Greece...

vivatifosi

Degenerate wrote: »

There's a good chance this will ultimately end in military dictatorship for Greece.

That's my fear Degenerate. I remember the not so cuddly pre-EU Greece.

I was on holiday there in the late 1980s when there was a very bad hurricane force storm that stopped all the ferries running. The net result was that we - and about 1,000 others - turned up at Athens airport after our flights had left. We were rewarded for our tardiness by being declared illegal aliens and not allowed to leave the airport. To reinforce this, a tank was sent to the airport to stop us leaving and either police or armed forces (can't remember which but blokes in uniforms) with guns were sent to guard us and make sure we didn't leave. There was a power cut and the building was thrown into pitch darkness, you could see nothing and all you could hear was the safety catches coming off the weaponry. I was stuck there for three days before I could get a seat on a flight home as the Brits worked together to get families and ill home first. Every time I tried to sleep I was kicked and told to sit up.

That's just beneath the surface and would be a very scary thing to return to. It would also screw up their tourist industry if they went back to treating their visitors like that.

gagahouse

AndyGuil wrote: »

It can only be prevented if they have a pot of money well into the trillions that can be set aside for Italy and Spain, unfortunately that has not and will not happen. The markets will turn on them and it will be a disorderly default as a result.

3 months ago I would have agreed but not now.

The market had been screaming for the ECB to print to stop the liquidity squeeze (due to expectation of default) taking place in interbank and funding markets - the credit creation and transmission mechanism of the banks was seizing up - let this happen and the real economy dies.

After much German resistance and foot-stomping, the ECB did print but via the backdoor, not explicit QE. The 1/2 trillion euro 3yr LTRO of late Dec (and an upcoming one) are the way they print and backstop the banks and unlock the liquidity crunch. This has worked so far, you only have to look at interbank spreads which show trust is returning to the unsecured and secured lending markets (Libor-OIS spreads). Other indicators confirm this like CDS indices, bank stock indices and cross currency basis swaps.

Everyone knows Greece will default, it's just a matter of how and when. The point is the LTRO and the changes to eligible collateral which effectively allow commercial banks to create money against their created collateral, are all designed to backstop the banks from any contagion losses from a hard or soft Greek default. They will print the difference.

The old saying is "don't fight the Fed" - add the ECB, BOE, SNB and BOJ to that -the market never ignores the central banks.

AndyGuil

gagahouse wrote: »

3 months ago I would have agreed but not now.

The market had been screaming for the ECB to print to stop the liquidity squeeze (due to expectation of default) taking place in interbank and funding markets - the credit creation and transmission mechanism of the banks was seizing up - let this happen and the real economy dies.

After much German resistance and foot-stomping, the ECB did print but via the backdoor, not explicit QE. The 1/2 trillion euro 3yr LTRO of late Dec (and an upcoming one) are the way they print and backstop the banks and unlock the liquidity crunch. This has worked so far, you only have to look at interbank spreads which show trust is returning to the unsecured and secured lending markets (Libor-OIS spreads). Other indicators confirm this like CDS indices, bank stock indices and cross currency basis swaps.

Everyone knows Greece will default, it's just a matter of how and when. The point is the LTRO and the changes to eligible collateral which effectively allow commercial banks to create money against their created collateral, are all designed to backstop the banks from any contagion losses from a hard or soft Greek default. They will print the difference.

The old saying is "don't fight the Fed" - add the ECB, BOE, SNB and BOJ to that -the market never ignores the central banks.

The Germans are terrified of printing. They will let the Greeks default before they even think about it, even then they would let the whole of Europe fail than print. If they had started printing they would not be in this mess. Instead they are removing money and liquidity by giving it to Greece and not creating any new money.

WhiteHorse

Headline: "Britain joins Euro to save Europe".

Well, that's what Cameron would like to see, no doubt. But he also knows that he can't sell that one to the British people. Or at least, not yet.

Cue much wailing and gnashing of teeth in Downing Street.

WhiteHorse

gagahouse wrote: »

Everyone knows Greece will default, it's just a matter of how and when.

Not necessarily.

Another scenario is where civil order collapses completely, necessitating outside military intervention to prevent a 'humanitarian catastrophe'.

AndyGuil

WhiteHorse wrote: »

Not necessarily.

Another scenario is where civil order collapses completely, necessitating outside military intervention to prevent a 'humanitarian catastrophe'.

And that will pay the bills? That will be a default.

gagahouse

AndyGuil wrote: »

The Germans are terrified of printing. They will let the Greeks default before they even think about it, even then they would let the whole of Europe fail than print. If they had started printing they would not be in this mess. Instead they are removing money and liquidity by giving it to Greece and not creating any new money.

They have already printed, did you not read any of my post? What's 1/2 trillion of 3yr LTRO and a corresponding increase in the ECB's balance sheet if it's not money printing then? And there's another one at the end of the month.

Germany couldn't give a toss about Greece, they've printed to backstop their own banks. Quite rationally they realised the implosion of the euro banking system and their customers wouldn't serve their future prospects well. So all their terror about Weimar type inflation went out the window once they had grasped this.

AndyGuil

gagahouse wrote: »

They have already printed, did you not read any of my post? What's 1/2 trillion of 3yr LTRO and a corresponding increase in the ECB's balance sheet if it's not money printing then? And there's another one at the end of the month.

Germany couldn't give a toss about Greece, they've printed to backstop their own banks. Quite rationally they realised the implosion of the euro banking system and their customers wouldn't serve their future prospects well. So all their terror about Weimar type inflation went out the window once they had grasped this.

The ECB get money from the banks. Most of their funding comes from German banks. The is not printed money and it takes money out of the system reducing liquidity.

A._Badger

vivatifosi wrote: »

That's my fear Degenerate. I remember the not so cuddly pre-EU Greece.


That's just beneath the surface and would be a very scary thing to return to. It would also screw up their tourist industry if they went back to treating their visitors like that.

It is worth remembering how recently that model of government was the norm for so many of our 'partners' in the EU (including East Germany)

And then wondering how thin the veneer is.

worldtraveller

Some Greece numbers courtesy of the BBC:



BBC News