Tag Archives: European Union

And I Thought Greece Was The Broken Link

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It turns out it all goes down the tubes on Cyprus of all places.

And really, let’s be honest, no one would have guessed Cyprus if you’d ask them last year. Everyone and their brother would have put the end of the Eurozone due to Greece, Spain or possibly even Italy.

But not Cyprus.

And now the EC is going to screw this up even more, which is truly impressive if you think about it.

From the FT: “a revised deal being discussed in Nicosia, with the blessing of the European Commission, would shift more of the burden on to deposits larger than €100,000, according to officials involved in the talks. Under a controversial deal struck with international bailout lenders in the early hours on Saturday, a 6.75 per cent levy would be imposed on all deposits under €100,000 while accounts over that threshold would be hit with a 9.9 per cent levy. The depositor levy was demanded by a German-led group of creditor countries to bring down the bailout’s price tag from €17bn…. Officials involved in last night’s talks said the changes in the levy’s rates were in flux, but they could see the higher rate increase to as much as 12.5 per cent while the smaller deposits could be about 3.5 per cent.”

Ah yes, let’s back up a step.

It was announced over the weekend that as part of getting “saved” by the EC, Cyprus would get some cash. Oh and they would have to go back on their promise of making depositors whole by “taxing”, ie stealing, various amounts depending on the amount in the bank at the time.

As various pundits here in the US have said, the markets don’t like uncertainty. So that is exactly what the geniuses in Brussels have decided to do.

They’ve bolloxed the situation by showing that no depositor is safe in the EU. No one. Not anywhere. They claimed this is a one time emergency but really, when it comes to money grubbing pols, there’s never just one time. There’s just the first time.

And to make things worse, after rightfully getting pummeled this way to next Tuesday, it seems they’re going to adjust the amount they take. Please don’t. Now you’re just going to confuse the situation. It’s a bad situation. I’m amazed that they’re going to make it worse by muddling what’s going on by changing how much they steal.

Really, these guys in the EC make the keystone cops and the Washington Generals look world class. Can’t wait to see the flight to treasuries and how everyone leaps out of the Euro. At least it’ll make Monday interesting.

Why Do You Trust Greece Now?

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As you may have heard, the Greeks are holding the EU hostage for some coin to pay off their debts. It’s been down to the wire now for, oh the past 20 years, or so it seems.

As one deadline after another has come and gone, leaders of the three parties in the coalition of Prime Minister Lucas Papademos postponed what was supposed to have been a crunch meeting on Tuesday until the following day.

Here’s the thing though. The Greeks lied before about their budget.

One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.
…
In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

The current Prime Minister Lucas Papademos, brought in to save the day for the EuroZone was Governor of the Bank of Greece while the lying was going on.

His reward for lying to the EuroZone ministers was a promotion to become Prime Minister.

Tell me again, since the people that did the lying are still in office now, why anyone in the world expects the behavior of the Greek government to change? They won’t. And yet the usual suspects will proclaim how shocked they are when it happens again.

It’s obvious that of all the poor choices available, they Greeks should leave the Euro and return to the Drachma. It is not a good choice, but it is, regrettably the only rational choice. Unless the Germans intend to keep Greece on life support forever.

I Am In The Wrong Business

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I guess I should have gone in to the consultancy business.

Despite a ballooning administration budget – already £6.6 billion a year and growing by 4.5 per cent next year – the EU spent more than £500 million on “external advice” on consultants between 2005 and 2008. Among the other consultancy items were £11,000 courses for officials on “taking notes and writing minutes” and a £44,000 opinion survey on the “working environment for Commission staff”.

Mats Persson, the director of the Open Europe campaign group, highlighted the spending of £580,000 on research into marketing fruit and a £290,000 study on domestic violence in Afghanistan.

“Far too much money is being squandered on all kinds of studies and evaluations which are either irrelevant or which cover areas that the EU should have no business in dealing with,” he said.

That is a lot of money to spend on consultants. I’m quite certain when I say this, they are definitely not getting their money’s worth from their consultants…lol

The Mother Of All Bailouts:European Edition

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Well well well, not only did the EU get its act together, but they were able to get something out the door to help reassure people that the Euro is a good place to park your cash.

European Union finance ministers moved toward agreement on an unprecedented loan package worth at least $645 billion to prevent Greece’s fiscal woes from triggering a broader sovereign-debt crisis and shattering confidence in the euro.

Jolted into action by last week’s slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, the 16 euro governments sketched out plans to make 440 billion euros ($570 billion) available, with 60 billion euros more from the EU’s budget

Of course they still have some arm twisting to do before they’ll have used all the bullets of government manipulation.

Government officials said they won’t push the independent ECB to, for example, buy government bonds. President Jean-Claude Trichet accelerated the market selloff on May 6 by rejecting that measure.

I’m sure they’ll try their hardest to get some quantative easing going on from the ECB side.

Obama yesterday emphasized “the importance of the members of the European Union taking resolute steps to build confidence in the markets,” White House spokesman Bill Burton told reporters in Hampton, Virginia.

Of course they haven’t done anything about the underlying problems, just punted that issue down the road like the American administration. All they’ve done is put one hell of a bandaid on the patient hoping it won’t die as the head lies on the road. And it’s obvious that the public in Europe is enamored of bailouts there as they are here in the States.

Voters in Germany’s most populous state dealt Chancellor Angela Merkel a painful setback Sunday, erasing her government’s majority in the upper house of parliament and curbing its power after a stumbling start and criticism over the Greek debt crisis.
…”This is of course a warning shot for the governing parties, and the people should know that it has been heard,” said Foreign Minister Guido Westerwelle, the vice chancellor and leader of the Free Democrats, Merkel’s junior coalition partner. “We must make an effort to win back lost trust.”

Well, color me skeptical about any politician actually doing what they say. I think the thing to take away is that the pols of Europe are scared of the downside and are willing to do anything thing possible to save their asses without actually fixing the problems they have. In other words, they are acting like typical politicians and their countries will be the worse for it. But we’ll see.