EU & Euro spot of bother

[Wolfie]

The IMF are now putting the boot into the Eurogroup. It's refreshing that these fall-outs are happening in public. first with Greece vs Eurogroup and now IMF vs Eurogroup.

 

From Robert Peston's blog:

Just when it looked as though there could be a pause in the eurozone's Greek crisis, the International Monetary Fund has launched a blistering attack on the bailout deal forced on Athens by Germany and other eurozone governments.

It estimates that Greek government debt will now reach a peak of close to 200% of GDP or national income over the next two years - which it regards as impossibly and unsustainably high.

It says that Greece's debt can now only be made bearable through "debt relief measures that go far beyond what Europe has been willing to consider so far".

And it makes three other savage criticisms of the reforms forced on Greece by the rest of the eurozone, and whose main elements are being rushed through the Athens parliament today.

It does not believe Greece will be able to achieve continuous budget surpluses of 3.5% of GDP or national income over several decades, as demanded by eurozone creditors.

It regards forecast rates of growth for Greece as unrealistically high.

And it believes that the governance of Greek banks is lamentable, at the heart of so many of Greece's economic woes, and not remotely being solved.

So why does this intervention by the IMF, in a statement issued tonight matter?

Well for two very big reasons.

First is that it will make it much harder for the government of Alexis Tsipras to persuade the Athens parliament to back painful austerity measures in votes today demanded by eurozone creditors as the sine qua non of keeping Greece in the eurozone.

But why on earth should Greek MPs vote for a painful economic reform package which the IMF - the supposed global arbiter of these things - does not believe will put the country back on the path to prosperity?

Second the eurozone creditors, and Germany in particular, forced Alexis Tsipras - against his strong preference - to accept IMF participation in the next formal bailout package to be negotiated if Greek MPs pass the initial reform measures tonight.

They told him, in effect, he would be turfed out of the eurozone and into national ruin unless he took more of the IMF's money and fiscal bossiness.

Which also look tragically comic tonight - with the IMF saying that if it's all the same to Mrs Merkel, it would rather not touch Greece with a barge pole.

Or to be tediously literal, the IMF has made it clear that it does not wish to participate in any further Greek bailout, unless Germany and the rest drop their vehement opposition to big write-offs of Greek debt.

Which should be music to the ears of Mr Tsipras, except that presumably he would quite like his creditors to agree among themselves, before presuming to tell him how to run his own shop.

PS: In case you've forgotten, the primary cause of the desperate worsening of Greece's economic and financial plight - that so worries the IMF - is the pernicious interaction between a chronically weakened banking system and an economy being plunged back into recession.

It means both that $25bn will have to be found to strengthen banks, and that government finances will come under further pressure from weakening tax revenues.

[eddie]

Bite the bullet, write ALL international debts off, start again.

[Stive Pesley]

Out of all of this - I'm absolutely in awe of Yanis Varoufakis, as a hugely intelligent economist that tried to negotiate a logical and fair way out of the crisis.

He paid for it with his job - and this interview is both frank and terrifying. When someone who has been there in the thick of it says that the Eurogroup is “completely and utterly” controlled by Germany, it's not just PR spin. He has nothing to lose, so can tell the truth.

This quote is madness

"“I try and talk economics in the Eurogroup” – the club of 19 finance ministers whose countries use the Euro – “which nobody does.” I asked him what happened when he did.

 “It’s not that it didn’t go down well – there was point blank refusal to engage in economic arguments. Point blank. You put forward an argument that you’ve really worked on, to make sure it’s logically coherent, and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply.”

I recommend everyone reads it. The statement from the IMF today condemning the new agreement completely backs up what he is saying

http://www.newstatesman.com/world-affairs/2015/07/exclusive-yanis-varoufakis-opens-about-his-five-month-battle-save-greece

[SillyBilly]

Bite the bullet, write ALL international debts off, start again.

Some debt write-off needs to happen but it would have to be carefully orchestrated so only the rich, who can afford the loss of principal, are affected. Will that ever happen? No chance.

The alternative is we write your pension or a large chunk of it off at the same time too. Who owns all of this government debt? You, me and everyone. It'd be global collapse if the debt was written off. Trillions of dollars of American citizen's 401Ks written off overnight - you'd have anarchy and martial law! Unfortunately collapse is always the end of a ponzi scheme and typically the costs will fall on those who can't afford it.

Asset prices would be hugely distorted overnight too as you'd see a rush of the now debt free buying up hard assets and driving prices skyward. Basically, you'd create a bubble all over and you can be sure the banks would be lending like never before. Its human nature, hence I favour heavy regulation of financial markets but while still allowing market price discovery.

[SillyBilly]

Out of all of this - I'm absolutely in awe of Yanis Varoufakis, as a hugely intelligent economist that tried to negotiate a logical and fair way out of the crisis.

He paid for it with his job - and this interview is both frank and terrifying. When someone who has been there in the thick of it says that the Eurogroup is “completely and utterly” controlled by Germany, it's not just PR spin. He has nothing to lose, so can tell the truth.

This quote is madness

"“I try and talk economics in the Eurogroup” – the club of 19 finance ministers whose countries use the Euro – “which nobody does.” I asked him what happened when he did.

 “It’s not that it didn’t go down well – there was point blank refusal to engage in economic arguments. Point blank. You put forward an argument that you’ve really worked on, to make sure it’s logically coherent, and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply.”

I recommend everyone reads it. The statement from the IMF today condemning the new agreement completely backs up what he is saying

http://www.newstatesman.com/world-affairs/2015/07/exclusive-yanis-varoufakis-opens-about-his-five-month-battle-save-greece

It is scary, I always feel the need to qualify to people when I mention I would vote to take the UK out of the EU that it isn't because I am a little Englander who hates Germans and Slovakians, its because I am opposed to the complete disdain the EU has shown for democracy since its inception, its unaudited accounts, its backroom deals and the salaries, expenses and excesses of its politicians. If anybody is so inclined, check what the European Parliament was voting on when Athens was burning, you'd realise this Union has its priorities all wrong. I am not totally against the concept of a European Union but I am vehemently against it in its current form. I have read quite a few accounts/interviews of EU insiders (who have in most cases worked in national parliaments) and the consensus is that the "project" is bigger than anything or anyone. There is no alternative view. Its dangerous in my opinion.

[Stive Pesley]

Which also goes some way to explain the mainstream parties fear of a UK exit from the EU - being outside of "the EU project" would clearly not be a good place to be for a nation of our size and standing.

I'm like you - I'm not against the concept of a European Union, but I think the current EU needs to be disbanded and started again from a postion of equality, and with some serious attention paid to lessons learned

Never going to happen I know, but I wouldn't advocate a UK exit while the EU is in it's current state.

[Wolfie]

Until very recently, I have been in favour of us being in the EU but have to say the way that the EU has handled the situation with Greece has really shone a light on the EU/Eurogroup/Germany and I'm starting to think we should stay the hell away from it. We're never going to join the Euro anyway but if the IMF is putting the boot in, then something is very wrong with the individuals and institutions which obviously still impact on us.

The EU are never going to do what we all know is required because it would be admitting failure. Maybe it's better to just view from a safe distance.

It would be hard for me personally to say no to the EU because my job would probably be in danger long term if we pulled out. There are other jobs, though and my kid's future could be at stake. Could I learn tube train driving at night school?

[eddie]

Some debt write-off needs to happen but it would have to be carefully orchestrated so only the rich, who can afford the loss of principal, are affected. Will that ever happen? No chance.

The alternative is we write your pension or a large chunk of it off at the same time too. Who owns all of this government debt? You, me and everyone. It'd be global collapse if the debt was written off. Trillions of dollars of American citizen's 401Ks written off overnight - you'd have anarchy and martial law! Unfortunately collapse is always the end of a ponzi scheme and typically the costs will fall on those who can't afford it.

Asset prices would be hugely distorted overnight too as you'd see a rush of the now debt free buying up hard assets and driving prices skyward. Basically, you'd create a bubble all over and you can be sure the banks would be lending like never before. Its human nature, hence I favour heavy regulation of financial markets but while still allowing market price discovery.

I don't think I'm going to live that long, so I don't really care. I'm happy to go back to the barter system - I can make beer and spent barley bread, so I'm all right.

[SillyBilly]

Until very recently, I have been in favour of us being in the EU but have to say the way that the EU has handled the situation with Greece has really shone a light on the EU/Eurogroup/Germany and I'm starting to think we should stay the hell away from it. We're never going to join the Euro anyway but if the IMF is putting the boot in, then something is very wrong with the individuals and institutions which obviously still impact on us.

The EU are never going to do what we all know is required because it would be admitting failure. Maybe it's better to just view from a safe distance.

It would be hard for me personally to say no to the EU because my job would probably be in danger long term if we pulled out. There are other jobs, though and my kid's future could be at stake. Could I learn tube train driving at night school?

I think the EU has been a financial disaster for Europe. I'd wager the EU's 28 member states would have a combined national output higher if there never was an EU but just the Common Market. 

I accept some jobs will be lost, though I maintain for the most part it will be nothing to do with British business or trade or anything of that nature, rather I am sure the powers at Brussels will be determined to make an example of any country that leaves voluntarily. It would obviously threaten the project if the UK were to do well out of the arrangement. Whether they drag their feet on trade deals or are generally hostile in diplomatic relations I'd imagine things will be tough for the first few years. I can just imagine the behind closed door conversations between the likes of Martin Schulz, José Manuel Barroso and Guy Verhofstadt on a UK exit! At the end of the day, sovereignty should not be surrendered lightly, the EU needs to prove it is worth losing our British sovereignty for. I'm not sure Moscow would be any worse at the moment.

 

 

 

 

 

 

 

[Brammie Steve]

I don't want to be in the Eurozone

I don't want to be in the EU.

I'm fed up of us being the only ones who take a blind bit of notice of stupid directives from Brussels.

I don't like being bossed about by a country we've had to drag out of the mire twice by a country we had to defeat in two world wars, or by that country itself come to that.

I don't want to be the 53rd state of a country 3000 miles away on the other side of the Atlantic.

We used to call it splendid Isolation. if we must become isolationists again bring it on say I!

[eddie]

I don't want to be in the Eurozone

I don't want to be in the EU.

I'm fed up of us being the only ones who take a blind bit of notice of stupid directives from Brussels.

I don't like being bossed about by a country we've had to drag out of the mire twice by a country we had to defeat in two world wars, or by that country itself come to that.

I don't want to be the 53rd state of a country 3000 miles away on the other side of the Atlantic.

We used to call it splendid Isolation. if we must become isolationists again bring it on say I!

Drawbridge up.

You're just missing duty frees, aren't you?

[SillyBilly]

 

http://www.markesausagech.com/story/china-finally-says-how-much-gold-it-has-but-nobody-believes-it-2015-07-17

China updates its gold reserves for the first time in 6 years today from 1054T to 1658T. This is of course a total fabrication by the Chinese to suit their immediate needs. They want inclusion in the SDR basket (alongside other major currencies) and that decision could be made as early as October. This would increase the Yuan's ability to be a tradeable currency between countries, the first step in their fight against dollar hegemony. Some economic reforms and more gold in the vault increases their likelihood of acceptance. The Chinese are playing a very clever game here, I suspect once their dollar reserves are sufficiently hedged by their gold reserves the true figure will come out.

Still, a 57% increase in 6 years shows the hoard is on!

 

[LesterRam]

was it worth it ?

http://www.bbc.co.uk/news/business-33754005

The main Athens stock index, the Athex, ended the day down by 16.23% as trading resumed after a five-week closure.

The nation's top four lenders - Piraeus Bank, National Bank, Alpha Bank and Eurobank - fell the most, all down 30%, the maximum allowed. Banks make up about a fifth of the index.

The bourse was shut just before Athens imposed capital controls at the height of the debt crisis.

It had fallen behind by 22.87% just minutes after opening for trade.

The Athex recovered slightly in morning trading, but was still down more than 18% in midday trading.

In accordance with conditions laid down by the government and the European Central Bank, local investors are not allowed to buy shares with money from their bank accounts, only with cash kept in safe deposit boxes or at home.

Meanwhile, data released on Monday showed that Greek manufacturing activity plunged in July to its lowest level on record as a three-week bank shutdown caused new orders to dive and created serious supply problems.

[SillyBilly]

was it worth it ?

http://www.bbc.co.uk/news/business-33754005

To be expected. I am buying Greek at the moment. These companies were here yesterday, they are here today and will be here tomorrow. Buy when others are panic selling is a recipe to make lots of money, generally.

You keep your powder dry for moments like this.

 

[EastKentRam]

Wish I studied economics at school.

Have very little clue about everything SillyBilly has said, but have enjoyed reading it.

Thanks. 

[LesterRam]

To be expected. I am buying Greek at the moment. These companies were here yesterday, they are here today and will be here tomorrow. Buy when others are panic selling is a recipe to make lots of money, generally.

You keep your powder dry for moments like this.

 

Yoghurts, Women ?

well that's the idea, I bet property is cheap in Greece ?

[SillyBilly]

Yoghurts, Women ?

well that's the idea, I bet property is cheap in Greece ?

http://www.hl.co.uk/shares/shares-search-results/g/global-x-funds-ftse-greece-20-etf

Linked it earlier in the thread. When people go intro bankruptcy you'd think that was a good time to buy from them, no? You tend to get a better price.

[SillyBilly]

Wish I studied economics at school.

Have very little clue about everything SillyBilly has said, but have enjoyed reading it.

Thanks. 

Surprised you haven't got a stocks and shares account if you're into your poker, having a punt on the penny shares, no different to gambling! That is how I started taking an interest anyway, was good fun, almost lost my shirt, wanted to learn proper money management and investing/economics after that! I still get my fix with a few quid in the riskier investments, the AGMs are a good laugh (piss up) too.

 

[EastKentRam]

Surprised you haven't got a stocks and shares account if you're into your poker, having a punt on the penny shares, no different to gambling! That is how I started taking an interest anyway, was good fun, almost lost my shirt, wanted to learn proper money management and investing/economics after that! I still get my fix with a few quid in the riskier investments, the AGMs are a good laugh (piss up) too.

 

Started doing more backing/laying (trading) on Betfair of late. Basically buying and selling. 

Don't really like parting with my money on areas I know nothing about. 

Recommend any reading material/lectures for economic beginners? 

[SillyBilly]

Started doing more backing/laying (trading) on Betfair of late. Basically buying and selling. 

Don't really like parting with my money on areas I know nothing about. 

Recommend any reading material/lectures for economic beginners? 

I haven't read this book but if you're interested this looks like it would be a good read for introducing you to the terms (and the main economic theories which divide economists):

http://www.amazon.co.uk/Free-Lunch-Easily-Digestible-Economics/dp/1781250111/ref=sr_1_6?ie=UTF8&qid=1438778039&sr=8-6&keywords=fractional+reserve+banking

Looks like it covers all the main stuff. If you get into it, particularly the political side of it, it becomes very interesting.

An interesting book I have just read is by an author called James Rickards, a very distinguished wall street/Fed "insider" who broke ranks, he was at one stage leading the development of a "secret" system which would allow the Americans to pre-empt terrorist attacks. Devising complex algorithms scanning for irregular trading patterns in US stocks (such as American Airlines).

http://www.amazon.co.uk/Death-Money-Collapse-International-Monetary/dp/0670923702/ref=sr_1_1?ie=UTF8&qid=1438778431&sr=8-1&keywords=death+of+money

While you may not agree with his end conclusions, he introduces the IMF's actual role in the world (not very well known) and he describes what has been happening to the dollar and pound over the years (and extrapolates).

One thing I have established is that economics is not a science as some will say it is but is in actual fact a narrow branch of history. Scientists will change their theories when the results don't work out as planned. Economists don't. They belong to a group based on whether they think Marx had it right or Keynes or Smith or anyone else for that matter. They look for trends in past data and apply them to the future, that is what central bankers are doing now in applying Keynesian economics even though the models are clearly broken (for example lowering interest rates hasn't stimulated the economy as intended, it has in fact encouraged poor capital allocation into property/stocks and props up "zombie" companies). The thing is when the models don't work, they think "more" will solve the problem, hence more QE etc. and the whole thing worsens.

 

cling to Keynesian economics