While some things change, most things stay the same. The sun came up this morning; Democrats and Republicans still hate each other; central bankers are still printing money with reckless abandon; Oprah Winfrey is still rich; the stock market made new highs on ridiculously low volume; and Greece was saved…again. The only thing that is different is the date on the calendar, which makes today Fat Tuesday.
What isn’t on the list above because it hasn’t happened yet (this time around) is the other part of the Greek bailout saga that never seems to change: as sure as Oprah will still be rich in a few days, yesterday’s Greek bailout will fall apart like a politician’s promise.
In the latest bank bailout via the Greek people, we learned that Puppet Papademos and Company agreed to more austerity for more cash - $172billion to be precise. In order to get this, private bondholders are being forced to accept higher losses without being paid on their insurance policies (CDSs), the ECB accepts no losses, the ECB retroactively changed all bond language so they wouldn’t lose money which radically changes all bond sales going forward, and Greece will be placed under a new wicked type of Financial Fascism by the EU that will make all decisions for the people of Greece.
There will be massive protests in the streets of Greece come Wednesday.
Here are a few comments about the latest bailout. I wonder which ones will be correct.
"It's an important result that removes immediate risks of contagion" - Italian Prime Minister Mario Monti.
"A nightmare scenario was avoided. It is maybe the most important (deal) in Greece's post-war history" - Greek Finance Minister Evangelos Venizelos.
"What's been done is a meaningful step forward” - Swedish Finance Minister Anders Borg.
"The austerity measures it will have to implement and increased monitoring by the troika amidst public outrage will make things harder and drive it deeper into recession. There is a risk of a euro zone exit later this year" - Jennifer McKeown, senior European economist at Capital Economics.
"This program is not something to cheer about” - Dutch Finance Minister Jan Kees de Jager
“The new Greek government could refuse to follow through on its commitment” - David Mackie, chief European economist at JPM
"So what? Things will only get worse!” – 31-yr old Athens taxi driver.
"Without the rebound and growth of the economy ... not even the immediate fiscal targets can be met, nor can the debt become sustainable in the long-term” – Greek Conservative leader Antonis Samaras
The final two comments above are true right now. In order to get the Eurocrats to agree to this banker bailout and keep their constituents from howling, the Eurocrats did what all slimy politicians do at the end of the negotiating line: fudge the numbers. Mr. Samaras’ comment above is exactly correct – Greece has no chance of growing out of this burden.
Isn’t it odd that EVERY U.S. president in memory – on both sides of the isle – have promised that he could cut the deficit in half by the end of his first term? How can they all make such a statement? It usually boils down to rosy growth predictions. None of them ever propose real cuts in the budget, just fantasy cuts; however, the way they look you right in the face and lie without batting an eyelash is in their always-rosy GDP growth projections.
And that’s exactly what the slimy EU politicians have done: made preposterous GDP growth predictions that everyone knows is a lie – but must accept to keep the can-kicking exercise going down the road.
As you can see on the chart above, Greece is in a depression. Yet on the chart we see the assumptions made by the EU politicians, who claim that Greece will magically halt this process this year and stage a staggering reversal of fortune. How this would happen, while the majority of the previous austerity demands have not even been implemented, is not explained by the Financial Fascists now ruling Greece. Even under the wild supposition above, Greece will only get to 159% of the required debt-to-GDP ratio and not the 120% needed for this to supposedly work.
In other news on this Fat Tuesday, the USSA posted its own new debt-to-GDP ratio…a record of course. It now stands at an official 101%. It will get worse with the coming 5 & 7-YR Note auctions over the next few days. But don’t worry; nothing bad ever happens to the USSA. Now if one were to consider the unfunded mandates made by our own home-grown slimy politicians, well, then the debt-to-GDP ratio would be somewhere around 730%. No worries, right?
Trade well and follow the trend, not the so-called “experts.”
President & Founder of Trading Advantage.