Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

Schadenfreude

by Jerome a Paris Tue May 4th, 2010 at 06:50:48 AM EST

Germany's reluctance to step in to decisively help stabilize Greece's debt situation means that the bailout package put in place this week-end had to be 3 times larger than it could have been a few weeks ago, and that it is still seen as not sufficient by markets, which scent blood and are are looking at Portugal, Spain and maybe others. It has also allowed Germany's generally laudable thrift to turn into malicious pigheadedness, and to be played against that country (when the English-speaking world says [Europe.Is.Doomed Alert] they certainly think about Germany too, and are all too happy to use anything that turns its virtues into catastrophes...)

At this point, the markets are going to bet all the way against individual European countries until either a default happens - which will be used politically to say the euro is a failure - or they get a full commitment by Germany and other solid Europeans to back the debts of their neighbors - which will be used politically to say the euro is a failure... unless that commitment takes the form of a European grand bargain towards greater integration rather than an unwilling, protracted capitulation "to save the German banks."

I've learnt not to be optimistic about European integration in the past 10 years, and am not looking forward to the utter humiliation of Germany by the markets, but they still have a choice, today.


Display:
whose frustration at Germany's self-defeating behavior has been painful to watch lately...

Wind power
by Jerome a Paris (etg@eurotrib.com) on Tue May 4th, 2010 at 06:57:40 AM EST
Sorry...

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 08:30:18 AM EST
[ Parent ]
No reason to be sorry.

You're not in charge of German fiscal and monetary policy.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue May 4th, 2010 at 07:08:00 PM EST
[ Parent ]
But I don't suffer fools gladly and have poor emotional control...

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 07:11:15 PM EST
[ Parent ]
Me: "All I have to do to find someone who doesn't suffer fools gladly and has poor emotional control" is to look in a mirror.

Elaine: "That's true."

LOL

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue May 4th, 2010 at 07:46:25 PM EST
[ Parent ]
It must be painful for her...

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Wed May 5th, 2010 at 02:12:03 AM EST
[ Parent ]
Hesitation and Patronizing Advice: How Germany Made the Greek Crisis Worse - SPIEGEL ONLINE - News - International

The Greeks are mainly responsible for their current predicament. But the German government has made the country's situation worse with its lectures and reluctance to provide assistance. Chancellor Angela Merkel is mainly to blame for the fact that German taxpayers now have to suffer.

"Anything that can go wrong will go wrong." This piece of wisdom, known as Murphy's Law, currently applies extraordinarily well to economic policy in the euro zone.

On the one side there are the Greeks, who clearly still do not have their financial statistics under control and who produce one false report after another about the country's budget deficit. On the other side are the Germans, who delight in hindering a rapid and unambiguous European response to the Greek crisis -- in the process driving the cost of a solution through the roof.

...In the process, and as a result of the active assistance of the German government, what has happened is exactly the thing that was supposed to be avoided, and what could have been avoided -- namely that Greece has indeed been forced to ask for financial help from other European countries.

The problem for the German government is that its arguments are not tenable. That applies first of all to the reference to the financial markets, an argument that is delivered in a tone of utter conviction that the risk premiums seen there accurately represent real risks. It is remarkable that, after all that has happened in the last couple of years, experienced politicians still assume that financial markets produce rational and reliable information.

It is a fact that speculators have access to no more information about Greece than the economic experts in Europe's governments. There are, however, many market players such as hedge funds which derive profits from uncertain events. The more chaotic things are, the more they like it. Their biggest enemy is political clarity, which is why they are delighted when politicians indulge in scaremongering. In the case of Greece, this scaremongering has succeeded extremely well, as the skyrocketing risk premiums show.

The role of rating agencies can also not be forgotten. It was their downgrading of Greece's creditworthiness that triggered waves of speculation. This is partly because the rating agencies, according to current regulations and despite their total failure during the financial crisis, still have a lot of power over the markets -- power that was given to them by politicians. Every downgrading of Greece's status forces banks to sell Greek government bonds. This in turn accelerates the decline in the value of those bonds, leading to even higher interest rates.



*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue May 4th, 2010 at 09:08:29 AM EST
[ Parent ]
It is a fact that speculators have access to no more information about Greece than the economic experts in Europe's governments.

Do the EU's economic policymakers know about this fact?

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 09:13:58 AM EST
[ Parent ]
it's probably one of those bits of information they don't have. :)

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Tue May 4th, 2010 at 09:16:47 AM EST
[ Parent ]
What do they need to know?

I don't know what to think anymore.

You have investment banks doing deals with Greece blindly, you have other banks buying their bonds blindly, you have European governments backstopping their deficit blindly, you have the ECB giving collateral to Greek banks blindly, you have rating agencies giving Greece good ratings (up until a few months ago) blindly.

Everyone gives money away blindly. It gets hard to believe, from the outside. I don't know if this is how things actually work, but I tend to think it is not so.

I can think of a variety of reasons why one would want to say, "We were blind, we didn't know"

One, French Finance Minister Lagarde said that Greece is different from Portugal and others because there was a question of statistical innaccuracy. That makes sense, you want to put up a guardrail against contagion.

Two, the Greek PM references the bad statistics in order to blame a long-standing problem on the previous administration. That too makes sense, because if he's perceived as culpable, then it will be hard to convince the electorate of what needs to be done.

Three, the banks who loaned Greece over 80% its debt say they were blind in order to deflect from either their own incompetency (which I don't totally believe though the Wall Street meltdown gives evidence) or else their complicity in the funding of European business and/or public projects in various countries.

Four, by citing the fraudulent statistics, emphasis is taking off the actuality of how the debt was built. There is no analysis of what the debt consists. little mention is made that, though the numbers may be fraudulent, they certainly consist of almost 30 billion in toxic bank debt that Greece took on from it banks.

I guess I could go on, but the point is, there are many reasons that the blindness toward Greece's situation is really a convenient explanation--even if it's true.

And then we hear stories about the shorts and the hedge funds tooling around Greece in limos last summer, getting real insight into the economic situation. Apparently, only the shorts realized Greece was in trouble.

by Upstate NY on Tue May 4th, 2010 at 10:55:57 AM EST
[ Parent ]
In order for shorts to be valuable one needs un-payable bonds. Given the evidence that has emerged in the US over Goldman, Paulson, Magnetar, etc. and the gusto with which liar loans were pedeled, packaged into MBSs with CDSs written around them for fees, the real problem seems to be proving how long this has been a deliberate strategy. I tend to go with those, such as Wm. K. Black, who say 2003 at the latest.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 12:29:35 PM EST
[ Parent ]
it's not just for street corners anymore...

set 'em up, knock 'em down

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue May 4th, 2010 at 06:28:39 PM EST
[ Parent ]
This assumes the average worker in the bond markets has the average analytical ability of the average rock.

"Mr. Bond Market" is bipolar.  Either he is in a state of catatonia or in one of hysteria.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue May 4th, 2010 at 07:12:44 PM EST
[ Parent ]
But does not commenting on Germany's self-defeating behavior make it less painful to observe? I have refrained from posting some articles because they seemed too sensitive. So thank you for this diary.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 10:16:22 PM EST
[ Parent ]
In the meantime, the SPD are opposing the bailout plan unless the banks are made to pay as well, and other steps are taken against speculation. Merkel probably doesn't need their votes, but this could delay the package a bit, and maybe help them in the NRW elections.
by gk (gk (gk quattro due due sette @gmail.com)) on Tue May 4th, 2010 at 07:04:46 AM EST
There's not much time for this to be played out, but gk's point here is important.  The SPD must simply drive home the point that the banks who invested in Greek bonds for their own profit must not be allowed to cover their losses from the taxpayer till.  this election includes the previously worker-stronghold of the Ruhrgebiet.

"Life shrinks or expands in proportion to one's courage." - Anas Nin
by Crazy Horse on Tue May 4th, 2010 at 07:24:11 AM EST
[ Parent ]
The German banks already enjoyed a €480bn bailout package, by the way.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 08:28:23 AM EST
[ Parent ]
Might it be that even with the €480bn bailout, allowing Greece to default would still take down some of these banks?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 10:18:54 PM EST
[ Parent ]
It appears that Soffin is still dishing out billions...

HRE: SoFFin beschließt Rekapitalisierung von 1,85 Mrd EUR (Hypo Real State: Soffin decides €1.85bn recapitalisation)

According to wikipedia Soffin has issued guarantees for €70bn and recapitalised banks for €28bn out of an authorised €400bn and €80bn respectively.

Back in February rumour had it that Germany's plan was to use Soffin as a vehicle to help Greece. As I can only source this through La Rouche (quo claims this was in Spiegel Online) I'm not linking to it... That plan must have been sabotaged because back in February Merkel was still favourable to helping Greece.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Wed May 5th, 2010 at 02:31:40 AM EST
[ Parent ]
Does it matter really?

In the end, they can pay now or pay later.

Public/Private, it's all the same.

That's the world we live in.

by Upstate NY on Tue May 4th, 2010 at 10:56:59 AM EST
[ Parent ]
1st comment:  How weird is it that such a hateful political figure as Schäuble got it right from the gitgo.   commit now, keep the IMF out.  Merkel showed not only zero leadership here (though she's getting praise in the spin version), but ended up costing German taxpayers more.

i believe it was dvx who surmised that perhaps as Schäuble was at the end of his career, he felt he could afford to say what he believed.

I wonder what Josef Ackermann's position(s) were?

"Life shrinks or expands in proportion to one's courage." - Anas Nin

by Crazy Horse on Tue May 4th, 2010 at 07:10:42 AM EST
Crazy Horse:
Merkel showed not only zero leadership

Merkel has been shown up in this for what she is, far from the wise leader she was building a reputation for.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 4th, 2010 at 07:20:15 AM EST
[ Parent ]
afew:
Merkel has been shown up in this for what she is

What she really is (and I know I've said this ad nauseum, so please stop me if you feel like puking) is the most gifted student and true and rightful heir of Helmut the Slimy. Accordingly, good press comes a distant second to maintaining power.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt t gmail dotcom) on Tue May 4th, 2010 at 09:29:15 AM EST
[ Parent ]
We'll see if she's Helmut material when Sarko takes her by the hand to Verdun.

No, wait, there's something wrong with that...

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 4th, 2010 at 10:38:29 AM EST
[ Parent ]
Will Carla be holding Sarko's other hand, or, perhaps, Angela's? Perhaps Sarko will leave Carla at home for this.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 12:34:33 PM EST
[ Parent ]
Well, the "something wrong" is at least as much on the Sarko side as it is on Merkel's.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed May 5th, 2010 at 03:51:58 AM EST
[ Parent ]
"On the brink of the abyss"
Yet another article [in FT Deutschland] was a report on Helmut Kohl's 80th birthday celebration. Kohl told the audience that he had no understanding for how the Greek situation has been handled, and no understanding for people who pretend that this was none of the their business. But you have to act, he told the audience, which included Mrs. Merkel. The former president Roman Herzog said Kohl had turned the CDU into a strong and decisive party, but this was no longer the case, while Merkel was looking on. In other words, the party's old guard is very unhappy.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu May 6th, 2010 at 04:10:52 AM EST
[ Parent ]
The IMF seems at the moment to be significantly less insane than the Bundesbank. Axel Weber called it the Inflation Maximization Fund.
by generic on Tue May 4th, 2010 at 08:10:24 AM EST
[ Parent ]
Whereas the right monetary policy according to Axel Weber is "deflation if it kills me!".

I hope Axel Weber continues to put his foot in his mouth and to annoy the rest of the Eurozone governments to the point where he loses any chance of being appointed to succeed Trichet at the ECB.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 08:23:02 AM EST
[ Parent ]
Krugman: Competitive Deflation
It's the euro version of Andrew Mellon: liquidate Latvia, liquidate Greece, liquidate Spain, purge the rottenness...


The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 09:38:27 AM EST
[ Parent ]
This bailout is a French affair: at the IMF we have DSK, at the ECB Trichet, and the political impetus within the Eurozone is provided by Sarkozy.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 08:30:04 AM EST
[ Parent ]
More Axel Weber: Euro zone committed to solving Greek woes (30 April 2009)
The euro zone is committed to solving the Greek crisis while controlled bankruptcies of banks should be allowed, European Central Bank Governing Council member Axel Weber, said on Friday.

...

"Let's wait for the (Greek aid) programme that comes, let's not speculate what the programme will be. We have a clear policy that we will solve this problem, we are all committed to it and the IMF and the Europeans will negotiate it."

"If consolidation in Greece, or in any other country, is portrayed as something that is needed to please the IMF and to please the Stability and Growth Pact, then that is a totally wrong perception."

(Reuters)

It's unclear to me what he means by "consolidation".

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 04:21:01 PM EST
[ Parent ]
Big banks absorbing little banks, as in FDIC mediated "resolutions"?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 10:25:42 PM EST
[ Parent ]
But why could anyone think that "consolidation in Greece" has to do with pleasing the IMF or the SGP?

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Wed May 5th, 2010 at 02:17:07 AM EST
[ Parent ]
"Consolidation" means:

  • consolidation of pension payments into smaller pension payments
  • consolidation of the pension age from 63(?) to 67
  • consolidation of public spending from a large amount to an amount that will fit, in cash, in a small box...
by Metatone (metatone [a|t] gmail (dot) com) on Wed May 5th, 2010 at 04:30:04 AM EST
[ Parent ]
Many German speakers translate Konsolidierung as consolidation, but it specifically means funding or financing.

"Life shrinks or expands in proportion to one's courage." - Anas Nin
by Crazy Horse on Wed May 5th, 2010 at 06:24:18 AM EST
[ Parent ]
Thanks.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Wed May 5th, 2010 at 06:25:48 AM EST
[ Parent ]
The Greek FM claimed yesterday that in negotiations, they held the line on retirement age at 65.

I've seen 63 quoted as well, but Reuters said the line was held at 65.

by Upstate NY on Wed May 5th, 2010 at 09:36:18 AM EST
[ Parent ]
Bloomberg: ECB's Weber Sees Threat of `Grave Contagion Effects'

How interesting that they don't talk of Weber as head of the Bundesbank...

European Central Bank council member Axel Weber said Greece's fiscal crisis is threatening "grave contagion effects" in the euro area, justifying Germany's contribution to a 110 billion-euro ($142 billion) aid package.

...

Chancellor Angela Merkel appealed to parliament to approve Germany's 22.4 billion-euro portion of the joint European Union- International Monetary Fund bailout amid public opposition. Policy makers across Europe are stepping up their efforts to contain the Greek crisis, which is spreading to other indebted nations such as Spain and Portugal.

...

Weber told the parliamentarians, who will vote on the package on Friday, that Greece defaulting on its debts "would in the current very fragile situation pose a significant risk to the stability of the monetary union and the financial system."



The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Wed May 5th, 2010 at 08:38:06 AM EST
[ Parent ]
Crazy Horse:
believe it was dvx who surmised that perhaps as Schäuble was at the end of his career, he felt he could afford to say what he believed.
Yes, but his latest pronouncements have been coming from the near vicinity of a hospital bed.

And there is some question about how long he'll stick around:

Schäuble wehrt sich gegen Rücktrittsgerüchte | tagesschau.deSchäuble fends off resignation rumors
Tritt Bundesfinanzminister Schäuble nach der NRW-Wahl aus gesundheitlichen Gründen zurück? Das jedenfalls behauptet die Berliner Gerüchteküche. Schäuble selbst begegnet den Anfeindungen gelassen - und Feinde hat der strenge Sparminister vor allem in der eigenen Koalition.Will Federal Finance Minister resign for health reasons after the NRW elections? This at any rate is what the Berlin rumor mill is saying. Schäuble himself responds to attacks with equanimity - and the strict cost-saving minister has enemies above all in his own coalition.

Joey Ackermann, meanwhile, is making the rounds of the banks and insurance companies to drum up chump change for the Greek rescue.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt t gmail dotcom) on Tue May 4th, 2010 at 09:36:19 AM EST
[ Parent ]
Bloomberg via BusinessWeek: Ackermann Says Banks to Help `Extinguish' Greek Fire
Deutsche Bank and other German financial institutions will refinance maturing Greek debt and maintain existing credit lines to Greece and its lenders for the next three years as well as buy bonds being sold by Germany's state-owned lender KfW Group, according to a statement distributed after a meeting between executives and Finance Minister Wolfgang Schaeuble.

Euro-region governments approved a 110 billion-euro ($143 billion) rescue for Greece from the European Union and International Monetary Fund on May 2 after it became too costly for the country to borrow in financial markets. Ackermann didn't name individual banks or the total amount to be provided, saying that Deutsche Bank plans to make a "sizeable contribution."

...

Schaeuble, who has called for private-sector involvement along with opposition politicians in Germany, organized the meeting in Berlin with executives and officials including Ackermann, DZ Bank AG Chief Executive Officer Wolfgang Kirsch, Commerzbank AG CEO Martin Blessing, HVB Group head Theodor Weimer and Bundesbank President Axel Weber.



The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Wed May 5th, 2010 at 08:18:16 AM EST
[ Parent ]
2nd Comment

How has it reached the point where 25-35 year old hedge fund bankers/speculators/financial vermin are determining the policies of nation-states?  How did we let the system get so polluted that those who skim the system now control it?

Will S&P/Moody's use the same criteria on certain englisch-speaking countries, with bloated militaries or 30% of GDP "financial services?"

I suppose this is the logical result of a society which elevates dollar greed to such a high value.

/screed.  now back to your normal ET analytical dissection of today's financial news.

"Life shrinks or expands in proportion to one's courage." - Anas Nin

by Crazy Horse on Tue May 4th, 2010 at 07:19:20 AM EST
How has it reached the point where 25-35 year old hedge fund bankers/speculators/financial vermin are determining the policies of nation-states?

Our former PM Göran Persson spoke of this as his greatest motivation for cleaning up the economy 15 years ago, so as not to need go to those smiling grasshoppers half his age and beg for loans and handouts.

The way to avoid such a situation is very easy though: keep the public finances sound.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue May 4th, 2010 at 07:58:40 AM EST
[ Parent ]
Like Spain did?
by generic on Tue May 4th, 2010 at 08:11:11 AM EST
[ Parent ]
Still lower debt to GDP ratio than Germany.

However, when the market is in a flight to safety, conventional wisdom rules and "investors" "protect their net worth" by buying US Treasury notes and German bonds.

That's okay, except that you cannot then read any "implicit predictions" in to the resulting market spreads. But that has been done. An instance of that has been how, as soon as things calmed down a bit and "investors" started returing some of their capital to stock markets from their sovereign debt safe havens, the uptick in debt yields was immediately interpreted as "market worries about the solvency of the public finances" when it was nothing but a relaxation of risk aversion.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 08:19:15 AM EST
[ Parent ]
That's the thing I don't understand in worries about Spain. What is going on in Spain already looks like incredibly tough austerity measures, and their debt is low on the public side.

Having never before seen anything like this in my 40 years, I wonder how the tough conditions in Latvia, Spain and Ireland will turn out.

by Upstate NY on Tue May 4th, 2010 at 11:00:27 AM EST
[ Parent ]
What is going on in Spain already looks like incredibly tough austerity measures

No, "automatic stabilizers", explicit economic stimulus, and emergency social safety measures (such as €420/mo for the long-term unemployed who lose regular unemployment benefits) have led to a high deficit.

Austerity would mean making millions of people destitute in the name of the 3% deficit limit of the Growth and Stability (Suicide) Pact.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 11:38:56 AM EST
[ Parent ]
In Portugal the "socialist" (*) government is cutting unemployment benefits. It was noted (by the local Trotskyist party - 10% of the vote) that the cut would have little impact in the budget.

Answer from the labor minister (she is a former leader of the European TRADE UNION Confederation) along the following lines: people need motivation to work, they are probably not working because the benefit is too generous and they do not really want to work (an argument that I could understand with very low unemployment rates). She is implying that the 10% of unemployed people are so because most of them are lazy, the idea that they cannot find a job does not strike her brain.

(*) Sarkozy said of Socrates (Portuguese PM): If all socialists were like him, I would have doubts about my party affiliation.

by t-------------- on Tue May 4th, 2010 at 07:10:26 PM EST
[ Parent ]
That is straight out of the Chicago School explanation for high unemployment during the depression: a large number of workers decided to take years long vacations.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 10:30:03 PM EST
[ Parent ]
Answer from the labor minister (she is a former leader of the European TRADE UNION Confederation) along the following lines: people need motivation to work, they are probably not working because the benefit is too generous and they do not really want to work (an argument that I could understand with very low unemployment rates). She is implying that the 10% of unemployed people are so because most of them are lazy, the idea that they cannot find a job does not strike her brain.

Do you have a source/link? Knowing Maria-Helena André (the minister), I am surprised she would say that. Furthermore, it is not consistent with the measures announced by the Portuguese government:

Government announces new measures to tackle unemployment

In January 2010, the Portuguese government announced a new economic package to tackle unemployment, which will cost the state €490 million, €90 million less than the previous package. The overall objectives of the Employment Initiative 2010 are to maintain jobs, encourage young people into the labour market, create employment and combat unemployment. The Minister of Labour and Social Solidarity estimates that the measures will affect about 760,000 people.
...
Furthermore, in this area, the Employment Initiative 2010 envisages:

    * extending payment of the initial unemployment social allowance and unemployment benefit for an additional period of six months when those benefits expire during 2010 (PT0906029I);
    * extending until 31 December 2010 applications for access to extraordinary credit intended to finance 50% of the monthly mortgage payment for people who have been unemployed for at least three months;
    * introducing the necessary modifications to the integrated system of managing training provision (sistema integrado de gestão da oferta formativa, SIGO), with the aim of promoting a more effective identification of trainees who are unemployed in order to encourage their inclusion in active employment measures;
    * increasing up to 50,000 the number of persons to be covered by employment-inclusion contracts (contratos de emprego-inserção), which are intended for subsidised unemployed people who are engaged in occupational programmes, and increasing up to 12,000 the number of people covered by the employment-inclusion contracts (contratos de emprego-inserção ). The latter are intended for unemployed beneficiaries of social inclusion income (rendimento social de inserção) who are engaged in activities considered socially useful;
    * strengthening a specific credit line, with the aim of encouraging unemployed people to create their own companies.



"Ce qui vient au monde pour ne rien troubler ne mrite ni gards ni patience." Ren Char
by Melanchthon on Thu May 6th, 2010 at 04:34:56 PM EST
[ Parent ]
Yeah well, seems the euro was a really bad idea for Spain. I'm thinking maybe we should have created a number of regional European currencies instead, which were closer to the optimal currency areas. Then they could have been merged after some decades as the European economies alinged closer.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue May 4th, 2010 at 08:41:12 AM EST
[ Parent ]
The N€ and the S€? Romance and Germanic? With the UK using both ;-)

You can't be me, I'm taken
by Sven Triloqvist on Tue May 4th, 2010 at 08:45:23 AM EST
[ Parent ]
The only problem for Spain is Germany's deflationary bias. If Germany were willing to run a 5% price and wage inflation (keeping German wages stable in real terms) for 5 years while the Mediterranean countries keep wages stagnant, the necessary correction in relative labour costs would be achieved.

Germany has benefitted greatly first from the European Exchange Rate mechanism and then from the Euro for the past 20 years. Time to acknowlege that, and also that the only interest that would be hurt by relatively high inflation in the Eurozone would be the same German creditors that had to be bailed out by their Government at the end of 2008...

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 08:51:01 AM EST
[ Parent ]
the necessary correction in relative labour costs would be achieved

Assuming Krugman was correct a year ago...

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 09:35:16 AM EST
[ Parent ]
Yeah well, seems the euro was a really bad idea for Spain. I'm thinking maybe we should have created a number of regional European currencies instead, which were closer to the optimal currency areas. Then they could have been merged after some decades as the European economies aligned closer.

There's nothing wrong with a sub-optimal currency area that you can't solve with higher inflation.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 01:14:18 PM EST
[ Parent ]
I suggested a northern and a southern euro a short while ago, with a planned trajectory to merge them over time.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 10:21:39 PM EST
[ Parent ]
If we could all agree on a planned trajectory we could make the € work as well...
by generic on Wed May 5th, 2010 at 06:14:35 AM EST
[ Parent ]
By keeping finances sound, you mean: run a surplus if you're a small country.

Because in a severe recession, you want stimulus. Some might accuse you of unsound practice if you do that however.

by Upstate NY on Tue May 4th, 2010 at 11:51:34 AM EST
[ Parent ]
You need relatively high taxes for that, and serious people won't like it.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 11:59:49 AM EST
[ Parent ]
The story BCG offered me $16,000 not to tell - The Tech

I'm a free marketeer. I believe that voluntary exchange is not just a good method of incentivizing people to provide their labor and talents to society, but a robust moral system -- goods and services represent tangible benefit to people, market prices represent the true value of goods in society, and wages represent the value that a worker provides to others. Absent negative externalities or monopoly effects, a man receives from the free market what he gives to it, his material worth is a running tally of the net benefit that he has provided to his fellow man. A high income is not only justified, but there is nobility to it.

My moral system is organized around a utilitarian principle of greatest good for the greatest number -- that which adds value cannot be wrong. It did not bother me therefore when I was handed consulting reports that had been stolen from our competitors. If the information in those reports would help us improve our client, then who could say we were doing wrong? Like downloading MP3s, it was a victimless crime.

What I could not get my head around was having to force-fit analysis to a conclusion. In one case, the question I was tasked with solving had a clear and unambiguous answer: By my estimate, the client's plan of action had a net present discounted value of negative one billion dollars. Even after accounting for some degree of error in my reckoning, I could still be sure that theirs was a losing proposition. But the client did not want analysis that contradicted their own, and my manager told me plainly that it was not our place to question what the client wanted.

In theory, it was their money to lose. If they wanted a consulting report that parroted back their pre-determined conclusion, who was I to complain? I did not have any right to dictate that their money be spent differently. And yet, to not speak out was wrong. To destroy a billion dollars is to destroy an almost unimaginable amount of human well-being. Spent carefully on anti-malarial bed nets and medicine, one billion dollars could save a million lives. This was a crime, and failing to try and stop it would be as bad as committing it myself. And if I could not prevent it, then what reason was I being paid such a high salary? How could I justify my income if not by prevailing in situations such as these?

Sit down, shut up

Early on, before I began case work, one manager I befriended gave me some advice. To survive, he told me, I needed to remember The Ratio. 50 percent of the job is nodding your head at whatever is being said. 20 percent is honest work and intelligent thinking. The remaining 30 percent is having the courage to speak up, but the wisdom to shut up when you are saying something that your manager does not want to hear.

I spoke up once. And when it became clear that I would be committing career suicide to press on, I shut up.

With a diligent enough effort, one can morally justify nearly anything.

tax them till they squeal, they deserve it. they've sure been taxing everyone else...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue May 4th, 2010 at 07:04:41 PM EST
[ Parent ]
From the above article:
Despite having no work or research experience outside of MIT, I was regularly advertised to clients as an expert with seemingly years of topical experience relevant to the case. We were so good at rephrasing our credentials that even I was surprised to find in each of my cases, even my very first case, that I was the most senior consultant on the team.

I quickly found out why so little had been invested in developing my Excel-craft. Analytical skills were overrated, for the simple reason that clients usually didn't know why they had hired us. They sent us vague requests for proposal, we returned vague case proposals, and by the time we were hired, no one was the wiser as to why exactly we were there.

I got the feeling that our clients were simply trying to mimic successful businesses, and that as consultants, our earnings came from having the luck of being included in an elaborate cargo-cult ritual. In any case it fell to us to decide for ourselves what question we had been hired to answer, and as a matter of convenience, we elected to answer questions that we had already answered in the course of previous cases -- no sense in doing new work when old work will do. The toolkit I brought with me from MIT was absolute overkill in this environment.(Emphasis added.


I had similar experiences late in my career. But for such an experience to be your first out of college....

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 10:52:49 PM EST
[ Parent ]
Well - it's not just a metaphor. The constant obsessive quest for 'growth' and 'performance', defined in economic terms with no awareness of broader consequences is a cargo cult. It's religious in all but name.

What's odd is the rationalisation that moar is always better - which is apparently something the author still believes.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue May 4th, 2010 at 11:29:40 PM EST
[ Parent ]
He probably KNEW more was better before going to MIT and wasn't disabused of that notion there, either.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 5th, 2010 at 01:27:40 AM EST
[ Parent ]
No, I mean you keep the debts down. If you run up lots of debt in a downturn, you make sure you pay it down when the good times return. See Keynes, John Maynard.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue May 4th, 2010 at 02:36:43 PM EST
[ Parent ]
Six of one, half a dozen of the other.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 03:11:52 PM EST
[ Parent ]
I don't recall Keynes saying that. Was that in the General Theory? Or is it something Samuelson came up with?
by generic on Wed May 5th, 2010 at 09:06:37 AM EST
[ Parent ]
It's just the basics of contracyclical spending, nothing fancy.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed May 5th, 2010 at 06:07:44 PM EST
[ Parent ]
I asked because the only instance of Keynes writing about deficits I remember was him quipping about being so concerned with the debt burden for our children that we neglect building them houses.
by generic on Wed May 5th, 2010 at 06:22:25 PM EST
[ Parent ]
Well, if you are to afford deficit spending during slumps you need to save during the upturns, or your national debt will balloon. Sure, growth will take care of a certain fraction of the debt, but not all of it. We're not "deficits don't matter"-supply siders.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed May 5th, 2010 at 07:01:11 PM EST
[ Parent ]
Actually I'm not sure if past deficits matter. Steven Keen makes a convincing case that bank lending is not constrained by reserves. So what is the difference between financing your deficit with bond sales and creating money out of thin air? And once you don't issue bonds or at least set the return you pay yourself how do past deficits reduce your ability to run deficits in the future?
by generic on Thu May 6th, 2010 at 06:52:26 AM EST
[ Parent ]
And once you don't issue bonds or at least set the return you pay yourself how do past deficits reduce your ability to run deficits in the future?

Eventually, your currency will lose "faith and credit" and your economy will dollarize.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 6th, 2010 at 10:45:21 AM EST
[ Parent ]
If you don't push your economy over capacity and run balanced foreign trade? What eventually breaks the economy?
by generic on Thu May 6th, 2010 at 12:14:59 PM EST
[ Parent ]
Nothing.

But if you want to avoid loss of faith and credit, you have to eventually stop accumulating (relative to whatever meterstick the parts of the political system that govern "faith and credit" uses - debt to GDP, debt pro capita, etc.) sovereign debt (or explicitly default on some of it in some manner that doesn't spook your political system too badly).

Essentially, you've rediscovered the fact that money is all about trust, and that as long as the relevant entities keep trusting you, you can keep printing money.

Trouble is that this trust is going to be most likely to evaporate at the moment when you most need it (because the moment when you most need it is the moment where that trust is under the greatest stress).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 6th, 2010 at 02:44:51 PM EST
[ Parent ]
I guess the question I have been asking myself is if Chartalism is bollocks.
by generic on Sat May 8th, 2010 at 12:17:17 PM EST
[ Parent ]
* whether Chartalism is bollocks.
by generic on Sat May 8th, 2010 at 12:26:15 PM EST
[ Parent ]
How has it reached the point where 25-35 year old hedge fund bankers/speculators/financial vermin are determining the policies of nation-states?  How did we let the system get so polluted that those who skim the system now control it?

It's an instance of mental capture. In the case at hand, officials have shirked their responsibility for policy and have hidden behind market quotes. As I paraphrased back in February

"the market is always right, we in the Eurogroup have no greater insight into the credibility of Greece's fiscal position than what you can get from looking at market prices"
Over the intervening 3 months, I've become convinced that we'd be no worse off if we replaced finance ministers with monkeys at bloomberg terminals.

The problem is the dominant economic ideology.

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 08:15:46 AM EST
[ Parent ]
The only central bank that is legally barred from assisting fiscal policy is the ECB. Basically we tell the financial parasites that they can make us pay whatever they want.
by generic on Tue May 4th, 2010 at 08:30:36 AM EST
[ Parent ]
I'd like to know if we can blame Theo Weigel directly for this or not.

Are there any accounts of how the relevant article of the EU treaties was negotiated?

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 08:32:33 AM EST
[ Parent ]
How did we let the system get so polluted that those who skim the system now control it?

Wm. K. Black calls it "control fraud". In the USA it started in the big banks and has extended to The Fed, The Treasury, The SEC....of course, ever promoted and pedaled by the RW "think tanks".


"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 12:48:32 PM EST
[ Parent ]
Chimpy pared down the SEC to 24 regulators, to oversee a shadow economy multiples greater than the entire country's GDP.

what could possibly go wrong that a few p0rn vids couldn't distract them from?

Bill Moyers' penultimate show was with Bill Black, and he kicked serious ass and took names...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue May 4th, 2010 at 06:40:50 PM EST
[ Parent ]
Gresham's law.  When the casinos come to town, everybody has to play like a casino to stay in business.  When the paper shufflers leverage everything to infinity and make obscene profits doing it, nobody wants to deal with a stuffy old banker who earns 4% and insists on old fashioned notions of collateral and reserves.

We all bleed the same color.
by budr on Tue May 4th, 2010 at 01:15:27 PM EST
[ Parent ]
European Tribune - Schadenfreude
unless that commitment takes the form of a European grand bargain towards greater integration

That was Jürgen Habermas's prediction, based on his reading of history. But when, after how much damage done?

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 4th, 2010 at 07:50:30 AM EST
In the greater scheme of things, the damage is likely to be trivial.

Unification projects on the scale of the European Union has normally required at least two serious shooting wars.

Germany required one against Austria, one against France and a practise match against Denmark; Britain required too many to recount; France required only one, but it lasted a hundred years, Italy required one against Austria and then a civil war on top of that; USA required a boatload of massacres, plus a serious civil war; India required a whole boatload too.

If we can move from a loose confederation to a federal architecture at only the comparatively minor cost of a serious business depression, then I think we should count our blessings.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 01:24:58 PM EST
[ Parent ]
excellent, refreshing observation, Jake!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Tue May 4th, 2010 at 06:21:44 PM EST
[ Parent ]
True dat. But we've already had more than five hundred years of shooting wars in Europe. Some were even trending towards unification, albeit not on the current model.

So I was kinda sorta hoping that would have been enough.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue May 4th, 2010 at 11:32:34 PM EST
[ Parent ]
This crisis is not for Germany to solve. It has been the case since day one that the ECB could quietly and at no cost (in fact, making Seigniorage profit) put a floor on the price of Greek debt in the secondary markets (or, indeed, any Euro-denominated financial asset).

The only question is who would make the decision to do so. I can imagine this being discussed among the Central Bank chairmen at a conference of the European System of Central Banks, and Axel Weber banging the table with his shoe like Khrushchev as he screams¨"over my dead body!".

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 08:45:43 AM EST
Migeru:
It has been the case since day one that the ECB could quietly and at no cost (in fact, making Seigniorage profit) put a floor on the price of Greek debt

Do you mean by doing this?

ECB Comes to Greece's Aid by Waving Collateral Rules (Update3) - BusinessWeek

May 3 (Bloomberg) -- The European Central Bank joined the international rescue of Greece, saying it would indefinitely accept the country's debt as collateral regardless of its country's credit rating, underpinning gains in the bond market.

The decision came less than a day after Greece agreed to a 110 billion-euro ($145 billion) package of emergency loans from the International Monetary Fund and its euro-region allies. Under the plan backed by the ECB, Greece pledged 30 billion euros in budget cuts to bring a deficit of 13.6 percent of gross domestic product within the EU limit of 3 percent in 2014.

"The ECB is a key player in the rescue package designed to help Greece and it is clearly buying insurance against the likelihood of further multiple downgrades of the Greek debt, something that might lead to a halt of ECB financing to the Greek banks," said Silvio Peruzzo, an economist at Royal Bank of Scotland Group Plc in London.



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt t gmail dotcom) on Tue May 4th, 2010 at 09:40:06 AM EST
[ Parent ]
No, by buying up Greek sovereign debt directly.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 01:37:04 PM EST
[ Parent ]
But not from Greece - it first has to be sanitised by a private investor.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 01:39:13 PM EST
[ Parent ]
Cue snark about the purifying power of the bid-ask spread of a major investment bank...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 08:06:56 PM EST
[ Parent ]
"On the brink of the abyss"
The column "Das Kapital" in FT Deutschland says the ECB is very likely to announce another U-turn very soon - it will almost certainly end up buying government bonds to sustain the European bond market, and depress interest rates, just as the Fed and the Bank of England has done. The only question is why the ECB does not do this right away, since then they at least have a chance to keep the eurozone together. Of course, the article concludes, the reactions in Germany would be even more extreme.
by afew (afew(a in a circle)eurotrib_dot_com) on Thu May 6th, 2010 at 04:07:52 AM EST
[ Parent ]
The question is why they don't do it quietly.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Thu May 6th, 2010 at 09:25:22 AM EST
[ Parent ]
How do we know they aren't?

If the ECB is buying up Greek bonds over the counter, it may not cause any reaction on the exchanges - by this stage, they seem to be driven wholly by animal spirits and those who manipulate the animal spirits of others.

It is in the nature of quiet operations that full-time manipulators will hear of them before their marks - and the full-time manipulators have no interest whatsoever in disclosing this knowledge before they've unwound their substantial short positions.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 6th, 2010 at 10:52:45 AM EST
[ Parent ]
Are they finally turning around?

http://www.businessweek.com/ap/financialnews/D9FG2MU80.htm

The idea being openly discussed is that the ECB may support bond prices -- and the balance sheets of banks holding them -- by buying government bonds even though the bank's constitution says it can't directly bail out profligate governments.

"Ultimately, the ECB may have to rewrite the rules," said Neil Mackinnon, global macro strategist at VTB Capital.

One option could be for the ECB to get round the no bailout rule by buying bonds on the secondary market from the banks instead of the governments -- a Spanish bank, say, would go to the ECB and exchange Spanish bonds, which could be junk status, in exchange for cash.

"That would prevent a banking crisis, provide liquidity, underpin solvency and indirectly help fiscally challenged governments to fund themselves," said Mackinnon..

by Upstate NY on Tue May 4th, 2010 at 12:37:44 PM EST
[ Parent ]
One option could be for the ECB to get round the no bailout rule by buying bonds on the secondary market from the banks instead of the governments -- a Spanish bank, say, would go to the ECB and exchange Spanish bonds, which could be junk status, in exchange for cash.

You mean it's taken them this long to figure out that open market operations exist?

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 12:53:43 PM EST
[ Parent ]
on European Tribune.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 12:57:32 PM EST
[ Parent ]
JakeS:
Migeru:
What the ECB cannot do is fund a public debt issue, and that makes some sense from certain ideological perspectives.

Because by having passed through the bid-ask spread of a major investment bank, it is suddenly converted from a loan into a monetary instrument?

European Tribune: Get your news two months early.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 01:33:43 PM EST
[ Parent ]
I can imagine this being discussed among the Central Bank chairmen at a conference of the European System of Central Banks, and Axel Weber banging the table with his shoe like Khrushchev as he screams¨"over my dead body!".

Now, there's a picture to cherish...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 01:26:51 PM EST
[ Parent ]
One of the things that annoys me in all of this is the treatment of the "hyena pack" of "bond vigilantes" as some kind of invisible hand/force of nature.

It seems to me that the case is rather that they see a chance to "do a Soros" and make a pile of money... it's not about "fundamentals" it's a game-theory situation.

If you add up all the hyenas they probably have the liquidity to take down Greece and other countries, but only if they all stick together. Decisive action makes that much less likely.

by Metatone (metatone [a|t] gmail (dot) com) on Tue May 4th, 2010 at 09:19:39 AM EST
Soros' attack on the Pound in 1992 was a successful political bet that the Bundesbank would not spend any DM keeping the pound within the bounds of the European Exchange Rate Mechanism. He was right and made a handsome profit. 20 years later he's complaining that Germany doesn't have the political will to do anything about market attacks on the Euro. I think his successors are making the same political bet about German commitment to the European construction, and will equally make out like bandits.


The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 09:26:43 AM EST
[ Parent ]
How much would Soros have lost if he'd failed?

More specifically - are the risk/rewards of this kind of speculation symmetric?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue May 4th, 2010 at 09:36:34 AM EST
[ Parent ]
Are you kidding?  Soros is To Big To Fail(TM).  Think of all those widows and orphans, dependent on retirement funds managed by Soros & Co.  We'd have bailed him out like we did Goldman.

We all bleed the same color.
by budr on Tue May 4th, 2010 at 01:09:54 PM EST
[ Parent ]
He was relatively unknown in 1992.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 01:17:39 PM EST
[ Parent ]
The ECB needs to implement a strategy to "skin the shorts". That is likely the only thing that will stop the feeding frenzy.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 12:52:23 PM EST
[ Parent ]
That's not bi-partisan. Oh, excuse me, wrong blog!

Hey, Grandma Moses started late!
by LEP on Tue May 4th, 2010 at 01:56:06 PM EST
[ Parent ]
Partisan, but true, unfortunately. Worse, they would probably be skinning some of their biggest contributors and might be taking down some banks they just propped up.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 03:01:13 PM EST
[ Parent ]
What about establishing a duchy somewhere in Europe on the order of San Marino or Liechtenstein? You then report false stats to Eurostat, something like, 287% debt to GDP, 287 billion debt, 100 billion GDP, deficit of 38%. Wait for the suckers to place their bets and then squeeze them dry.

(Sorry to everyone, this must come from the Greek blood in me).

by Upstate NY on Tue May 4th, 2010 at 09:39:06 PM EST
[ Parent ]
Even better, issue 60 billion in bonds, set 10 aside for coupons, pocket the rest, abscond and let the sucker default. This was once called "Giving them the Royal Shaft".

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 5th, 2010 at 12:33:47 PM EST
[ Parent ]
Because it's not a Ponzi scam if you're a sovereign...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat May 8th, 2010 at 07:19:01 AM EST
[ Parent ]
This resonates with too many themes in this thread [bond traders as forces of nature, mental capture...] to post as a reply so at the top it goes...

This Is Money: Bond traders ready gilt sell-off for hung vote

City vultures are waiting to swoop and plunge the economy into turmoil if voters leave Britain saddled with a hung parliament.

Bond markets will open at an unprecedented 1am on Friday - three hours after the polls close - because traders want to be able to sell UK gilts and effectively offload their shares in the Government.

In a stark warning about the economic consequences if no one party wins a working majority, the futures market Liffe has been forced to open its doors after coming under pressure from investors.

(h/t metatone in the UK Election Finale thread.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 11:28:14 AM EST
ENGLAND PREVAILS.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Tue May 4th, 2010 at 11:44:19 AM EST
[ Parent ]
GO NIALL!!!

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 11:57:37 AM EST
[ Parent ]
Even by their abysmal standards that is bollocks.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Tue May 4th, 2010 at 11:47:41 AM EST
[ Parent ]
Apparently the Liffe management doesn't think so.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 11:58:18 AM EST
[ Parent ]
Bond markets will open at an unprecedented 1am on Friday - three hours after the polls close - because traders want to be able to sell UK gilts

Well, so fucking what?

I mean, excuse my French, but why the fuck is the Exchange (which last time I checked was supposed to be a quasi-public institution whose main responsibility is to ensure an orderly and transparent market) cowtowing to such hysterical demands?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 12:42:11 PM EST
[ Parent ]
The mental capture is complete. Instead of telling the crack monkeystraders to get a grip and wait until 9am, the exchange works overtime so the market can fail to clear early. For, if there is an avalanche of sellers, the market may not clear...

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 12:47:07 PM EST
[ Parent ]
Is the exchange, in effect, run by traders? Looks like election day and Friday might be interesting. A ploy to stampede the electorate to the Tories?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 4th, 2010 at 01:03:18 PM EST
[ Parent ]
Liffe is now an electronic market and is owned by EuroNEXT.

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 01:08:05 PM EST
[ Parent ]
Y'know, if I'm gonna live in a cyberpunk dystopia, I want the cool gadgets to go with it.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 01:47:11 PM EST
[ Parent ]
   

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue May 4th, 2010 at 02:32:52 PM EST
[ Parent ]
I know, I know. We already have way cooler gadgets than the 1980's cyberpunkers imagined...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 03:13:07 PM EST
[ Parent ]
Cyberpunk writers hadn't heard of Moore's law?

The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Tue May 4th, 2010 at 03:20:19 PM EST
[ Parent ]
Moore's law speaks only to the difference in scale (and only of processing power).

What it doesn't say - and what is hard to imagine - is the difference in kind that goes with a ten-thousand-fold increase in computational power.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 4th, 2010 at 03:28:05 PM EST
[ Parent ]
I am copying this from a comment on ZeroHedge:


To name a things the US has that EU/EMU does not:

common fiscal policy

political union

deep, liquid, unified sovereign debt market

ability and willingness to engage in QE

a military

better energy independence, through its own energy resources and control of the Sunni oil fields

better demographics, if only relatively better

more alignment with China and the rest of Asia-Pac, if only relatively better alignment

I would add another one, the most important: Americans feel that they belong to the same country. Europeans don't.

by t-------------- on Tue May 4th, 2010 at 07:18:17 PM EST
I'd add another, (that these may partly explain or partly be a result of): decades of institutionalised hegemony over the planet.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed May 5th, 2010 at 04:13:25 AM EST
[ Parent ]
Each of these lines appears to merit a diary of it's own, including the one added. (Note that I fail to see the author of the diary making a comparison US-EU though.)
by Joost van der Lugt on Fri May 7th, 2010 at 09:54:36 PM EST
[ Parent ]
Credit rating agency Moody's puts Portugal's credit rating on review for downgrade, warns of possible two notch cut according to AP

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed May 5th, 2010 at 08:21:32 AM EST
This being the same Moody's that put AAA ratings on junk bonds three years ago?

We care about those dumbasses because?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed May 5th, 2010 at 08:28:48 AM EST
[ Parent ]
We care about those dumbasses because?

Bloomberg: Pound Rally Backs Cameron Win, Polls Flag Coalition

Traders are betting that whichever party forms a government after the May 6 vote will deliver a plan to reduce the record budget deficit. The euro tumbled to a one-year low against the dollar following reductions in the credit ratings of Greece, Portugal and Spain by Standard & Poor's last week. S&P and Moody's Investors Service signaled they may remove Britain's AAA grade depending on the new government's measures.

"What's happening in the euro zone with the rating downgrades are most likely being followed by the U.K. candidates," said Audrey Childe-Freeman, a senior currency strategist at Brown Brothers Harriman Ltd. in London. "No leader or no coalition government would like to experience a downgrade for U.K. debt."

...

The U.K. deficit, the largest in the Group of Seven nations at more than 11 percent of gross domestic product, has dominated the election campaign.



The brainless should not be in banking -- Willem Buiter
by Migeru (migeru at eurotrib dot com) on Wed May 5th, 2010 at 08:32:48 AM EST
[ Parent ]
Moody's Investors Service signaled they may remove Britain's AAA grade depending on the new government's measures.

But isn't that libel? Can't we just get a superinjunction stopping them from publishing any such downgrade?

by gk (gk (gk quattro due due sette @gmail.com)) on Wed May 5th, 2010 at 06:23:19 PM EST
[ Parent ]
we care about those dumbasses because?...

They are the shock troops preparing the ground for the first wave assault by hedge fund infantry?

Would be nice to have enough free time, and some skilled help, to put out a white paper on a ratings agency scorecard for the past two decades.  as well as, for example, what didn't get downrated at the same time as Portugal or XYZ did.

However, in the age of the tubez, i would suppose someone's already done it.

"Life shrinks or expands in proportion to one's courage." - Anas Nin

by Crazy Horse on Wed May 5th, 2010 at 09:37:03 AM EST
[ Parent ]


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