Step 1, get bailout money, check. Step 2, wreck your economy in order to save it, that is what lies ahead for Greece but they have no choice. With the cheap cost of money that Greece will borrow money for the next 3 yrs, Greek market rates are falling both on the short end and longer end of the curve but European stocks and the euro are not getting any bounce as the bailout precedent now established is a dangerous one. It reminds me of the children’s book, If You Give a Mouse a Cookie, he’s going to ask for a glass of milk, etc… The austere measures that other countries will have to take too risks a slowdown in the euro region at the same time China tries to reign in their growth. Chinese reserve requirements will be raised by 25 bps to 17% and this comes after the prices paid component in a PMI index rose to near a 2 yr high. The euro zone is also China’s largest trading partner.

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Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

18 Responses to “Short term relief for Greece but at large cost”

  1. JustinTheSkeptic says:

    It looks like the wall of worry that the bulls are climbing has become Half-Dome, or K-2 and the lack of oxygen to their brains is the only thing at work here???

  2. VennData says:

    If the Greeks would just allow drilling throughout the Aegean Sea and Mediterranean, their problems would be solved.

    I’m sure Larry Kudlow and the rest of the GOP media machine can can help them with a catchy phrase, baby.

  3. b_thunder says:

    I tend to agree with David Rosenberg, who does not think the bailout is a good idea, because according to him “countries don’t go under, they default.”
    And now with the euro moral hazard firmly in place, I’m trying to figure out how much it’ll take to bail out Portugal, Spain, Ireland and the rest.

  4. JustinTheSkeptic says:

    Is it just me or are these guys that are touting, ” the recovery is intack,” cheerleading just a little over enthusiastically? And don’t they all seem to have self-interests in mind?

  5. rktbrkr says:

    Greece fire smothered under new currency.

    Seriously, an austerity plan will be watered down with each change of Greek government, a 25% VAT is a showstopper. Everytime one of the other PIIGS is on the ropes and needs a similar bailout Greece will scream like a PIIG that the irish, Spanish etc got a better deal and they want the same.

    I think most realize that the austerity program will be politically untenable and it’s the Euro version of kick the can down the road.Nobody knows where the can will eventually end up but they know they don’t want to address a Greek failure/Euro meltdon now, tomorrow is better, especially if this can be paid for with new currency and not real sacrifice by the Germans and French.

  6. Sircornflakes says:

    The only thing of value now in paper currencies, is the paper.

  7. Arequipa01 says:

    Can’t pay your debt? We have a great new product for you. It’s called “Even More Debt!” Works every time (until it doesn’t…but them’s the breaks). Call 1-IMF-FOREVER.

  8. R. Cain says:

    As Dennis Gartman indicates, Greece with the € is simply untenable.

    Gartman says Greece default ‘inevitable’, will leave €

  9. The Curmudgeon says:

    Imagine if Georgia, in the southeastern US, needed $160 billion bailout. Georgia has about the same population as Greece. Yet it’s population is not nearly as old, and it is still growing. Greece has a median age of roughly 41, and its birthrate is below replacement.

    Bailing out Greece is just throwing good money after bad. Greece is rapidly aging and fading away. In a hundred years, the Greek culture may very well be only accessible in history books (or whatever medium is used by then.) But this is the same as will happen throughout Western Europe, as it ages and dies. Soon enough, new tribes will arise, probably from the Middle East as is happening now, to fill the void left by the dying Europeans.

  10. rootless_cosmopolitan says:


    I tend to agree with David Rosenberg, who does not think the bailout is a good idea, because according to him “countries don’t go under, they default.”

    I don’t know what Rosenberg exactly said, but this argument how you reproduce it, looks a bit nearsighted. Countries don’t go under, but creditors do. Greece by itself might not be the problem, the danger is that there is a contagion and that other countries default as well, especially Italy, Spain, Ireland, whose absolute debt burden is much larger than Greece’s one. There was an interesting graphic in the NYT on the weekend:

    The European banking system is heavily exposed to the debt of these countries, particularly Germany’s and France’s banks. Greece’s default could trigger a domino effect that might bring down many banks. So I think the bailout isn’t so much about Greece, it’s much more about the European banking system. The ones who are being bailed out here are actually the banks and the holders of the sovereign bonds of those debtor countries. For Greece, it just means pain, austerity measures, and the projected debt burden won’t even decrease over the next years. On the contrary. But the bailout makes sure that the wealth transfer from Greece to the creditors continues and that the business remains profitable for the creditors, because that’s what debt means: Wealth transfer from the debtor to the creditor through interest payments, at least as long as the debtor doesn’t default on the debt. I guess they figured that the EU and IMF loans to Greece might be less costly than the costs that would come from a chain collapse of many European banks. So I don’t really know why so many Germans are whining about the bailout, at least from a rational point of view. The aid to Greece isn’t a generous gift. These are loans. Germany might even get a financial gain out of it at the end.

  11. Robespierre says:

    Don’t really think the Greek government will be able (or willing) to implement the austerity rules without falling. Also, with the Euro dropping and the Chinese trying to tighten I can only see US exports falling no?

  12. beaufou says:

    Just for info.

    Until 1973, the central Bank of France financed the state.
    When money was needed for works such as hospitals roads etc… the central bank would create the loan, out of nothing, but with no interest, then the state would pay it back and the amount would be destroyed.
    In 1973, with President Pompidou in power (an executive twice at the Rothschild Bank) and after years of bugging De Gaulle who told them to go to hell, the rules changed and private banks became the creators of money and the state creditor.
    A study has been done by a national agency (insee) to find out what the national debt would be under the old system, the result was positive 100billion Euros.
    The present national debt is 1150 billion Euros, with 45 billion Euros of interest a year, which is about the same amount as income tax collected by the state.
    The total amount payed by France’s taxpayers since 1973 is 1200 billion Euros.
    France only pays the interest on the debt, the nominal amount is out of reach.

    Hurray, I just managed a whole post with no cursing.

  13. beaufou says:

    Again, I will argue that a general default and the elimination of national debt is the only way out of this mess, otherwise it will keep popping up.
    Le roi est mort, vive le roi.

  14. NormanB says:

    So, Greece ‘promises’ to cut their deficit to 3% of GDP by 2014. Wanna bet?

  15. WolfStreet says:

    @Peter “With the cheap cost of money that Greece will borrow money for the next 3 yrs” Maybe there’s some logic I don’t understand here, but as far as I can see, Greece is going to be charged 5% interest rate, and you call that cheap?…

    I don’t think that’s nothing near cheap given Greece current situation, is it Peter?

  16. trackerman says:

    beaufou Says:
    Until 1973, the central Bank of France financed the state.
    ….. A study has been done by a national agency (insee) to find out what the national debt would be under the old system, the result was positive 100billion Euros.
    It would be very interesting to see what the US debt would be if the US had removed the banks as the middle man in 1973 and created its own money . I guess “Old Hickory” had the right idea when he destroyed the American Central Bank in the 1800′s. There is no doubt in my mind that this country would be in much better shape today if we had not allowed the banks to usurp the power of the federal govt to print its own money.

    Is it any wonder the banks make up almost 20% of GDP today? That is creating something out of nothing that benefits nobody (but the bankers).

  17. formerlawyer says:

    to rootless_cosmopolitan

    That argument is supported by the “New German Empire (Economy)” for example see: