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The European debt crisis

Old 05-01-10, 06:30 PM
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The European debt crisis

OK, had to create a thread on this topic so I would have someplace to post a picture of the awesome cover of the new issue of The Economist.



Angela Merkel looks smokin' in cammies (or not).

Since the Greek crisis has serious risk of spreading elsewhere in what some are calling the "PIIGS" nations (Portugal, Ireland, Italy, Greece and Spain). Here are the scary numbers:

http://www.zerohedge.com/article/2-t...back-and-watch

Total PIIGS funding needs (defined as the sum of debt maturities and budget deficits) over the next 3 years amount to $2 trillion. Total PIIGS funding needs in 2010 alone amount to $600 billion. Total IMF bail out capacity: around $700 billion. Sorry - it simply does not compute.

On Tuesday all the PIIGS had essentially entered the unfundable zone as each's cost of funding surged, meaning the IMF would have to guarantee or bail them all out. We will certainly see this contagion again as the PIIGS now commence spending with unprecedented profligacy, knowing full well they will be bailed out when the time comes.

(more at link)
If I am not mistaken, the United States funds 20 cents on every IMF dollar.
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Old 05-01-10, 11:36 PM
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Re: The European debt crisis

I've been watching this and it is fascinating. I have no idea why Germany ever bought into the Euro idea. And looking at the way Greece "works" there is no solution other than to let them go bankrupt. If you bail them out, their work force will expect it to continue. There really is no workforce in the world that is more "entitled" than they are. And then to have their bond rating go to junk? Wow.
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Old 05-02-10, 12:10 AM
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Re: The European debt crisis

We tend to think of Europe as having been (and still to an extent) divided between west and east. When it comes to finances within the EU, the divide is more between north and south.
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Old 05-02-10, 09:55 AM
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Re: The European debt crisis

Originally Posted by kvrdave View Post
I've been watching this and it is fascinating. I have no idea why Germany ever bought into the Euro idea. And looking at the way Greece "works" there is no solution other than to let them go bankrupt. If you bail them out, their work force will expect it to continue. There really is no workforce in the world that is more "entitled" than they are. And then to have their bond rating go to junk? Wow.
Because we are all one people, we are all together, none better than another.
Can you imagine if Germany opted out of the EU and kept the Mark. There would be cries of a 4th reich and why isn't Germany sharing the misery. Though I believe England is the true leader of Europes descent into oblivion.
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Old 05-02-10, 11:42 AM
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Re: The European debt crisis

Originally Posted by kvrdave View Post
I've been watching this and it is fascinating. I have no idea why Germany ever bought into the Euro idea.
What about the Greeks? They probably bought in thinking, "Alright, we have a strong currency!" Now they're thinking, "Shit, we have a strong currency that's beyond our control. We can't inflate our way out of this mess."
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Old 05-02-10, 11:55 AM
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Re: The European debt crisis

One thing that people forget about Greece is this: they don't have the productive infrastructure to produce their way out of this financial mess.

Compare this to Spain and Italy: both countries have SUBSTANTIAL agricultural and industrial productive assets that under the right financial and political incentives could make them economic powerhouses that can help them weather an economic downtown and get them back on their feet as the world economy improves. Greece, on the other hand, primarily relies on their shipping and tourism industries for their income, and given the recession today, both are hurting big time in that country.

I think in the end, the best solution is to ease Greece out of the Eurozone and let the IMF do its work to clean up that economy.
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Old 05-02-10, 01:10 PM
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Re: The European debt crisis

Originally Posted by arminius View Post
Because we are all one people, we are all together, none better than another.
Can you imagine if Germany opted out of the EU and kept the Mark. There would be cries of a 4th reich and why isn't Germany sharing the misery. Though I believe England is the true leader of Europes descent into oblivion.
England was smart enough not to get involved with turning over their currency.
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Old 05-02-10, 01:13 PM
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Re: The European debt crisis

Originally Posted by RayChuang View Post
One thing that people forget about Greece is this: they don't have the productive infrastructure to produce their way out of this financial mess.

Compare this to Spain and Italy: both countries have SUBSTANTIAL agricultural and industrial productive assets that under the right financial and political incentives could make them economic powerhouses that can help them weather an economic downtown and get them back on their feet as the world economy improves. Greece, on the other hand, primarily relies on their shipping and tourism industries for their income, and given the recession today, both are hurting big time in that country.

I think in the end, the best solution is to ease Greece out of the Eurozone and let the IMF do its work to clean up that economy.

Absolutely. Either you set them up as the welfare recipient (forever) that they have come to be as a people, or you dump them and let them find a way to restart. They want to live a middle class lifestyle (European, not American) while working 20 hour a week with 8 weeks of paid vacation a year. They simply don't have enough people to pay into their own welfare system.
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Old 05-02-10, 01:51 PM
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Re: The European debt crisis

how is this really that harsh of an austerity programs?

Papaconstantinou said savings worth euro30 billion through 2012 would be achieved through public service and pension pay cuts, higher taxes and streamlining government.

Annual holiday bonuses will be capped at euro1,000 ($1,330) per year for civil servants and scrapped for those with gross monthly salaries over euro3,000 ($3,995), he said. Pensioners' bonuses will also be capped at euro800 and canceled for those paid more than euro2,500 ($3,330). Salary cuts will not extend to the private sector, as had been widely feared.

Greeks receive their annual pay in 14 salaries, receiving extra at Christmas, Easter and for their summer vacations.

Taxes would also be increased, including further hikes on fuel, alcohol and tobacco. The top bracket of sales tax rises from 21 percent to 23 percent.

This sounds like what many states in the US have been doing for years and most have balanced budget requirements.
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Old 05-02-10, 01:59 PM
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Re: The European debt crisis



Hard to believe that wasn't sustainable.
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Old 05-03-10, 12:19 PM
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Re: The European debt crisis

Originally Posted by Sean O'Hara View Post
What about the Greeks? They probably bought in thinking, "Alright, we have a strong currency!" Now they're thinking, "Shit, we have a strong currency that's beyond our control. We can't inflate our way out of this mess."
There was a question about the level of U.S. debt asked at the Berkshire shareholders meeting this weekend. The response was interesting. Buffet and Munger basically said that as long as the world will take debt denominated in your currency, you don't have to worry. You only need to worry if they force you to borrow in other countries currency. They also said our level of debt is unsustainable long term too.
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Old 05-03-10, 01:01 PM
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Re: The European debt crisis

Seems likd Greece was around 120% debt to GDP and we are in the lower 90% area. The guy I watched talk about it said that 100% is when things start to go bad (really bad), but that it is like the Richter Scale. Every 10% is similar to doubling how bad it is.
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Old 05-03-10, 01:42 PM
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Re: The European debt crisis

Didn't Greece take a bath on the '04 Olympics?
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Old 05-03-10, 01:49 PM
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Re: The European debt crisis

We are near 100% ourselves:

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Old 05-03-10, 07:31 PM
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Re: The European debt crisis

Interesting graphic from The New York Times:

<b>Europe's Web of Debt</b>
Banks and governments in these five shaky economies owe each other many billions of euros — converted here to dollars — and have even larger debts to Britain, France and Germany. Arrow widths are proportional to debt amounts.

<img src="http://graphics8.nytimes.com/images/2010/05/02/weekinreview/02marsh-image/02marsh-image-custom1.jpg" />

Link: http://www.nytimes.com/2010/05/03/bu...03drachma.html
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Old 05-03-10, 07:39 PM
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Re: The European debt crisis

And an interesting op-ed piece by Paul Krugman for anyone who is trying to understand the implications of the situation:

<b>The Euro Trap</b>
By PAUL KRUGMAN
Published: April 29, 2010

Not that long ago, European economists used to mock their American counterparts for having questioned the wisdom of Europe’s march to monetary union. “On the whole,” declared an article published just this past January, “the euro has, thus far, gone much better than many U.S. economists had predicted.”

Oops. The article summarized the euro-skeptics’ views as having been: “It can’t happen, it’s a bad idea, it won’t last.” Well, it did happen, but right now it does seem to have been a bad idea for exactly the reasons the skeptics cited. And as for whether it will last — suddenly, that’s looking like an open question.

To understand the euro-mess — and its lessons for the rest of us — you need to see past the headlines. Right now everyone is focused on public debt, which can make it seem as if this is a simple story of governments that couldn’t control their spending. But that’s only part of the story for Greece, much less for Portugal, and not at all the story for Spain.

The fact is that three years ago none of the countries now in or near crisis seemed to be in deep fiscal trouble. Even Greece’s 2007 budget deficit was no higher, as a share of G.D.P., than the deficits the United States ran in the mid-1980s (morning in America!), while Spain actually ran a surplus. And all of the countries were attracting large inflows of foreign capital, largely because markets believed that membership in the euro zone made Greek, Portuguese and Spanish bonds safe investments.

Then came the global financial crisis. Those inflows of capital dried up; revenues plunged and deficits soared; and membership in the euro, which had encouraged markets to love the crisis countries not wisely but too well, turned into a trap.

What’s the nature of the trap? During the years of easy money, wages and prices in the crisis countries rose much faster than in the rest of Europe. Now that the money is no longer rolling in, those countries need to get costs back in line.

But that’s a much harder thing to do now than it was when each European nation had its own currency. Back then, costs could be brought in line by adjusting exchange rates — e.g., Greece could cut its wages relative to German wages simply by reducing the value of the drachma in terms of Deutsche marks. Now that Greece and Germany share the same currency, however, the only way to reduce Greek relative costs is through some combination of German inflation and Greek deflation. And since Germany won’t accept inflation, deflation it is.

The problem is that deflation — falling wages and prices — is always and everywhere a deeply painful process. It invariably involves a prolonged slump with high unemployment. And it also aggravates debt problems, both public and private, because incomes fall while the debt burden doesn’t.

Hence the crisis. Greece’s fiscal woes would be serious but probably manageable if the Greek economy’s prospects for the next few years looked even moderately favorable. But they don’t. Earlier this week, when it downgraded Greek debt, Standard & Poor’s suggested that the euro value of Greek G.D.P. may not return to its 2008 level until 2017, meaning that Greece has no hope of growing out of its troubles.

All this is exactly what the euro-skeptics feared. Giving up the ability to adjust exchange rates, they warned, would invite future crises. And it has.

So what will happen to the euro? Until recently, most analysts, myself included, considered a euro breakup basically impossible, since any government that even hinted that it was considering leaving the euro would be inviting a catastrophic run on its banks. But if the crisis countries are forced into default, they’ll probably face severe bank runs anyway, forcing them into emergency measures like temporary restrictions on bank withdrawals. This would open the door to euro exit.

So is the euro itself in danger? In a word, yes. If European leaders don’t start acting much more forcefully, providing Greece with enough help to avoid the worst, a chain reaction that starts with a Greek default and ends up wreaking much wider havoc looks all too possible.

Meanwhile, what are the lessons for the rest of us?

The deficit hawks are already trying to appropriate the European crisis, presenting it as an object lesson in the evils of government red ink. What the crisis really demonstrates, however, is the dangers of putting yourself in a policy straitjacket. When they joined the euro, the governments of Greece, Portugal and Spain denied themselves the ability to do some bad things, like printing too much money; but they also denied themselves the ability to respond flexibly to events.

And when crisis strikes, governments need to be able to act. That’s what the architects of the euro forgot — and the rest of us need to remember.
http://www.nytimes.com/2010/04/30/op...30krugman.html
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Old 05-03-10, 07:58 PM
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Re: The European debt crisis

Originally Posted by Breakfast with Girls View Post
And an interesting op-ed piece by Paul Krugman for anyone who is trying to understand the implications of the situation:



http://www.nytimes.com/2010/04/30/op...30krugman.html
Good article. I can see why some people are building up gold again. It hasn't done a lot with the relative strength of the dollar in the past year, but a Euro crisis could force it up if there is a run on banks there. The dollar would also be strengthened, but I think gold would outpace it.

If I understand anything correctly.
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Old 05-03-10, 11:34 PM
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Re: The European debt crisis

Greece doesn't get it, and Germany is stupid enough to try to help.

http://www.usatoday.com/money/world/...ece04_ST_N.htm

Germany, the International Monetary Fund and other European nations have agreed to bail out Greece, but investors keep pushing the euro down.
The pan-European currency slipped to $1.321 Monday, down from $1.331 Friday and $1.512 on Dec. 3.

Germany's cabinet agreed Monday to lend Greece 22.4 billion euros ($29.6 billion) over three years. The IMF agreed Sunday to lend Greece 110 billion euros, or $145.3 billion. The IMF loans are tied to austerity pledges that could bring Greece's annual deficit below 3% from 13.6% in 2009.

You'd expect the euro to recover as the crisis gets resolved. But the Greek crisis has revealed the eurozone's prime weakness: It doesn't have a central bank to act as lender of last resort in an emergency.

"There's no law that says these guys have to be bailed out," says Ronald Simpson, economist with Action Economics. Currency markets were looking for more timely action from European central bankers and politicians, Simpson says. The Greek crisis has dragged on since December, when Standard & Poor's cut its ratings for Greek government debt.

Traders also worry that the European debt crisis could spread — or that member nations might not act fast enough. Portugal, Italy and Ireland all have serious debt problems. The euro's other woes:

•Europe. "The fat lady hasn't really sung yet," says Larry Greenberg, president and founder of CurrencyThoughts.com. The European bailout hasn't been approved by all countries involved, Greenberg says. Germany's parliament is scheduled to vote on Friday.

•Greece. The austerity plan isn't popular in Greece. Labor unions are planning a general strike on Wednesday. And Simpson still questions whether current Greek economic statistics are accurate and reflect the true extent of that country's woes. "They cooked the books for years," Simpson says.

The euro's woes have one side benefit: Investors snapped up $24 billion in 13-week Treasury bills and $23.6 billion in 26-week T-bills Monday. The Treasury received $4.55 in bids for every $1 in 13-week T-bills up for auction.

But goods made in the U.S. and sold in Europe cost more when the dollar rises in value. "If the euro continues to drop more, it will be problematic," says Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.
So Germany (assuming parliment votes to allow it) is agreeing to lend Greece a bunch of money, but that lending is tied to them reducing their annual deficit from 13.6% to under 3%.....which is something they need to do anyway. And how do the Greeks react to this act of kindness for which they have zero bargaining chips? They plan to strike on Wednesday. And beyond that, there is a good suspicion that Greece is in worse shape that previously thought, which has already been shown to be worse that previously thought, because they cook the books.

Germany should save its money and let Greece fall. If they don't, they will end up just doing this over and over and over. Seriously, you are given a bailout if you can get your financial house in order and your reaction to it is, "What barbaric terms.....WE'LL STRIKE!"

I would hope that Germany's parliment is too smart to do this.
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Old 05-03-10, 11:43 PM
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Re: The European debt crisis

That could be close to 20% of the IMFs total bailout capacity.

Everyone seems terrified as to what would happen if Greece were allowed to fail.
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Old 05-03-10, 11:51 PM
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Re: The European debt crisis

Here's one on the strike
http://online.wsj.com/article/BT-CO-...?mod=rss_Bonds
ATHENS (Dow Jones)--Greece's public sector umbrella union, ADEDY, said it would extend a planned 24-hour strike to a second day to protest the government's austerity measures.

In a statement issued late Sunday, ADEDY called on public workers to walk off the job from Tuesday for 48 hours. The union had previously announced a strike, along with its private sector counterpart, GSEE, for Wednesday.

"The executive committee of ADEDY calls on the workers to strongly react against the unprecedentedly harsh and savage measures taken by the government," the union said in a statement.

The statement followed an announcement Sunday that the Greek government has signed off on a EUR110 billion, three year joint European Union-International Monetary Fund aid program.

The program, which will help Greece cover its financing needs for the next two years, requires Greece to implement tough spending cuts and raise taxes, including steep cuts in civil service pay and pensions and higher sales and sin taxes.

On Monday, local government workers also staged a 24-hour strike, both to protest plans to radically pare back the number of local governments, and over the recent austerity measures.
Also some gold here.....
http://www.businessweek.com/news/201...-update1-.html
May 3 (Bloomberg) -- Prime Minister George Papandreou’s call for Greeks to accept more sacrifices in return for staving off default was rejected by opposition leaders and unions, which are already organizing more protests.

Unions representing more than 500,000 civil servants called a 48-hour strike starting May 4. Local government workers called a snap strike for today. Teachers are also on strike from tomorrow and a general strike, the third this year, is planned for May 5. Members of the opposition party Syriza plan to encircle the Finance Ministry in central Athens today.

“Protests will increase, given we also have the pension issue before us,” said Spyros Papaspyros, the head of the federation of civil servant unions, ADEDY. “Opting for the easy path of cutting wages and pensions can’t be accepted.”

Greece announced an unprecedented 110 billion-euro ($146 billion) bailout from the European Union and International Monetary Fund to prevent default, agreeing to an additional 30 billion euros in budget cuts that unions have called “savage”. The austerity measures include a second set of wage cuts for public workers, a three-year freeze on pensions and a second increase this year in sales tax and the price of fuel, alcohol and tobacco.

Pensions, Labor Rules

The government also promised changes to the pension system, such as raising the retirement age for women in the public sector, increasing the number of years worked before qualifying for a pension and overhauling labor rules to make firing workers easier and cheaper.

“Implementation will now be investors’ foremost concern in the coming months,” said Marco Annunziata, chief economist at UniCredit Group in London in an e-mail. “It will be an uphill struggle. As could be expected, public support for the adjustment has disintegrated as the magnitude of the sacrifices required has become clearer.”

[b]Elected in October on pledges to raise wages for public workers and step up stimulus spending ( This is how badly they don't get it-kvr), Papandreou quickly discovered the depth of the country’s fiscal problems and revised up the 2009 budget deficit to more than 12 percent of gross domestic product, four times the EU limit. EU officials revised the deficit further to 13.6 percent of GDP on April 22.
Reversing Promises

The surge in the shortfall as the economy contracted and debt increased fueled investor concern about Greece’s ability to finance the deficit and sent borrowing costs to the highest since before the start of the euro in 1999. Now Papandreou’s socialist government has implemented wage cuts and tax increases that will greatly impact his working-class base.

Greeks will protest, though they will eventually accept the measures if they see that they are not in vain and that the pain is shared across society, Finance Minister George Papaconstantinou said yesterday in Brussels after meeting with euro-region finance ministers on the plan.

“People are hurt and they will express their anger and express their disappointment,” he said. “If you look at opinion polls you will get very a profound sense for the need for change.”

Opinion polls show falling support for Papandreou, even as he garners kudos from the EU for pushing through the cuts to qualify for the loans as the soaring borrowing costs locked Greece out of the market.

More to Come?

“Papandreou’s international connections are all he has going for him,” said Pavlos Nikolaou, 39, who runs a mini- market in Athens. “They make people, at least in Europe, listen to him. I don’t think this will be the end of the measures. Cutting salaries is also not what’s going to solve Greece’s problems.”

Fifty one percent of Greeks say they won’t accept new austerity measures and would join protests against them, according to a poll of 1,000 people by ALCO for Proto Thema newspaper. That compared with 33 percent who would accept them.

Even with the rising discontent, Papandreou’s Pasok party remains more popular than the opposition New Democracy party with 29.7 percent of Greeks surveyed backing the socialists to 20.5 percent for the opposition. Support for Pasok fell from 32.1 percent last month and 34.7 percent in January.

With cuts in wages, and increases in taxes, the Greek economy is set to shrink 4 percent this year and 2.6 percent next, the Athens-based Finance Ministry said yesterday. Unemployment in the country of 11 million rose for a fifth month in January to 11.3 percent, a six-year high.

Greece’s ‘Waterloo’

Papandreou will meet with opposition party leaders today to explain the measures. All have been critical of his handling of the crisis.

”Weak government, weak negotiation, weak results,” George Karatzaferis, the president of the nationalist LAOS party said. New Democracy leader Antonis Samaras, who has criticized Papandreou for converting the deficit crisis he inherited into a global debt crisis, said the announcement was a “Waterloo” for the government, referring to the battle where Napoleon met his final defeat.

Still, with a 10-seat majority in parliament, Papandreou won’t have trouble pushing through a vote on the new measures.

The success of the plan “assumes that there is going to be a fundamental, systemic change in the country,” said Poul Thomsen, head of the IMF’s team in Greece. “It’s also going to assume an unprecedented cohesiveness of Greek society. This is a defining moment for Greece.”
[/quote]

"So we'll loan you 11 billion Euros if you will cut 30 billion Euros from your budget."
"Free Barabas....I mean, STRIKE!!!!"

Even going into this, the only way to get elected was to promise higher wages, etc. This is what happens when your government employs such a huge amount, and when everyone is in a union.....apologies to Lemmy.
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Old 05-04-10, 08:56 AM
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Re: The European debt crisis

i remember when i lived in Italy i used to eat at a local pizza place all the time. the guy running the cash register always had it open and would only ring up 30% - 50% of the purchases. we got to talking about taxes one time and he said they were so high that everyone cheated the government to avoid them
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Old 05-04-10, 04:55 PM
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Re: The European debt crisis

Originally Posted by kvrdave View Post
Seems likd Greece was around 120% debt to GDP and we are in the lower 90% area. The guy I watched talk about it said that 100% is when things start to go bad (really bad), but that it is like the Richter Scale. Every 10% is similar to doubling how bad it is.
90% is still high. Wonder what the 2010 US GDP will be.
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Old 05-04-10, 11:52 PM
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Re: The European debt crisis

Absolutely it is high, but it isn't something you can't overcome. Our problem is that we have had20+ years of 50% or more. If you look at Dr. Mabuse's graph, we've had higher, but before and after we have pretty low. In order for us to come out of a big spike of 100% or so again, we have to follow that up by getting back below 50%, and neither party has been there for decades.

On the other hand, Greece is beyond saving, imo. Would not surprise me to see a Euro break up. You can save Greece (and have that problem forever), but then you have Spain and Portugal right behind them. Likewise, we can have one California, but if we had 10, it would be a very bad situation, because California won't allow spending to go down, and they are taxing themselves out of population (that produces taxes, anyway).
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Old 05-05-10, 03:57 PM
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Re: The European debt crisis

Getting ugly. I can sympathize that many (most?) of the Greeks hit the hardest by cuts will be the ones who can least afford it, but what exactly are they hoping to accomplish with the strikes and protests? If the money ain't there, it ain't there.




3 dead as anti-austerity riots erupt in Athens


Wednesday, May 5, 2010. Greek fire … By DEREK GATOPOULOS and ELENA BECATOROS, Associated Press Writer Derek Gatopoulos And Elena Becatoros, Associated Press Writer – 2 hrs 57 mins ago


ATHENS, Greece – Riots over harsh new austerity measures left three bank workers dead and engulfed the streets of Athens on Wednesday, as angry protesters tried to storm parliament, hurled Molotov cocktails at police and torched buildings. Police responded with barrages of tear gas.

Tens of thousands of people took to the streets in a nationwide strike to protest new taxes and government spending cuts demanded by the International Monetary Fund and other European nations before heavily indebted Greece gets a euro110 billion ($141 billion) loan package to keep it from defaulting.

The three bank workers — a man and two women — died after demonstrators set their bank on fire along the main demonstration route in central Athens. As their colleagues sobbed in the street, five other bank workers were rescued from the balcony of the burning building.

"A demonstration is one thing and murder is quite another!" Prime Minister George Papandreou thundered in Parliament during a session to discuss the spending cuts he announced Sunday — measures even the IMF has called draconian. Lawmakers held a minute of silence for the dead — the first deaths during a protest in Greece since 1991.

"We are all concerned by Greece's economic and budgetary situation but at this time our thoughts are with the human victims in Athens," European Union President Herman Van Rompuy said in Brussels.

A senior fire department official said demonstrators prevented firefighters from reaching the burning building, costing them vital time.

"Several crucial minutes were lost," the official said, visibly upset. "If we had intervened earlier, the loss of life could have been prevented."

He asked not to be identified pending an official announcement.

In Berlin, German Chancellor Angela Merkel called the Greek bailout critical for all of Europe.

"Nothing less than the future of Europe, and with that the future of Germany in Europe, is at stake," Merkel told lawmakers in Berlin, urging them to quickly pass the country's share of the bailout — euro22 billion ($28 billion) over three years — by Friday. "We are at a fork in the road."

Greece faces a May 19 due date on debt it says it can't repay without the help.

In Brussels, European Union officials desperately tried to calm market fears that Greece's debt crisis was spreading to the rest of Europe, insisting it was a "unique case" combining profligacy and tampered accounts. Van Rompuy insisted the growing debt problems in Spain and Portugal had "absolutely nothing to do with the situation in Greece."

"Greece is a unique and particular case in the EU" because of its "precarious debt dynamics" and because it "has cheated with its statistics for years and years," EU Commissioner Olli Rehn said.

But Moody's Investor Services, a major ratings agency, put Portugal's bond rating on review for possible downgrade Wednesday. Spanish and Portuguese bonds and stocks slumped further on the news, reflecting fears that they may also have trouble repaying their debt and that the eurozone would have to extend even larger bailouts to them.

On the streets of Athens, demonstrators chanted "Thieves, thieves!" as they attempted to break through a riot police cordon guarding Parliament and chased ceremonial guards away from the Tomb of the Unknown Soldier in front of the building.

Tear gas drifted across the city center as rioters hurled paving stones and fire bombs at police. Firefighters extinguished blazes at least two buildings — the bank and a branch of the Finance Ministry — while protesters set up burning barricades and torched cars and a fire truck.

Police said 12 people were injured in the riots.

The marches came amid a 24-hour nationwide general strike that grounded all flights to and from Greece, shut down ports, schools and government services, and left hospitals working with emergency medical staff. The Acropolis and all other ancient sites were closed and journalists also walked off the job, suspending television and radio news broadcasts.

But media later broke the strike to report on the deaths and the protests.

Violence also broke out in the northern city of Thessaloniki, where another 20,000 people marched through the city center and some youths smashed store windows.

Union reaction over austerity measures until now had been relatively muted by Greece's volatile standards, despite several previous strikes. But anger mounted after Papandreou announced cuts in salaries and pensions for civil servants and another round of consumer tax increases.

Papandreou said he has no choice but to implement the measures if Greece was to avoid bankruptcy.

"There was only one other solution — for the country to default, taking the citizenry with it. And that would not have affected the rich, it would have affected workers and pensioners," he told Parliament on Wednesday. "That was a real possibility, however nightmarish."

Under the bailout package, Greece will receive loans over three years from the IMF and the other 15 countries who share the euro currency. The rescue aims to prevent Athens' debt troubles from becoming a wider crisis for the euro.

But the rioting underlined skepticism that the Greek government could keep up its end of the bargain, helping drive the euro below $1.29 for the first time in over a year.

Even with the bailout, many economists think Greece will eventually default on or restructure its debts because its prospects for economic growth are so poor over the next several years, hurting government revenue. Some fear the austerity measures insisted upon by the EU and IMF could make prospects for growth even worse.

Unions say low-income Greeks will suffer disproportionately from the latest austerity measures, which aim to save euro30 billion ($40 billion) — the country's current budget deficit — through 2012.

"These people are losing their rights, they are losing their future," said Yiannis Panagopoulos, head of GSEE, one of the two largest unions. "The country cannot surrender without a fight."

IMF chief Dominique Strauss-Kahn warned that the crisis could spread to other countries despite the rescue package's efforts to contain it.

"Everyone must remain extremely vigilant" to this risk, Strauss-Kahn said in an interview in French newspaper Le Parisien Wednesday.

"I completely understand the Greek populations' anger, its incomprehension at the size of the economic catastrophe," Strauss-Kahn said. But, he said, Greeks must also understand that without these measures "the situation would be infinitely more serious."

The draft bill of the new austerity measures is to be voted on Thursday. Papandreou's Socialists hold a comfortable majority of 160 in the 300-seat Parliament and the bill is expected to pass easily.

___

http://news.yahoo.com/s/ap/20100505/...nancial_crisis
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Old 05-05-10, 04:00 PM
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Re: The European debt crisis

MORE MONEY, LESS WORK! MORE MONEY, LESS WORK!
<img src=http://www.thestreet.com/content/image/60882.include>
http://www.thestreet.com/story/10747...cm_ven=GOOGLEN
The daily turns of trading euphoria followed by trading agony, and stemming from the outlook for a European Union bailout package for Greece, seem minor in comparison to people dying on the streets.
Television screens were filled with images of protesters in the streets of Athens and around Greece on Wednesday morning. The fatalities reportedly occurred after angry Greek youths set fire to a bank building associated with Greece's Marfin Bank.
Greek workers had begun their two-day strike on Tuesday. Greek Prime Minister George Papandreou has been trying to persuade labor unions to accept further austerity measures as the European Union works to finish a bailout package to avoid a Greek bond default. An estimated 100,000 people took to the streets Wednesday.
The Greek budget deficit had soared to 13.6% of GDP in 2009, four times above the maximum threshold allowed by EU rules.
More story there as well. Plus these....
Deadly Firebomb Hits Bank During Greek Riots
http://news.smh.com.au/breaking-news...0506-ub0a.html

This is reminding me of Mt. St. Helens in 1979 and 1980. You can tell something is going to happen, but it is really hard to predict. Might even go dormant again, but suddenly the thing is going to just explode one day and you'll find out on the news. And I am blown away how the Greeks think that there is some solution that doesn't involve major pain for them, as though they can just continue to get bailed out by other countries.
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