Inquiring minds are making note of the current
state of affairs in Greece.
Here is a quick 10-point
synopsis.
Current Sorry
State of Greek Affairs
1.
Greece did not meet the IMF's criteria for more aid
2.
The
Greek government is collapsing
3.
The
Greek prime minister threatened to resign
4.
An emergence meeting of the Greek Parliament could not gather support for more austerity
measures
5.
An
emergency meeting of EU ministers produced "no results".
The EU has no consensus about what to do
6.
Two-year interest rates in Greece topped 30%
7.
Germany
wants bond holders to take a haircut, France does not
8.
Greek
unions are on strike
9.
Riots
and violence have escalated
10. Credit default swaps are pricing
in an 80% chance of default
Logic Useless
Logic would dictate that given the current sorry state of affairs in Greece that the IMF would not be willing to lend Greece more money. Indeed point
number 1 alone would seem to be sufficient to settle the hash.
However, once must not attempt
to apply logic to decisions made by the IMF, by ECB president
Jean-Claude Trichet, or by Euro-Zone officials in general.
IMF ’Ready to Continue Support’ for Greece
Please consider IMF ’Ready
to Continue Support’ for Greece
“We
stand ready to continue our
support for Greece subject
to adoption of the economic policy
reforms agreed with the Greek authorities,” Caroline Atkinson, the director of IMF external
relations, said in an e-mailed
statement today.
“Progress is being
made in the discussions to ensure the full financing of the program, and we
anticipate a positive outcome
on this at the next Eurogroup meeting,” she said.
Progress?
What Progress?
Progress is being made? What progress? Where? Will the Greek government go along or has the Greek government had enough of these austerity measures?
Caroline Atkinson also said
that the IMF board will still have to approve the “conclusions of the pending
program review.”
There is nothing to approve. The papers are signed, stamped, and sealed already. The only open question, and it's a
major one, is "Will Greece
Go Along?"
Logic Cannot Be
Used on Pathological Liars
Attempts to apply logic to what pathological liars say is useless.
How can you possibly believe that known liars
will do what they say?
"When it becomes serious, you have to lie," said
Jean-Claude Juncker, chairman of the regular
meetings of eurozone finance ministers.
The IMF, the ECB, and the Fed are the same.
To get things correct you cannot believe
a thing pathological liars at the IMF, ECB, and Fed say. Instead, simply bet they
will kick the can down
the road until the market
kicks it back in their
faces, smashing some teeth in the process. Brute
force and a lick in the teeth
by the market is the only thing liars
react to. Even then, it takes
multiple kicks before they
get the message.
In regards to politicians, in many
instances they are kicked
out of office, never understanding
the message at all.
Market Repeatedly
Calls Foolish Bluffs by IMF, ECB
Recall that Trichet loaded up the ECB's balance sheet with garbage
from Greece and Ireland.
Trichet thought that
bluff would lead the markets
to accept his idea that Greece
would not default. His
move stabilized bonds for about 2 weeks. Then the market kicked that can back in Trichet's face, bruising his forehead, but unfortunately leaving his arrogance intact.
More recently, ECB executive
board member Juergen
Stark threatened the "nuclear"
option of refusing to accept
Greek debt as collateral if there was a restructuring of Greek debt. This was a foolish bluff that was supposed
to bring the market into line.
Instead, yields and CDS shot up and continued higher. In simple terms the market kicked that can back into the ECB's face.
The bluff was not remotely
believable. The ECB would
trash its own balance sheet if it did
what Stark suggested. Moreover, it would also destroy the balance sheets of French banks who are the primary bag-holders of Greek garbage.
Solid Kick in the Teeth in Progress
A solid kick in the teeth
of the ECB and IMF appears to be
in progress right now. However, Jean-Claude Trichet, the IMF, and Christian
Lagarde (running to head the IMF), still have not gotten the
message.
Expect to see more teeth kicked out in the weeks or months to come if the fools at the ECB, IMF, and EU try to kick the can down the
road one more time.
Running Greek Recap
·
Investors Bet on Accident: 2-Year Greek
Bond Yield Hits 28.15%; Investors
Bet on Prospect of 'Greek
Accident'
·
Papandreou's Days Numbered: Riots Images from Greece; Prime Minister to Reshuffle Greek Cabinet, Seek Vote of Confidence on New Government
·
Papandreou
Offers to Resign: Opposition Tells Greek Prime Minister to Step Down; Papandreou Offers to
Resign With Strings Attached
·
Emergency
Session Fails: ECB Divorced
From Reality; What is US Exposure to EU Mess?
·
Irish
Finance Minister Flip-Flop: Yesterday Noonan Vowed
to Screw Irish Taxpayers;
Today Seeks Haircuts on Senior Irish Bonds; Lessons
From Iceland
Mish
GlobalEconomicAnalysis.blogspot.com
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