Why Do You Trust Greece Now?

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.

So Far The Market Likes It

So far the Street likes what it sees.

Stocks rocketed higher and bond prices fell Monday after investors were reassured by a nearly $1 trillion plan to avoid a European debt crisis.

The Dow Jones industrial average rose about 390 points. The Dow and broader stock indexes rose more than 3 percent. Markets also barreled higher in Europe.

At this point it’s up 414 and change. We’ll see whether this will last thru the day and how the market closes. If the Europeans were trying to goose the market, they’ve certainly done that and more. We’ll see whether it really fixes the underlying problems.

And The Americans Get Involved Saving The Euro

The Fed has decided it too wants in on saving the Euro.

The U.S. Federal Reserve will restart its emergency currency-swap tool by providing as many dollars as needed to European central banks to keep the continent’s sovereign-debt crisis from spreading.

The swaps with the European Central Bank, Bank of England and Swiss central bank will allow them to provide the “full allotment” of U.S. dollars as needed, the Fed said late yesterday in a statement in Washington.

Not sure if it’ll all help, but it’s obvious that everyone thinks there’s a problem in Europe. Of course they are again not fixing the underlying problems…

The Mother Of All Bailouts:European Edition

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.

Greece Gets A Bailtout

Greece finally got it’s bailout. Thankfully I’m not directly on the hook for any of the cash.

Euro zone finance ministers unanimously approved a detailed 30 billion euro ($40.5 billion) emergency aid mechanism for debt-plagued Greece on Sunday but stressed it had not requested that the plan be activated now.

Right. Does anyone really believe it wasn’t requested? I mean, why bother going through the process of creating a bailout if Greece didn’t want it. Everyone knows that’s a lie, so why bother repeating it?

“If the mechanism had to be activated, it would not be a violation of the no-bailout clause (in the European Union treaty) since the loans are repayable and contain no element of subsidy,” Eurogroup chairman Jean-Claude Juncker told a news conference in Brussels after the meeting.

And if they happen to forgive the loan? Does it then become a bailout an violate the no-bailout clause? I’m just askin…

The size of the International Monetary Fund’s contribution to any package was not disclosed but it would come on top of the euro zone amount.

And here’s where I become mildly concerned about my ass being on the line for the money. While the IMF is technically independent, if there’s a problem, you know they’re coming back to the US for cash. Hopefully they’ll be able to stick the Europeans with the losses when they happen.

And losses will happen on this bailout. It’s painfully obvious to anyone with a working set of eyes that Greece is nowhere’s even close to getting their house in order. Yes I know, like the US should be talking… 😉