to match them.’ What Mr. Leibowitz neglected to mention is that if no ‘matching’ took place stocks would have simply stopped trading. We know this was not the case. Rather, and as Mr. Leibowitz concedes, someone or something continued to trade even as chaos took over:

“Electronic markets actually traded all the way through the slower New York Stock Exchange markets where we were trying to slow down trading.”

Drawing on the stub hub hits and lighten fast wave of sell orders, many have speculated that computerized trading was to blame. Perhaps the computers, which are not capable of panic, were informed to place sell orders as low as a penny simply because they’re never expected to be used...

Worry not! If history holds the SEC will get to the bottom of things, debate the matter for a decade or so, and then proclaim that market makers must maintain quotes that are reasonably related to the prevailing market. Until then the manipulation market making many investors have come to know and love persists, and will probably continue to do so for a lot longer than the euro experiment.

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May 06, 2010
Catastrophe In Greece Could Soon Be Our Story

By Andrea Tantaros
- FOXNews.com

The current economic catastrophe in Greece is a possible reality in the United States in 25 years – maybe less.

Record high deficits, an economy in crisis and impending tax increases have shaken a country. Its citizens are angry about being over taxed, in debt and tired of bailouts. They’ve began to organize in protest.

The people’s trust in big government is gone. They blame the previous Administration and Wall Street and are hopeful the current Administration can help right the course, but all signs point to a dire economic landscape that’s poised to continue for years because of a government that’s completely out of money.

If it sounds familiar, it is. I'm talking about the current crisis in Greece, but the narrative uncomfortably can be applied to the situation in the US. The similarities are striking.

The current economic catastrophe in Greece is a possible reality in the United States in 25 years – maybe less. The meltdown in the Mediterranean been brewing for decades and it’s the result of government spending too much, borrowing too much and making its citizens so reliant on the federal dole that when the money runs out and cuts need to be made to get finances back in order, the people go berserk.

Over this time period, Greeks have become incredibly lazy. It’s like they invented democracy and decided to take the next 2,000 years off. Even if they were set to have a cultural shift, put down the ouzo and embrace a society where everyone pulls its own weight, unemployment is so high that there aren’t any jobs for those who seek them. To make matters worse, Greece imports most of its goods from Asia and only exports a few agricultural items. Their economy thrives on tourism, but because of the recent rioting countries are issuing travel warnings, scaring away would be visitors right before the busy summer season.

Greeks also blame Wall Street, particularly Goldman Sachs. Many Greeks argue that it was Goldman who helped mask the true extent of Greece's deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules, enabling Greece to enter the European Monetary Union when it was too financially unstable.

In the United States we’re facing our own spending issues and solvency issues for big programs like Medicare and Medicaid. We don’t have Molotov cocktails being thrown into banks yet, but we saw a bank lobby on Wall Street stormed last week and tea parties spring up across the country, outraged at the growing size of Washington and because of the creation of an entirely new entitlement program with the Democrats’ health care bill.

The Obama Administration and the Democrats are pulling us on a similar glide path that my family and friends in Hellas are facing. In the short term their lust for power over the people will be satiated and the masses will be thrilled at the government giveaways, not realizing it’s akin to Obama buying you a drink in a bar – with your own money. Eventually we’ll hit rock bottom and when it’s time for cuts and we can no longer get loans from developing countries like China, the citizens who have been co-dependent on Uncle Sam will take to the streets. California could be first.

There is a reason my father, like so many other immigrants, left Greece 50 years ago. He knew that the freedom and prosperity he craved could only be gained in the greatest country on earth – America. Right now, we’re seeing our exceptionalism crumble and it we will continue to back slide unless we and our leaders learn from the lessons of Greece. Yes, it can happen to us. And unless we sharply change course, as the saying goes, “it will be all Greek to us.”

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Why Greece’s economy should matter to everyone

Globe Staff And Wire Services / May 7, 2010

Q. Why are US investors worried about the growing debt crisis in Greece?

A. Investors fear that Greece’s debt problems could spread to other European nations and ultimately damage the US economy. A weak European economy hurts American exports and the profits of US multinationals.

“Europe is a major trading partner of ours, ’’ said Peter Boockvar, equity strategist at Miller Tabak, “and this threatens the entire global growth story.’’

Q. Why is Greece in trouble?

A. Greece spent and borrowed too much in recent years as it rode a global economic boom. Once the global recession hit, Greece was left with heavy debts, a sinking economy, and no means to pay its debt. Greece must make a May 19 debt payment or default.

Q. What happens if Greece defaults?

A. Economists and investors worry the crisis could spread to other economically struggling European nations, such as Spain and Portugal, much as financial contagion spread through the US banking system in 2008. That could damage the financial institutions, primarily European, that hold this debt and spark another financial crisis.

“It feels like a whole set of dominoes,’’ said Simon Johnson, a professor at MIT’s Sloan School of Management and former chief economist at the International Monetary Fund.

Q. Is anything being done?

A. The Greek Parliament approved an austerity package as a part of bailout deal with the European Union and IMF. But coordinating efforts is tricky. While Europe has a single currency, it has many national governments, each dealing with its own domestic politics. For example, German leaders, in the face of angry voters, have been reluctant to support bailout plans, shaking confidence that the situation can be resolved.

“Who’s in charge?’’ asked Nariman Behravesh, chief economist at IHS Global Insight in Lexington. “The policy response has been awful. This is Europe at its worst.’’

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Greece Heading to Euro Exit Door

May 07, 2010
Paul Krugman

So, is Greece the next Lehman? No. It isn’t either big enough or interconnected enough to cause global financial markets to freeze up the way they did in 2008. Whatever caused that brief 1,000-point swoon in the Dow, it wasn’t justified by actual events in Europe.

Nor should you take seriously analysts claiming that we’re seeing the start of a run on all government debt. US borrowing costs actually plunged on Thursday to their lowest level in months. And while worriers warned that Britain could be the next Greece, British rates also fell slightly.

That’s the good news. The bad news is that Greece’s problems are deeper than Europe’s leaders are willing to acknowledge, even now — and they’re shared, to a lesser degree, by other European countries.

Many observers now expect the Greek tragedy to end in default; I’m increasingly convinced that they’re too optimistic, that default will be accompanied or followed by departure from the euro.

In some ways, this is a chronicle of a crisis foretold. I remember quipping, back when the Maastricht Treaty setting Europe on the path to the euro was signed, that they chose the wrong Dutch city for the ceremony. It should have taken place in Arnhem, the site of World War II’s infamous “bridge too far,” where an overly ambitious Allied battle plan ended in disaster.

The problem, as obvious in prospect as it is now, is that Europe lacks some of the key attributes of a successful currency area. Above all, it lacks a central government.

Consider the often-made comparison between Greece and the state of California. Both are in deep fiscal trouble, both have a history of fiscal irresponsibility. And the political deadlock in California is, if anything, worse — after all, despite the demonstrations, Greece’s Parliament has, in fact, approved harsh austerity measures.

But California’s fiscal woes just don’t matter as much, even to its own residents, as those of Greece. Why? Because much of the money spent in California comes from Washington, not Sacramento. State funding may be slashed, but Medicare reimbursements, Social Security checks and payments to defense contractors will keep on coming.

What this means, among other things, is that California’s budget woes won’t keep the state from sharing in a broader US economic recovery. Greece’s budget cuts, on the other hand, will have a strong depressing effect on an already depressed economy.

So is a debt restructuring — a polite term for partial default — the answer? It wouldn’t help nearly as much as many people imagine, because interest payments only account for part of Greece’s budget deficit. Even if it completely stopped servicing its debt, the Greek government wouldn’t free up enough money to avoid savage budget cuts.

The only thing that could seriously reduce Greek pain would be an economic recovery, which would both generate higher revenues, reducing the need for spending cuts, and create jobs. If Greece had its own currency, it could try to engineer such a recovery by devaluing that currency, increasing its export competitiveness. But Greece is on the euro.

So how does this end? Logically, I see three ways Greece could stay on the euro.

First, Greek workers could redeem themselves through suffering, accepting large wage cuts that make Greece competitive enough to add jobs again.

Second, the European Central Bank could engage in much more expansionary policy, among other things buying lots of government debt, and accepting — indeed welcoming — the resulting inflation; this would make adjustment in Greece and other troubled euro-zone nations much easier.

Or third, Berlin could become to Athens what Washington is to Sacramento — that is, fiscally stronger European governments could offer their weaker neighbors enough aid to make the crisis bearable.

The trouble, of course, is that none of these alternatives seem politically plausible.

What remains seems unthinkable: Greece leaving the euro. But when you’ve ruled out everything else, that’s what’s left.

If it happens, it will play something like Argentina in 2001, which had a supposedly permanent, unbreakable peg to the dollar.

Ending that peg was considered unthinkable for the same reasons leaving the euro seems impossible: even suggesting the possibility would risk crippling bank runs.

But the bank runs happened anyway, and the Argentine government imposed emergency restrictions on withdrawals.

This left the door open for devaluation, and Argentina eventually walked through that door.

If something like that happens in Greece, it will send shock waves through Europe, possibly triggering crises in other countries.

But unless European leaders are able and willing to act far more boldly than anything we’ve seen so far, that’s where this is heading.

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Greece teetering at brink of abyss

ERIC JOHNSTON
May 8, 2010

BALLOONING government debt in Europe has widened credit spreads as investors brace for a possible debt default in Greece and several other euro-zone countries that are in economic strife.

Investors are increasingly concerned that the €110 billion ($A157.5 billion) rescue package for Greece will not work, resulting in a full-blown sovereign debt crisis. Yields on two-year Greek government bonds were running at more than 18 per cent - equivalent to so-called junk bond levels. Yields on Spanish and Portuguese bonds climbed overnight.

Credit default swaps on Greek, Portuguese, Spanish and Italian debt rose to or near record highs. Swaps on Greek debt surged 97 basis points to 941 - implying a more than 50 per cent chance of default.

Advertisement: Story continues belowCredit default swaps are often regarded as reacting much faster to problems than bond and equity markets.

''The market has now come to the view that Greece is going to default,'' said Philip Bayley, a principal of ADCM Services.

The market is pricing in one of two possible scenarios. One is that the rescue package doesn't eventuate.

''Even if the package does get delivered, there is going to be a default shortly thereafter, simply because the debt is far too large, and that can never be repaid,'' Mr Bailey said.

The other possibility is that the IMF could oversee a so-called orderly default of Greek bonds, with investors expected to wear a loss.

''The question is just how large the loss is going to be. Thirty per cent of your investment, 50 per cent of your investment or something even bigger,'' Mr Bailey said.

The VIX Index, which reflects market volatility in Wall Street's S&P 500 Index, surged 24 per cent to a one-year high.

Elsewhere, the spread between the three-month dollar London interbank-offered rate and the overnight indexed swap rate - often considered a benchmark of the reluctance of banks to lend - rose to the highest in more than five months, reaching 13.4 basis points.

Underlying the Greek problems are broader concerns that governments around the world have high debt burdens relative to the size of their economies. Greece's debt is more than 123 per cent of its forecast nominal gross domestic product this year. Italy's net debt is 127 per cent of GDP while Britain's is 83 per cent.

By comparison, Australia's net debt to GDP this year is expected to reach 20 per cent.

Many governments have additional implicit commitments due to the need to support systemic parts of the private sector. As well, the rising pension burden of Europe's ageing population could place additional pressure on deficits.

According to analysts, credit markets have now reached a point where they are preparing for substantial government issuance in the next few years.

Jim Reid, a London-based credit market strategist with Deutsche Bank, said the structure of the European Monetary Union had been exacerbating problems.

Mr Reid said a Western government sovereign crisis had been looming with four successive private-sector bubbles rolled on to government balance sheets.

''The timing of the recent escalation has been much quicker than we would have imagined, '' he said. ''All these current issues would have likely developed over time, but the problems have spiralled due to an EU framework which understandably finds it difficult to make proactive and aggressive decisions.

''There are just too many countries, all answerable to their electorate, involved in making incredibly difficult and expensive choices.''

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Today's European Report: Ongoing Implosion of Greece at Heart

by: Macro Man May 07, 2010

Where to begin? Let's forget the nonsense with P&G (PG), or the supposed fat-fingered futures butchery at Citi (C) ("your tax dollars at work!") Yesterday was a game-changer, a sea-change. Obviously, anyone who saw the SPX melt 60 points in 5 minutes probably doesn't need Macro Man to tell them this, but consider that:

E mini futures posted their highest volume day (by a huge margin) since October 9, 2008.

VIX soared higher and is now up on a YOY basis.

The front end of the eurodollar strip got slammed in a long-overdue comeuppance for the "pennies in front of the steamroller" crowd. The chart below shows the continuous first eurodollar contract...ouch! At one point yesterday, EDM0/EDZ1 had flattened 45 ticks: the former was down 22 and the latter was up 23. Ouch, indeed.

The day after posting its high print of the year, USD/JPY posted its low print of the year. Unless you're in the first week of January, that's normally not a good sign.

At the heart of everything, of course, is the ongoing implosion in Greece, and the European "response". It seems pretty clear that neither side (the Germans with the money, or the Greeks with the sense of entitlement) really wants to do a deal ... and the fact that Greece has hired an investment banker to "advise" on its debt profile should raise a big 'ol red flag to any potential bottom-fishers in Greek debt.

The only centralized body in Europe with any sort of the authority is the ECB. And frankly, at this juncture, it looks like they are in over the heads. Now, perhaps we might wish to extend the benefit of the doubt to Trichet and company until after the Germans vote on the rescue package. Perhaps the governing council took the view that if the ECB acted pre-emptively, the necessary fiscal support would not be forthcoming.

Somehow, though, that doesn't ring true. A central bank that talks of being "inflexibly" wedded to price stability isn't one that sounds capable of quick, credible action. After everything that's happened over the last few years, how the hell can any Tier 1 central bank talk about "inflexibility"? It's asinine.

And if they really, truly didn't even discuss a bond-purchasing program, even in passing ... well, then the single currency is going to deserve everything that it gets. Sticking your head in sand and hoping everything turns out OK isn't really an option if you're the custodian of a reserve currency in crisis...and yet that seems to be the policy response pursued by the ECB.

The natural result would be to strip the euro of its reserve currency status. OK, OK, the ECB isn't doing nothing. They're having a conference call, by gum, with some of Europe's largest banks to talk about the state of the money market! They'll presumably be told it's in bad shape...the scramble for dollars has sent EUR/USD forward points screaming to the right (i.e., pricing in higher USD rates than EUR rates.)

They've also publicized a conference call to be held amongst the G7. Leaking news of the call might not have been such a swell idea...because if it doesn't produce anything, what then? Sure, the Fed can re-open swap lines with European central banks, but both the US Congress and taxpayer may justifiably question as to why the Fed should lift a finger when the ECB itself doesn't seem prepared to do so. (And that's before Congress has gotten its teeth into the idea that they'll have to appropriate several billion dollars towards the IMF bailout of Greece.)

So while "risk" is currently enjoying a bounce, Macro Man wouldn't exactly be scurrying to build longs here. After a day like yesterday, he suspects that you're (finally) supposed to sell rallies now.

Alas, one place where a sea-change may not be in the offing is the benighted UK, where a hung parliament has now been confirmed (thereby putting paid to one of your author's non-predictions for the year.) While the Tories have a comfortable plurality of the vote, the vagaries of the UK electoral system (translation: Labour districts are the size of a postage stamp; everyone else's are the size of the Grand Canyon) mean that they are denied a majority.

Noted creature of the underworld Peter Mandelson was pimping the notion of Labour crawling into bed with the Lib Dems before the first result was announced last night, and it certainly sounds like Gordon Brown will need to be forcibly ejected from Downing Street (ed. note: now that, I'd pay to see.)

So even though the Tories will be the largest party in the house by a decent margin, we're looking at a few days of uncertainty at best and another 5 years of Gordon at worst. Ugh. Will the last one to leave Britain, please turn out the lights.....

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Better to die from a bullet than working: The mantra of pampered, lazy Greek rioters used to living off the state

By Edna Fernandes
1:41 AM on 10th May 2010


Protesters face riot police during a demonstration in front of the Greek Parliament in Athens, Greece

A red circled capital A - the international sign of anarchy – marks the door of the headquarters of the Anarchist Party at a university in Athens.

Inside the lights are on, but nobody is home.

Demetra, a ‘conservative’ student, tells me her anarchist classmates are rarely in before mid-afternoon.

‘They like to sleep when they’re not being anarchists,’ she explains wryly.
Every inch of their base is sprayed with anti-capitalist and anti-state graffiti.

Protesters face riot police during a demonstration in front of the Greek Parliament in Athens, Greece

There are pictures showing pigs dressed as riot police beating downtrodden workers.

The usual thing. But one catches the eye: ‘Better to die from a bullet than from working.’

Demetra laughs with embarrassment. My middle-aged taxi driver Vasilis does not find it so funny and tells me this lies at the heart of the whole crisis that Greece finds itself in.

It is a country that’s not working hard enough and suffers from a bloated, money-devouring state and a mentality that the state owes them a living.

Vasilis is angry, not just at the politicians for bringing Greece to its knees, but at public-sector workers who are refusing to change.

Greece feels very much like Britain at the start of Thatcher’s economic revolution 30 years ago.

Greek politicians say there is no alternative but bankruptcy. The public sector and unions are up in arms.

Vasilis, who works 12 hours a day as a driver and earns less than €1,000 (£860) a month, says: ‘Imagine a restaurant earning €1million a year, but it spends €10million to stay open.

'That restaurant is called Greece. Too many of today’s generation are lazy, corrupt. They like to sit in the sun and drink ouzo.

'They want the state to pay. That’s why we’re in this mess.’

Last week, Athens was brought to a standstill as 30,000 protesters, including a small, violent hardcore of black-hooded anarchists, took to the streets to protest against measures that will cut public spending by £25billion over the next few years.
French President Nicolas Sarkozy and Italy's Silvio Berlusconi with a plentiful supply of biscuits at crisis talks.

In return Greece will get an IMF and EU-backed bailout of £95billion.

As parliament voted on the austerity cuts package last week, riot police were deployed in the capital when shops and banks were attacked with missiles and Molotov cocktails.

The violence culminated with an arson attack on the Marfin Egnatia Bank, which killed three people, including a pregnant woman.

Quiet for now, Greece is in mourning and shock as world markets reel, fearing that the Greek ‘contagion’ will sweep the Eurozone.

‘The Greek Problem’, as it is known locally, has the potential to ignite a fresh global economic crisis, as eurozone leaders fear if the country goes bankrupt, others will follow.

It is also a warning signal to Britain whose own debt burden is larger than Greece’s.

Despite the depth of the crisis, many Greeks are opposed to cuts. So what is it like to live in a country facing possible bankruptcy?

Nasos Alevras, a senior MP with the ruling Pasok party and a former minister of culture, was one of those fighting for reform last week in parliament.

Outside his offices and Pasok’s HQ on Friday, the streets are quiet but riot police are on guard, just in case.

Fresh from the battle to approve the spending cuts, Mr Alevras had a direct message for the Greeks on what will happen to them if reform fails.
‘I say to the people, we’re on the brink of default,’ he says. ‘If we have no money, we cannot pay our bills.

Running from the mob: A policeman flees protesters in the northern city of Thessaloniki.

'That means pensions won’t be paid, public-sector salaries won’t be paid, money for schools and hospitals will no longer be there. That’s what’s at stake. Everything we know.’

The budget deficit must be cut from 13.6 per cent of GDP last year to less than three per cent by 2014.

Alevras told me one in five public-sector jobs will be axed, pensions will be cut by ten per cent and Christmas bonuses paid to pensioners and workers by the government will be scrapped.

Taxes will rise and unemployment increase from 11 per cent to 14 per cent.

The pain is just beginning.

The price rises have been punishing. In March VAT, or retail tax, went up from 19 per cent to 21 per cent. In July it will go up again to 23 per cent.

At the same time, tax on alcohol will rise from 19 per cent to 30 per cent and the price of 20 cigarettes will increase from £2.50 to £3.66.

All of this comes on top of a 20 per cent rise in consumer prices after Greece joined the euro – old drachma prices were simply hiked upwards.

As I leave Mr Alevras’s office, a policeman dressed in civilian clothing takes me downstairs.

He is wearing a T-shirt bearing the message: ‘No more violence.’ I ask him if the police are braced for more trouble ahead.

He says: ‘We’ve not seen the worst days yet. More will come. After all, this is just the beginning of the reforms.’

Outside the Marfin Egnatia Bank, a floral memorial has been set up to
honour the dead.

Passers-by lay wreaths, teddy bears and bouquets. Candles and messages lie among the flowers left outside the burned out bank. Some onlookers are crying.

Giota, a waitress, has come to pay her respects. ‘I’m scared for me, I’m scared for my children,’ she adds.

A man leaves a candle in front of the burnt Marfin bank in memory of the three employees who were killed in the Athens bank petrol bombing
‘We have no money as a country. We have no work. The prime minister is doing his best. We’ve got to help him.’

But Nicos, a pensioner, has no good word to say about the prime minister George Papandreou. ‘No, he’s not right,’ he says.

‘My pension will be cut by £172 a month [from £603]. I’ve worked hard all my life, so why should I pay for the mess created by politicians?’

He is not alone – most Greeks retire in their 50s. Those in the air force retire at 45, on full state pension.

Even less popular than the prime minister is the IMF. But the harshest words are directed against EU partner Germany, which has demanded tougher conditions to be imposed in return for the bailout.

There is still huge political opposition in Germany to contributing money to help Greece.

Germany’s Angela Merkel has stuck her neck on the line, warning that ‘nothing less than the future of Europe’ is at stake.

But Greek pride is affronted by ‘outsiders’ telling them how to run their country.

They are especially furious at the Germans’ imposing their will. Here, memories of the war still run deep.

'We don’t need advice from the Germans,’ said one man. ‘They’re responsible for two wars, so they shouldn’t talk too much.’

Even politicians recognise the anger over Germany’s demand for even harsher austerity measures in return for money.

Mr Alevras said: ‘There’s anger against the Germans. Always in Greek history there is a betrayer. Right now, that betrayer is Germany.’

It’s an odd way to describe an EU partner which has helped pay towards a £95billion bailout. But it shows that now, all the eurozone nations’ fortunes are linked. For good or ill.

The crisis, a word derived from Greek, has prompted many to question whether the Euro is sustainable.

It took an ordinary housewife, Helena, to sum up the flaw that lies at the heart of
the European project with deadly clarity.
'We have one currency, but 16 countries with 16 different economic systems,’ she says.

‘Greece isn’t Germany. One size doesn’t fit all. We must do what’s best for Greece.’

So what should Greece do, I ask her. ‘Let’s default and have the drachma back,’ she insists.

Some feel that if they had control of their own currency and central bank, Greece could have the financial weapons to determine its destiny. Instead, it has outsourced control of its economy to the EU and IMF.

As Mr Papandreou attends a crisis meeting in Brussels this weekend, the eurozone leaders must come up with a plan that ensures they do not lose the shirts off their backs to the markets.

Unless tough concerted action is taken, the Greek crisis could become a global tragedy.

A new credit crunch would threaten the recovery under way, including that in Britain.
For too long Greece ignored its debt mountain until the money markets made it a junk-bond nation.

Last week, EU Commissioner Olli Rehn warned that Britain’s budget deficit would hit 12 per cent of national income this year – the highest of all EU member states.

Mr Rehn said tackling the deficit should be the No1 priority for a new British government.
No doubt David Cameron, mindful of the lessons of Greek tragedies from his days at Eton, is taking heed as he hopes to form the next government.

[vector7]

Greece is fast approaching the point of no return

An uncontrolled debt default by Athens is suddenly starting to seem a horrible possibility

Comments (202)



Nils Pratley

guardian.co.uk
Wednesday 15 June 2011 20.21 BST
Article history


Renewed rioting in Athens worries investors as bankers and eurozone politicians squabble over the next bailout package. Photograph: KPA/Zuma/Rex Features


Greeks rioted , the country's prime minister offered to resign and the yield on Greek two-year sovereign bonds hit 28%. Meanwhile, the Dow Jones industrial average fell 190 points at one stage. Markets are carrying a simple message: we fear politicians and policymakers are losing control of the plot. The long-feared "Lehman moment" – an uncontrolled debt default by Greece, with the impact being felt across the eurozone banking system – suddenly seems a horrible possibility.

Investors' worries are understandable. The past month has seen the European Central Bank and eurozone politicians squabble over the design of the next bailout package for Athens. Private sector investors must share some pain, says German finance minister Wolfgang Schäuble, if German taxpayers' money is to be dispatched. Unacceptable, says the ECB, we cannot allow anything that looks like a debt default, it would be too dangerous.

That squabble over the design of a bailout that wasn't meant to be necessary (Greece was supposed to be borrowing in the market by now, according to last year's plan A) suddenly looks a sideshow. If Greece doesn't have an effective government capable of imposing the austerity measures demanded by its lenders, the game is close to up.

A unity administration in Athens might allow bailout talks to resume, but by then investors might have zero faith that the next package of loans could succeed where the last one failed. More austerity, even if the Greeks could be coerced into accepting more pay cuts and more state sell-offs, might simply damage the economy further.

Default, then, seems to be looming one way or another. The best policy would be to try control the damage by ensuring the impact of the rest of the eurozone banking system is as soft as possible. That assumes, of course, that damage-control is still an option. The point of no return is fast approaching.

[vector7]

Greek Youths Firebomb Police During Anti-Austerity Protests

• Posted on June 15, 2011 at 8:12am by Jonathon M. Seidl
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ATHENS, Greece (AP) — Groups of youths on the edge of a major anti-austerity protest in Athens threw rocks and firebombs at police outside Parliament, where the struggling government sought support for new cutbacks required to avoid a debt default.

At a rally of more than 20,000 in the Syntagma Square, police responded with tear gas to push the protesters away from barricades erected to protect the Parliament building and the lawmakers arriving to debate the new austerity plan.



Other demonstrators who had been part of the previously peaceful gathering also clashed with the violent groups of hooded youths, trying to eject them from their rally.

The protests were part of a 24-hour general strike against the new cutbacks, which the country must pass in order to continue receiving funding from a euro110 billion international bailout that is preventing it from defaulting on its debts.

A large part of central Athens was closed to all traffic and pedestrians as police mounted a huge security operation to allow lawmakers access to Parliament by car. Some 5,000 officers, including hundreds of riot and motorcycle police, used parked buses and crowd barriers to prevent protesters from encircling the building.



“Resign, resign,” the crowd chanted outside Parliament. The protesters included both young and old, and many brought their children, hoisting them onto their shoulders to shield them from the crush.

Two separate marches organized by trade unions joined the rally in Syntagma. Such demonstrations have often turned violent in the past – three clerks died when rioters torched their bank in Athens last May.

But the latest austerity drive has brought many people onto the streets for the first time.



“What can we do? We have to fight, for our children and for us,” said Dimitra Nteli, a nurse at a state hospital who was at the protest with her daughter. “After 25 years of work I earn 1,100 euros a month. Now that will drop to 900. How can we live on that?”

Her 26-year-old daughter, Christina, said the situation in Greece had led her to leave for the U.K. to study conflict resolution.

“I have no job here. There are no prospects,” she said.

Police spokesman Athanassios Kokalakis said 10 protesters were briefly detained. About a hundred people booed and heckled as cars carrying Prime Minister George Papandreou and President Karolos Papoulias swept past for a meeting.



The general strike crippled public services across the country, leaving state hospitals running on emergency staff, disrupting port traffic and public transport, and forced radio and television news programs off the air during the morning. Journalists’ unions called off their strike to cover developments in Athens.

Flights were also operating normally after the air traffic controllers’ union dropped out of the strike.

“They keep asking us to give more,” said Ilias Iliopoulos, general secretary of the civil servants’ union ADEDY. “Now, again, they will cut our salaries and bonuses, from the little that we have left.”

The government needs to pass a new 2012-2015 austerity program worth euro28 billion ($40.5 billion) this month – or face being cut off from the rescue loans from European countries and the International Monetary Fund.

To meet their commitments, Papandreou‘s Socialists’ abandoned a pledge not to impose new taxes and have drawn up a four-year privatization program worth euro50 billion ($72 billion) – further fueling protests against austerity by public utility employees and other affected groups.

Some governing party lawmakers have publicly criticized the new cuts.

One of them defected on Tuesday, reducing Papandreou’s parliamentary majority to five in the 300-seat legislature. Another Socialist lawmaker said he will vote against the bill, which is set for final approval by early next month.

Papandreou faces an open revolt from his own party and a refusal by the main opposition conservatives to back the new austerity bills, despite EU pressure for cross-party support.

Papandreou met with the president to discuss how to solve the crisis.

“A national effort is required. Because we are at a historically crucial moment and a time of crucial decisions,” Papandreou told Papoulias, adding that he was still in contact with opposition party leaders in an effort to garner cross-party support for the austerity drive.

“But on the other hand, everyone has to assume their responsibilities,” Papandreou told the president, according to a transcript of their conversation released by the prime minister’s office. “In any case, we will move forward with this sense of responsibility and the necessary decisions” to pull Greece out of the crisis.

The statements calmed concern, voiced mainly in the local media, that the prime minister might have been considering calling early elections.

The Socialists’ popularity plummeted in recent weeks over the new austerity plan. A weekend opinion poll gave the main opposition conservatives a four-point lead over their Socialist rivals, the first time the party has been ahead in surveys since 2009. The next general election is scheduled for October 2013.

With its credit rating deep in junk status, Greece is being kept afloat by the EU and IMF bailout, but will need additional support to cover financing gaps next year as high interest rates will prevent it from tapping the bond market next year, contrary to what the original bailout agreement had predicted.

On Monday night, Standard & Poor‘s slashed Greece’s rating from B to CCC, dropping it to the very bottom of the 131 states that have a sovereign debt rating. That suggests Greece’s creditors are less likely to get their money back than those of Pakistan, Ecuador or Jamaica.

[American Patriot]

Looks like the commies over there are shutting down power now.

(The UNIONS = COMMIES)

[Ryan Ruck]

Probably because they know that power outages are the quickest way to induce mass rioting and looting.

[American Patriot]

What I heard was the UNION for the "POWER WORKERS" (what a crock of shit) are going to go on "strike" and unfortunately "power outages will most LIKELY occur at the hottest part of the day.... etc"

Meaning they plan to kill as many old people as they can.

[Malsua]

They are especially furious at the Germans’ imposing their will. Here, memories of the war still run deep.

'We don’t need advice from the Germans,’ said one man. ‘They’re responsible for two wars, so they shouldn’t talk too much.’

Even politicians recognise the anger over Germany’s demand for even harsher austerity measures in return for money.

Mr Alevras said: ‘There’s anger against the Germans. Always in Greek history there is a betrayer. Right now, that betrayer is Germany.’

This just boggles my mind.

If they don't want the Germans telling them what Austerity measures they get, then don't take the bailout money. It's really that simple.

"Oh but then we'll have nothing".

Well, champ, you're the dickheads that thought retiring at 45YO and eating dates and drinking Ouzo all day was a good idea. The time has come to pay for the dance. Either deal with some hurt pride and some trimming of the belt or get nothing and starve.

Also, don't come to Uncle Sam looking for a handout. He'll probably give it and it'll really piss me off that some lazy Greek gets to drink, sit on the beach and pork his ole lady is the butt while I have to work. Get a job you effing lazy ass commies.

[American Patriot]

Also, don't come to Uncle Sam looking for a handout. He'll probably give it and it'll really piss me off that some lazy Greek gets to drink, sit on the beach and pork his ole lady is the butt while I have to work. Get a job you effing lazy ass commies.

/chuckles

mal, you have such a way with words.