Thursday, July 9, 2015

Greek Crisis: Taking down Germany, Shoring up Oligarchs and Worse?

H/T to tal who left links for two very interesting articles about the Greek 'crisis' Definitely  material worth considering
Here are two article that more-or-less support this view:
Thanks tal! 

I think, but am not certain, that tal is suggesting these article support the view that the Greek crisis is being stoked to take down Germany and the other European nations. Related to a comment by Greg Bacon:
  Greece is being used as a test for the rest of Europe and the USA, to see what needs to be fine-tuned in the final rape of humanity.
 Tal, should you stop by? Have I got this correct?

Alcimos- excerpt below!

The current stand-off with Greece’s creditors is just part of the ongoing tug-of-war between Germany and the IMF on a possible haircut on Greek debt. The background of this conflict is as follows: the US (which exerts substantial influence on the IMF) is “pro Keynesian” while Germany is “pro austerity”. The two different viewpoints are summarized in two articles in the New York Times: one by Wolfgang Schäuble, and a riposte to it by Paul Krugman.

The slowdown in the European economy is obviously affecting the US economy as well; hence the US interest is clearly justified. The USA has been nudging Europe to engage in some good-old Keynesian deficit-spending. Obviously, the deficit spending does not need to happen in Germany, whose economy is doing very well, thank you. It needs to happen in places like Greece, but then the question arises, how could this deficit be financed? Well, the markets are certainly not willing to finance Greece, so that leaves few people in the room able to do this. Rich Germany obviously comes to mind, but then this is a major no-no for German voters and politicians. (West) Germany engaged in the mother of all expansionary policies (and fiscal transfers) at the time of reunification with East Germany, when it set a 1:1 conversion rate of the East German mark into the DEM, while the exchange rate applicable for East German exports had been at 1 to 4.3. Rightly or wrongly, it is widely accepted in Germany that the dismal performance of Germany during the rest of nineties is due to those very policies— justifiable perhaps at the time by a duty of solidarity. Quite understandably, the German public doesn’t feel such a strong duty of solidarity vis-à-vis Greece. Any German politician suggesting a large-scale fiscal transfer to Greece would be skewered. Any haircut on Greek official-sector debt would be seen as (and be) just that: a fiscal transfer to Greece.
 There is much more it's an article that covers a range of views. That said, I would like to include some interesting tidbits that appear as one reads further along.

*Neither Greece’s ailment, nor its cure, is not its currency, be it the the euro or the drachma, or its pensions—whether too low or too high. Greece’s cancer is the purely domestic cleptocracy which has been sucking the country dry for at least thirty-five years (that’s as far back as I can remember, older people may argue this may have been going on for much longer).
The domestic cleptocracy sucking the country dry. While Canada changes laws for corrupt corporations? Ottawa Softens Anti-Corruption Rules for Companies Seeking Government Work
Keep that in mind while you read about the Greek situation. Ottawa encouraging corporate corruption.
You think I’m exaggerating? Let’s look at a couple of interesting statistics, then. According to the UN comtrade database, supplies of bunker fuel to ships in Greece went from $25m in 2008 to $1.72bn in 2014.  Exports of fuel to Turkey went from $204m in 2007 to $3.2bn in 2014. Exports of fuel to FYR of Macedonia in the same timeframe went from $72m to $614m (for comparison purposes, Greece’s GDP in 2014 was $238bn). Either Greek refineries got very efficient during the crisis, or other refineries in the region got very inefficient. Or it could be that the cleptocrats, hit by the crisis in their half-way legit businesses, had to supplement their income with some other, far more lucrative ventures.

According to the FT “George Papandreou, the former socialist premier who resigned in 2011, also claimed he was brought down by oligarchs after a finance ministry campaign to tackle widespread fuel smuggling revealed a Balkanwide scam that cost Greece €3bn a year in lost taxes”.
Its’ not as if these smugglers are thousands. They’re a handful of people, whom practically every Greek knows by name. Unlike Escobar, they are not in hiding. They’re feted by the press as “successful businessmen” and are being sat next to prime ministers.

If that’s not fixed, irrespective of whether the currency of Greece is the euro, the drachma or the rupiah, there can be no end to Greece’s plight. Is Tsipras likely to fix that? I’ll give you a hint: most Greek oligarchs voiced their support for Tsipras ahead of the general election in January. Before that, they supported his predecessor of course.
What I think, is that Greeks should be united in their fight for the rule of law and against the cleptocracy, and not divided over a referendum on an absurd question. That division, however, serves the cleptocrats well—they can go about their usual ways unnoticed. Whoever said “divide and rule” knew what they were talking about.


Wolf here: the IMF’s job is to bail out holders of sovereign bonds issued in a currency the issuer doesn’t control and can’t devalue (Mexico issuing bonds in dollars, Greece issuing bonds in euros). These bondholders are mostly banks. In a debt crisis, the IMF bails out these banks by buying their troubled bonds and then tightens the belts around the little guys so that the country can service the debt it now owes the IMF.
What happened in Greece? The banks that used to hold Greek debt have sold most of it to the European institutions, and some of it to the IMF; they have been bailed out years ago. The IMF has done its insidious job. Now mostly taxpayers are on the hook. But the IMF doesn’t give a crap about taxpayers.
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
As Europe teeters on a precipice of its own making, some people are beginning to wonder whether the IMF might have somehow discovered it has a conscience. Strange as it may sound, rumors of the IMF’s do-gooding began spreading on Friday after the Fund published a damning report on the sustainability of Greece’s finances and the Troika’s woeful mismanagement of the country’s debt crisis.
Granted, the report was deeply critical of Syriza’s negotiation strategies and governance of Greece. But the report’s real victims were the IMF’s two Troika partners, the European Central Bank (ECB) and the European Commission, both of whom had fought to prevent its publication.
The latest developments confirm what I argued four months ago in “Is the IMF About to Make Greece an Offer It Can’t Refuse?”: namely that the IMF could well prove to be an unlikely, albeit temporary, ally for Syriza. Now, by publishing its Debt Sustainability Analysis at the best/worst possible time, the Fund has massively improved Syriza’s chances of achieving a no-vote on Sunday.................
Continue reading at highlighted link that precedes article

An aside: What happened with the US stock market yesterday? Obviously the computer glitch tale is not credible! Cyber attacks were denied. But that was simply planted as a distraction. The market was dropping like a stone prior to the 'glitch' I would assume back up systems are in place.
Another thought? If this was a legitimate glitch that should send a big warning to us all about over reliance on computers! 

"Major indexes were already falling before the shutdown, which occurred shortly after 11:30 a.m. Eastern time. NYSE resumed trading at 3:10 p.m."


  1. Insightful

    Yes Germany NSA scandals seem to be leaking fast and furious.

    Per nyse, A400 crash was also a software glitch and occured days after the NSA Corp espionage allegations on airbus implicating Germany. Heck of a lot of russian and us fighter planes crashing lately.

    Curiously the us backed the imf release of the haircuts for greece in what is a breach of bailout protocol. As you may remember days before DSK was arrested he allegedly advocated haircuts in Ireland and greece. At the time treasury felt the need to issue a statement on geithner behalf that the us did not intervene to block a haircut on the debt. So why would the us be backing a haircut now?

    Like the recent basing deal in Spain the us is pushing a base on a yet unnamed greek island per reports weeks ago.

    Yestd russia and china called for rapid implementation of the imf reforms. This as china pushes bilateral fx clearing with brazil.

    Germany seat on board of new china development bank.

    IMF has been walking a fine line lately with its openly backing the yuan as fair valued as opposed to us calls of undervaluation (iron as the market tanks and banks have been warning for past year about capital account leakage into the ftz and liberalization (coming out of shanghai which is an entirely different discussion).

    Lagarde last year said imf was ready to g around the us on reforms (see call attached to latest g20 meetup for reform implement). Imf has also said it could see headquarters in china one day.

    China hack allegations, natural disasters and ferry sinking. China days ago said Goldman was flooding the futures pits with sell orders. Hybrid?

    Us faces the same problem in greece that it faces in iran. Any deal in no way guarantees a favorable outcome for us interests especially with the EEU and silk road nexus. Too much to be gained looking east rather than west. Calls are everywhere from Bulgaria to Germany to France to roll back russian sanctions. The Italians have made clear their disregard for the sanctions from the getgo.

    The scrutiny of deutsche bank by the ny fed citing lack of controls and requiring on site audit means someone looking for something. The dB pullout from the gold fix and the Libor scandals that just cost ceo Jain his job are indicative of some sort of tripwire. Consider that Jain partner who presided over risk found dead in London last year in one of the banker suicides. Curious that the triage UK banker who stepped into ubs at height of crisis is now running dB. Ubs being ground zero of the effort to crack the secrecy laws and unlock banking havens. DB also has a massive derivatives book ex netting. Is the ny fed putting auditors on site talking about lack of controls out of scrutiny or are they looking for weaknesses to exploit?

    Note the recent extension of nord stream in spite of sanctions. Germany could just as easily write a check to greece, bury and derivatives issues presumably and defect east. Greece seems like a weak card to play with Germany considering the russia and china links.

    As an aside it would appear that the saudi dept crown prince and defense minister just made a journey toa. Us aircraft carrier in the gulf. What is curious is that he rather than Nayef is being courted as isis ramps up ops across gcc. Kuwait the latest target.

    1. Gee, could you have left me anymore to think about?! ;)

      I love it, don't get me wrong, but, it's a lot to think about and see if the connections fit.

      I was unaware of the db scrutiny, so had to go look up some news item

      "An examination by the Federal Reserve Bank of New York found that Deutsche Bank AG's giant U.S. operations suffer from a litany of serious financial-reporting problems that the lender has known about for years but not fixed, according to documents reviewed by The Wall Street Journal.

      The criticism from the New York Fed represents a rebuke to one of the world's biggest banks, and it comes at a time when federal regulators say they are increasingly focused on the health of overseas lenders with substantial U.S. operations.

      The Dec. 11 letter, excerpts of which were reviewed by the Journal, said Deutsche Bank had made "no progress" at fixing previously identified problems. It said examiners found "material errors and poor data integrity" in its U.S. entities' public filings, which are used by regulators, economists and investors to evaluate its operations. The problems ranged from data-entry errors to not taking into account the value of collateral when assessing the riskiness of loans.

      The shortcomings amount to a "systemic breakdown" and "expose the firm to significant operational risk and misstated regulatory reports," said the letter from Daniel Muccia, a New York Fed senior vice president responsible for supervising Deutsche Bank.

      That's bigger then I had realized

    2. continuing..

      "We have been working diligently to further strengthen our systems and controls and are committed to being best in class," a Deutsche Bank spokesman said Tuesday. As part of this, he said, the bank is spending €1 billion ($1.35 billion) globally and appointing 1,300 people, including about 500 compliance, risk and technology employees in the U.S. Mr. Muccia declined to comment.

      The German lender's U.S. businesses, including investment banking, asset management and transaction processing, collectively account for as much as $600 billion of assets, or more than one-quarter of Deutsche Bank's global total, executives say. Large portions of the U.S. operations were previously the responsibility of Anshu Jain, who today is Deutsche Bank's co-chief executive. The bank's current North American CEO is Jacques Brand. The bank spokesman declined to comment on behalf of both men"

      etc., I'm actually going to save that article
      off to dig some more :)


    relinking a post from the 2011 take down of DSK who was one his way to meet Angela Merkel- curious?

  3. Into sco and Brics summits

    Guangdong on top terror alert as growing number of Uygurs move to Middle East for training scmp

    Integrated strategy?

  4. Penny,

    This might explain things. Or maybe not.


  5. Sorry for the delay, Penny. Yes, you've got it right.

    This site keeps disappearing my comments, but I'm trying one more time..

  6. OK, I've figured out the problem: I have Privacy Badger installed & blogger wouldn't let me comment until I modified my settings