Feb 10, 2012
From Acting Man
By Pater Tenebrarum
Greek Government's Plan Rejected
It has turned out that the latest Greek plans in connection with the second bailout have essentially been rejected by the eurogroup. This hasn't kept the Greek government from claiming the exact opposite:
“Greek political leaders said they had clinched a deal on economic reforms needed to secure a second EU bailout, but euro zone finance ministers demanded more steps and a parliamentary seal of approval before providing the aid.The EU and the International Monetary Fund are exasperated by a string of broken promises by Athens and weeks of disagreement over the terms of a 130 billion euro ($172 billion) bailout, with time running out to avoid a default. Finance ministers of the 17-nation euro zone meeting in Brussels warned there would be no immediate approval for the rescue package and said Athens must prove itself first.Jean-Claude Juncker, who chairs the Eurogroup, set three conditions, saying the Greek parliament must ratify the package when it meets on Sunday and a further 325 million euros of spending reductions needed to be identified by next Wednesday, after which euro zone finance ministers would meet again."Thirdly, we would need to obtain strong political assurances from the leaders of the coalition parties on the implementation of the programme," Juncker told a news conference after six hours of talks in Brussels. "Those elements needs to be in place before we can take decisions.""In short, no disbursement before implementation."
It should be no surprise that the eurocrats are now playing hardball with Greece. Too many promises have been broken over the past two years.
Meanwhile, Bob Pisani not unreasonably wonders what exactly it is the Greek government is supposed to be agreeing to. The official release reads like a product of the post-modernism essay generator – a random compilation of completely meaningless gibberish:
"The government's discussions with the troika were concluded successfully this morning on the issue which had remained open for further elaboration. The political leaders have agreed on the result of these discussions.Thus there is general agreement on the content of the new program, in view also of this evening's Eurogroup meeting. This program accompanies the new loan agreement to finance Greece with 130 billion euro.""The political leaders have agreed on the result of these discussions … thus there is general agreement on the content of the new program…"
The Economic Contraction Deepens
Meanwhile, the Greek economy has descended further into the abyss in January. First it became known that tax revenues came in 7% below expectations, with VAT collections light by high double digits – a shortfall of about € 1 billion.
Then a series of economic data releases painted a picture of a 'death spiral' as the Telegraph's Ambrose Evans-Pritchard puts it:
We have a feeling that by the time the April elections come around, the political situation in Greece will change dramatically. The hard left will likely grab the majority of the votes – not an absolute, but at the very least a relative majority. We are slightly surprised there is no open revolt already, although this may actually be about to change as we write these words, see further below. Any agreements the current coalition government makes won't be worth the paper they are printed on. A hard default remains a highly likely outcome, the main question seems to be whether it happens sooner or later.
CDS May Pay Out After All
Meanwhile, CDS traders are reportedly increasingly confident that CDS on Greek debt will be triggered by the restructuring:
“Credit default swaps traders are increasingly sanguine that a deal to restructure Greek debt will trigger CDS and lay to rest a year-long debate that has undermined the value of sovereign CDS in the eyes of many investors.“Our baseline scenario is collective action clauses will be inserted into the Greek-law bonds, and when these are actioned the CDS will trigger,” said one head of European credit trading at a US bank.“The market will breathe a sigh of relief and you’d hope this will mitigate the speculation around sovereign CDS, but there’s been damage done to the product in the past few months and I don’t think it’ll be cured overnight,” he added. The value of sovereign CDS as a hedging tool came into question last year when authorities seemed intent on avoiding a CDS trigger when restructuring Greek debt. According to a Fitch survey of European investors managing US$7.1trn of assets, 28% planned to reduce their use of sovereign CDS, although only 10% said the decrease would be material.Dealers conceded a huge amount of uncertainty remained over the plan to cut Greek debt, which is thought to be unveiled by European officials imminently. At the same time, traders believed CACs will be inserted into Greek-law bonds (which make up around 90% of Greece’s outstanding debt) presuming the restructuring actually goes ahead.”
So at least sovereign CDS may remain valuable as hedging tools when everything is said and done. With only € 2.8 billion in notionals on Greek debt outstanding, there won't be any great effect on the financial system if the CDS contracts are triggered. Besides, presumably sufficient margin collateral has already been posted by the writers of the contracts.
Violent Protests Break Out, Government Crumbles
The protests and demonstrations in Greece have turned ugly. Meanwhile, more and more ministers are resigning from the Papademos cabinet in a bid to save their own political hide.
As the AP reports:
“Greece's future in the euro grew increasingly precarious Friday as violence erupted on the streets of Athens during a general strike and five politicians resigned from the government after European leaders demanded deeper spending cuts.Hours after Greece claimed it had reached an agreement among its squabbling party leaders on new cutbacks, European officials dashed any hopes that the country was close to getting its bailout. Finance ministers said more austerity needs to be agreed and set a deadline for the middle of next week.If Greece's government fails to meet Europe's demands, the debt-ridden country faces a chaotic debt default next month that would send shockwaves around the world economy and could doom a generation of Greeks to even deeper hardship.If it does deliver those demands, Europe has committed to give it a €130 billion ($172 billion) lifeline that would at least postpone Greece's day of reckoning.”
Altogether six ministers have resigned by now (the five mentioned above resigned today alone). The AP report continues:
“Thousands of people marched through the streets to protest the cuts, which include a 22 percent drop in the minimum wage at time when the unemployment rate is over 20 percent and the economy is in a fifth year of recession. Clashes broke out, with demonstrators hurling fire bombs at riot police shooting tear gas.Resistance was also growing in Athens' halls of power, with six members of the 48-strong Cabinet leaving the government over the past two days because they could not agree to the new demands.The five were Deputy Foreign Minister Mariliza Xenogiannakopoulou, a majority Socialist lawmaker, the transport minister and the deputy ministers of defense, merchant marine and agriculture — all members of the rightist LAOS party, a junior coalition member. On Thursday, Deputy Labor Minister Yiannis Koutsoukos, a Socialist, also quit."They are trying to impose measures that will make the recession worse and drive the country to despair," Xenogiannakopoulou said in a letter, adding that she would vote against the cutbacks in parliament.LAOS leader George Karatzaferis said he was withdrawing support for the measures agreed a day earlier, describing the country's treatment by its European partners as "humiliating."Though LAOS is a small party, its action underscores the growing discontent, both among political leaders and households — nearly one in two young people are out of work.”
As the LAOS leader put it, he doesn't want to be 'under the German jackboot'. He may be surprised to learn that this statement is probably welcomed in Germany. As Mish pointed out yesterday, the Germans are seemingly trying to push Greece out of the euro area, while officially proclaiming that this is the last thing on their mind.
As a side effect of the above, the Athens stock market fell by nearly 5% today. In short, a pullback that could produce a buying opportunity is underway. As Baron Rothchild reportedly once said, the 'time to buy is when there is blood in the streets' – a condition that seems fulfilled as of today.
A videos documenting the clashes between protesters and police in Athens can be seen here.
It is understandable that Greece's citizens are frustrated and angry at the recent developments. They are the ones now condemned to shouldering the burdens created by an unconscionable political class. The economic situation remains more or less hopeless at this point, so there is not even a light at the end of the tunnel that might create a bit of motivation and make it psychologically easier to go through the retrenchment.
Alas, the question remains what would happen if Greece were to default and leave the euro. People don't want the government to cut back, but without the bailout funds it will have to cut back far more dramatically, as it will then be forced to spend no more than what it actually takes in.
While this would be a salutary development in the longer term, it would be the opposite of what the protesters presumably want or expect. In addition, the main reasons for Greece to return to the drachma would be the ability to finance government debt with the help of the printing press and a devaluation to help narrow the current account deficit. In that case, the country would likely soon experience hyperinflation given the track record of the government in terms of spending discipline.
Meanwhile, prosperity can not be attained by means of devaluation. In the short term it may boost export earnings and tourism income, but it should be obvious that this type of prosperity is a complete illusion. In reality, it means an accelerating impoverishment. This becomes clear by once again looking beyond the veil of money. If a certain widget for instance costs € 10 both in Greece and Germany today, and Greece were to devalue the new drachma by 50% so that it could now offer the widget for € 5, it means that it would ceteris paribus effectively be paying with two widgets for for one widget. After all, what is exchanged between Greece and the rest of the world it trades with are goods and services – money only facilitates these exchanges.
Or putting it differently: what Greek exporters would gain by dint of being able to offer their goods at lower prices, importers would lose by dint of having to pay higher prices. Any perceived advantage gained by devaluation is therefore ephemeral on a society-wide basis.
Here's How Greece Would Leave The Euro
Despite Arab League confirming opposition rebels are committing violence, Guardian blames Assad for terror attack
Paul Joseph Watson
Infowars.com - February 10, 2012
Infowars.com - February 10, 2012
Desperate to sell another “humanitarian” invasion, the leftist media in the United Kingdom has resorted to inventing conspiracy theories about events in Syria as part of a campaign to depict President Bashar Assad’s government as genocidal, while completely failing to acknowledge that the country is in a state of civil war.
While the likes of the Guardian and other establishment leftist newspapers in Britain routinely savage anyone who dares to commit the thought crime of questioning the official story behind the 9/11 attacks or the London bombings, apparently it’s perfectly reasonable to continually imply that the wave of bombings and attacks targeting President Bashar Assad’s forces are false flags committed by the regime itself.
The UK Guardian, which has completely prostrated itself as a 24-hour rolling mouthpiece for opposition fighters it habitually describes as “activists,” is at it again today, reacting to news that explosions have killed 17 people in an attack carried out by opposition rebels which targeted Syrian military and security buildings in the northern city of Aleppo, by insinuating the Syrian government bombed its own facility.
They did the same thing when were 30 people killed by opposition rebels following two terrorist attacks in Damascus back in December.
The newspaper’s live coverage of events is little more than a platform for dubious ‘tweets’ sent out by anyone with a Twitter account claiming to be a Syrian activist, almost all of which claim with no evidence that Assad is killing his own forces to blame it on the opposition.
“Blow up people then broadcast the gory aftermath on morning TV. What an utterly disgusting regime,” reads one tweet featured by the Guardian.
“Two explosions rock Aleppo, obviously another Regime charade on the bodies of innocent civilians and some of its cronies,” writes another.
These baseless accusations could be coming from anywhere, whether they be from real Syrian “activists” or from within the halls of Britain’s Foreign Office. The Guardian simply regurgitates them alongside an editorial tone that affords the claims total credence, ignoring the independent observers from the Arab League who confirmed in their report thatopposition fighters were using indiscriminate violence against government forces.
The plausibility of terrorists targeting the Syrian regime is perfectly viable given the fact that hundreds of Libyan rebels, commanded by Abdulhakim Belhadj, a committed jihadist who fought with the Taliban against U.S. troops in Afghanistan, were airlifted into Syria last November to aid the opposition in carrying out attacks against government forces.
British Special Forces are now also on the ground advising rebels. Why would Special Forces who are trained to kill be advising “activists,” as the Guardian describes them?
The Guardian was even called out by one of its own readers, who pointed out that the fighting is actually a two-sided affair, rendering claims that Assad is engaging in “genocide” totally inaccurate.
“The definition of genocide is: “the deliberate and systematic destruction, in whole or in part, of an ethnic, racial, religious, or national group”. Your writers, and the writers of many other publications, use it incorrectly all too often. What is happening in Syria is tragic, certainly could be called a crime against humanity, etc, but it is not genocide. It is civil war. Misusing genocide as frequently and mainstream journalists seem to love to do is inappropriate, unprofessional, and immoral in the sense that it is crying wolf and diminishing the severity of the word and the magnitude of the times genocide has actually occurred,” commented the reader.
No one denies that Assad’s forces are killing opposition fighters, what do you expect when NATO powers have flown in the same terrorists who helped them overthrow Gaddafi to aid Syrian rebels? But to portray the rebels as “activists” who are the victims of bloodthirsty repression, even as they carry out terror attacks killing innocent people and Syrian government personnel, is wholly dishonest.
Don’t forget that these are the same media outlets who for weeks persisted in describing Libyan rebel fighters who were armed with RPGs and were commandeering fighter jets as “demonstrators,” urging the UN to impose a “no fly zone” which quickly turned into a bombardment.
The “humanitarian” attack on Libya so yearned for by liberal interventionists, with NATO powers again throwing their weight behind Al-Qaeda-affiliated terrorists who had killed US and British troops in Iraq, has produced a country run by mobs of thugs who hunt, torture and kill dissenters, notably black Libyans who have been rounded up and incarcerated in detention camps.
Thanks in part to leftist cheerleaders of “humanitarian” war like the Guardian, the Al-Qaeda flag now flies proudly over Libya.
The Guardian is not alone in its efforts to portray Syrian rebel fighters as peace-loving angels while denouncing Assad’s government as an army of genocidal maniacs. The London Independent has got in on the act too, claiming that “Syrian President Assad’s security forces have indiscriminately killed scores of newborn babies in Homs this week,” writes Patrick Henningsen.
The claim, which evokes memories of the notorious Saddam Hussein incubator babies hoax, has absolutely no foundation in evidence and comes directly from inside Britain’s Foreign Office.
Despite there being no media access inside Syria whatsoever, the international corporate press has simply relayed propaganda from “activists,” who are regurgitating talking points handed to them by Britain and the US, while completely ignoring the Arab League’s report which affirmed that the media has greatly exaggerated the amount of violence taking place in Syria.
Paul Joseph Watson is the editor and writer for Prison Planet.com. He is the author of Order Out Of Chaos. Watson is also a regular fill-in host for The Alex Jones Show and Infowars Nightly News.
Related:The Source Behind the Syrian Atrocity Stories
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Protect Your ASSets: Buy Gold or Silver NOW - If you wait you will be late.
(He who panics first, just may salvage something.