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Wednesday, February 15

15th Feb - Another EZ Kung Fu-Move

This is getting even crazier than I thought. After the Chinese rumor, which has been taken from the carbonite every six weeks to prop up the morale of the troops, it is now back to the beatings until the morale in Greece really improves. Now the creditor countries are planning to hold on to the bailout money until the Greek elections, to make sure that there are no instant austerity reversals in Athens after a couple of months' time. 

Perhaps they hope that if the PSI goes through and with heavy austerity,  the bailout funds would only be used to service the remaining debt and Greece could continue existing in limbo and not bother anyone else for a while. Maybe this is another tactic to squeeze people like the Greek ceremonial president who is complaining about the Finns, the Dutch and the Germans - because he was a resistance fighter against the nazis in WWII and everyone else are a bunch of nobodys. What a wonderful sales pitch from someone who happens to need 145 billion to maintain living standards. Okay, he is old. Sad and desperate people behave in desperate ways.

Now everything is becoming supercritical, and failure in any of the pieces - PSI, austerity plans, EZ17 acceptance to measures, etc etc. will take down the bailout 2.0. One has to wonder if this was the Franco-German plan all along. They just couldn't find a polite way to ask their guest to leave their europarty.
Markets – Between The Hedges
EZ crisis press summary – openeurope
  -Eurozone finance ministers postpone meeting as Greece fails to provide sufficient guarantees; Reuters: Spain could face fines for inflating deficit figures

Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
Tracking Europe’s Debt Crisis – NYT

Europe’s wobbly economyMacroScope / Reuters
Real economy contracting, credit crunch…and Greece.

Poles go cold on the euroopeneurope
32% of Polish people are in favor of euro membership – while in 2002 the number was 64%,

In Europe, the reasons to fear a Lehman-like event still seem compellingCredit Writedowns
Creditor countries seem to bet that LTRO helps banks face a Greece default, and this has hardened their rhetoric. IMF thinks that Portugal’s debt is not sustainable if its GDP disappoints. A Grexit would not solve the European structural problems.

Is Spain Going Greek On Statistics?openeurope
EU to punish Spain for deficits, inactionReuters
Spanish government made the 2011 deficit look bigger than it was, just so that it would look better this year. Sounds too familiar.

Greece, a proxy for what no one dares admitSaxo
Capital markets have failed because no one wants to admit they have. If you can’t admit you have a problem, you can’t get on with finding an evolutionary alternative to the current failed premise.

As Greece Crashes And Burns, Troika Arrives In Portugal With "Soothing Words Of Support"ZH
Portugal, unlike
Greece, has simple, clean and efficient negative pledge language in its non-local law bonds. Which means "no can do" to any additional bailouts under its current capitalization. Which may very well mean that Portugal is stuck with its existing balance sheet unless the country succeeds in doing an exchange offer which takes out all UK- and other strong-protection bonds.

UBS Counts The Nails In Greece's CoffinZH
UBS: Is Greece saved? No, but we could hope it is ring fenced.

Does Germany want Greece out of the euro?The World / FT
Different parts of the government send different signals. Grexit is not a complete taboo anymore.

In the Picture: Greece under pressureThe World / FT
Very nice collection of recent articles on Greece.

Greece’s depression could prove worst in modern historyWonkblog / WP
“On the current path — which is not sustainable in my view — we may very well see Greek
GDP go down 25 to 30 percent, which would be historically unprecedented,” said Uri Dadush, a former World Bank official.

Portugal Is the Next Greece (Feb-14)NYT
Europe is fixated on the wrong problem, budget deficits. The bigger problem in most of Europe is private indebtedness and financial sector leverage. If Europe wants to fix its problems, it must address this indebtedness, and that requires a lot more than endless rounds of fiscal austerity and budget cutting.

Greece is broken, and can’t be fixedFelix Salmon / Reuters
Eventually, Greece will tip, and will leave the euro in a chaotic manner. I’m thinking late summer. That’s not a Plan B anybody really wants…Is there a Plan C?

Bailout 1.3 (maybe)alphaville / FT
We’ve speculated that solvent members of the eurozone are goading a Grexit here. But the picture is one of an ugly blend of bullying and bureaucratic farce. Bailout 2.0 has been under discussion for four months now.

More delays in Greece may not be an optionopeneurope
The chance of getting approval for and raising this amount of funds in the time necessary (a week or two max) seems unrealistic. But it is also unlikely that eurozone finance ministers will delay the PSI further, simply because they cannot afford to.

March 20th – Bridge Loan? What’s The Cost?TF Market Advisors
I think that the EU is making this stuff up as they go along… I hope Greece is getting ready to sell some assets – POST default – because selling them now is just plain stupid.

March 20th Bonds And The Latest Greek HeadlinesTF Market Advisors
Europe is painting themselves into a corner (again).  If they say they are going to wait for the Greek elections to figure out the long-term program, how can they not pay the March bonds?  If they pay the March bonds and Greek elections go poorly, how do they explain to their citizens that they just threw away more money (especially as France will be going through its own elections).

Dumas Says China May Not Be Onboard for GreeceBB (mp3)

The Japanese liquidity trap, revisitedalphaville / FT
If anyone is an expert on the unintended effects of quantitative easing, it’s the Bank of
Japan. In fact, one might say, what the Fed, ECB, BoE are facing today, the BoJ has already faced. What’s more, what the BoJ is facing today, the Fed, ECB, BoE will face too.

Back to BasicsIMF
Collection of non-technical articles on basic concepts published since 2003

Chinese GDP: doesn’t add upbeyondbrics / FT
The regional GDP figures cannot avoid double-counting certain items – a good explanation why the Chinese numbers don’t usually add up.