9-Feb-12 World View -- Greece bailout talks still deadlocked

[John]

9-Feb-12 World View -- Greece's bailout talks in Athens deadlocked for another day

Tension grows between Egypt and U.S. over arrest of Sam LaHood

** 9-Feb-12 World View -- Greece's bailout talks in Athens deadlocked for another day
** http://www.generationaldynamics.com/cgi ... 09#e120209



Contents:
Greece's bailout talks in Athens deadlocked for another day
Turkey rules out military intervention in Syria
Tension grows between Egypt and U.S. over arrest of Sam LaHood


Keys:
Generational Dynamics, Greece,
Lucas Papademos, George Papandreou, Antonis Samaras,
Ahmet Davutoglu, Turkey, Syria, Egypt, Sam LaHood, Ray LaHood

[Trevor]

Yeesh, how many times have they been over these bailout talks? We all know what's going to happen. They'll come up with something, while Greece promises to get their budget under control and everyone goes home happy. A few days later, once they realize that the problem isn't solved, investors start panicking again and Greece states: "Screw you, we're not cutting a damn thing." They've been playing this game for well over a year now.

[Marc]

This is the sort of scenario with Greece's sovereign debt that I was respectfully thinking was going to play out, given the number of relevant actors involved and their tenacious financial interests. It is indeed possible that there could be an orderly default that occurs on March 20, 2012, but I'm just thinking that due to someone (especially Germany and maybe a few hedge funds) not wanting to budge, that there will be further can-kicking past that date, especially stealthily orchestrated via the Fed. It will be very interesting to see how all this plays out in the weeks ahead. —Best regards, Marc

[Trevor]

Right now, what some are forgetting are the banks. Many of them have already been found insolvent and bailed out. I'm willing to bet that there are plenty more in similar trouble. That's going to put an added burden to the European nations, in addition to bailing out Greece and Portugal.

[Marc]

Certainly true — the issue of recapitalization of the banks after a Greek default (followed by the likely default of other PIIGS nations) is certainly being heavily discussed (and feared) in Europe and elsewhere. Thanks for the on-target comments. —Best regards, Marc

[Trevor]

Not to mention what that default can do to the others, namely accelerate their collapse as well. A greek default Europe can survive; they can probably survive Portugal as well, although it would still drive them back into recession. Italy or Spain, on the other hand... that would be enough to destroy the eurozone. Of course, that's going to hurt us as well... I wouldn't want to be the president right now

[Marc]

Keeping Italy or Spain from causing a severe global financial crisis is certainly a dicey issue. They way that these countries are apt to be initially dealt with if their sovereign-bond interest rates really go into the stratosphere is to try to help them meet their bond payments (and I can see the Fed doing a lot to try to help facilitate that, even if it needs to be mostly via backdoor measures). However, like Greece, their problems cannot be addressed for the long haul via such means, of course. There will likely even be further can-kicking on a heroic scale once those Italian/Spanish sovereign-bond sustainability issues become very dire, and you could really see heroic Fed backdoor measures to try to help these countries at that juncture (I realize that some might disagree with me here). But obviously, all this gets into the systemic sustainability of the entire global financial system, and someday, things are really going to have to give, of course.

(And yes, being the US President now and in the near future is certainly not for the faint of heart — although if things really start to collapse, this may allow Obama, if he is President when this happens, to really cast aside oppositional forces and really usher in that hope and change he promised us ) Thanks again for sharing! —Best regards, Marc

[Trevor]

I shudder to think of what he would do if he had the chance. Remember, he's an early nomad and a Chicago politician. That doesn't bode too well.

Even if we do assist, bailing out Italy or Spain would be next to impossible. We MIGHT be able to do it for a short period of time, but in the long run, it wouldn't make any difference.

[Reality Check]

Not to mention what that default can do to the others, namely accelerate their collapse as well. A greek default Europe can survive; they can probably survive Portugal as well, although it would still drive them back into recession. Italy or Spain, on the other hand... that would be enough to destroy the eurozone. Of course, that's going to hurt us as well... I wouldn't want to be the president right now

No problem, the FED just has to delay this past November, then Obama will have a free hand without having to worry about anymore elections.