Baltic Dry Index. 706 -09
LIR Gold Target by 2019: $30,000. Revised due to QE programs
On Tuesday morning, private and official lenders to Greece made extra concessions that should bring down Greece's debts from the levels cited in the report. But that didn't soften criticism that even a glum IMF assessment lacked credibility. Sony Kapoor, managing director of Re-Define, a financial think tank, said the IMF had engaged in "arithmetical gymnastics" to produce the assumptions to get Greece's debt target down to the targeted 120.5% of gross domestic product by 2020—a level many analysts still consider too high. Greek government debt now stands at more than 164%.
Greece opted for slavery and effectively put the country under Berlin’s rule, and still it isn’t enough. This morning, one day on, outside of Europe’s delusional politicians and criminal banksters, no one believes that Greece can be saved by the latest announced rescue plan. In the markets most believe Greece will have exited the Euro by the end of the year. What is the point of a non-rescue rescue? Below, the Journal, Telegraph, and Bloomberg cover the reality of yesterday’s non rescue. But now the great Germanic victory parade rolls on towards Lisbon and Madrid. Stay long precious metals, the euro as we know it is dying. For the hapless Europeans trapped in the Euro, keep swapping notes bearing country IDs “Y”, “P”, “S”, “G” and “V” for those with Germany’s “X”. Even the French “U” is questionable.
A German joke is no laughing matter.
Mark Twain.
FEBRUARY 22, 2012
Despite Pact, Unease Lingers for Greece
Agreement Staves Off Immediate Concerns, but Many Problems Remain Even Under Best-Case Scenarios
No triumphalism accompanied Greece's bailout and debt-restructuring deal hammered out early Tuesday; the euro zone's two-year debt crisis has seen too many false dawns.
Financial markets were somewhat cheered that months of negotiations aimed at cutting Greece's heavy debt had reached a resolution, largely putting to rest fears of a chaotic debt default next month. It also removed—at least for the immediate future—the gnawing anxiety that some policy makers in Germany and elsewhere are trying to oust Greece from the euro.
But the overriding reaction was of unease that this tough deal, which has already generated huge opposition among Greeks, is bound to fail. Many observers ask not if the program will fall apart, but when.
----Tuesday's agreement isn't quite the end of Greece's near-term debt concerns. Private investors will be asked to tender their old bonds for new, which will force some to crystallize losses of perhaps three-quarters of their investments.
If enough bondholders don't agree—the agreement assumes 95% participation—holdouts will be forced into the bond swap, a process that in past sovereign restructurings has generated multiple lawsuits. In Athens, a new law was unveiled Tuesday that could be invoked to strong-arm holdouts.
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Battle over EU financial firewall threatens to derail Greek bailout
A battle over an increased eurozone bail-out fund and International Monetary Fund support for the European Union's single currency threatens to derail the latest Greek bailout.
At a G20 summit in Mexico in two days the EU will plead for increased IMF contributions by non-euro countries to help shore up a eurozone "financial firewall" seen as vital to protecting Spain and Italy from Greek debt contagion.
The IMF will refuse to make extra cash available to the EU and will threaten to pull the plug on its contribution to Tuesday's €130bn bailout of Greece unless the eurozone creates a €750bn fund, a move opposed by Germany.
In the wake of this week's deal to prevent a Greek default, Olli Rehn, the EU's economic and monetary affairs commissioner, insisted that a plan to merge two eurozone bailout funds was vital over the next 10 days. Mr Rehn is seeking to fuse the existing European Financial Stability Facility (EFSF) fund, worth €250bn, with a new European Stability Mechanism (ESM), to be created this summer and worth €500bn.
Greek Rescue Leaves Europe Default Risk Alive
By Simon Kennedy and James G. Neuger - Feb 21, 2012 12:51 PM GMT
Europe is still struggling to avoid the threat of default as investors warned Greece will soon risk violating the terms of its second bailout in three years.
Seven months of negotiations ended in the pre-dawn hours in Brussels with Greece winning 130 billion euros ($172 billion) in aid it needs to avoid a March bankruptcy. Any respite may prove temporary after it signed up to a program of austerity and economic reform aimed at slashing debt to 120.5 percent of gross domestic product by 2020 from about 160 percent last year.
Even with investors and central bankers chipping in to relieve the debt burden, economists from Citigroup Inc. to Commerzbank AG concluded Greece may again fail to deliver amid a fifth year of recession, looming elections and social unrest. The upshot could be the removal of aid and renewed debate over the merits of fresh assistance before year-end as policy makers shift toward doing more to inoculate the rest of Europe.
----In return for the new cash, Greece signed up to cuts in pensions, the minimum wage, health-care and defense spending, as well as layoffs of state employees and asset sales. It must implement that austerity with unemployment already topping 20 percent, meaning more retrenchment might end up only compounding the debt stress.
“The danger of Greece saving itself into economic depression and having to default and exit the common currency zone remains substantial,” said Christian Schulz, an economist at Berenberg Bank in London. Jennifer McKeown of Capital Economics Ltd. repeated her forecast that Greece will quit the euro by the end of the year.
Again, it may be said that we need not be alarmed at the magnitude of our credit system or at its refinement, for that we have learned by experience the way of controlling it, and always manage it with discretion. But we do not always manage it with discretion. There is the astounding instance of Overend, Gurney, and Co. to the contrary. Ten years ago that house stood next to the Bank of England in the City of London; it was better known abroad than any similar firm—known, perhaps, better than any purely English firm. The partners had great estates, which had mostly been made in the business. They still derived an immense income from it. Yet in six years they lost all their own wealth, sold the business to the company, and then lost a large part of the company's capital. And these losses were made in a manner so reckless and so foolish, that one would think a child who had lent money in the City of London would have lent it better. After this example, we must not confide too surely in long-established credit, or in firmly-rooted traditions of business. We must examine the system on which these great masses of money are manipulated, and assure ourselves that it is safe and right.
Walter Bagehot. Lombard Street. 1873
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