That Greek “haircut” will HURT!
October 29th, 2011 LAIGLESFORUM
by Don Hank
My mom used to give me haircuts, but she was always a little nervous and often nicked me in the ear with the scissors. That really hurt.
This haircut on the Greek bonds will hurt a LOT MORE.
Now that Europe has given a 50% haircut on their sovereign debt, many will figure they can continue to live like kings and the next time around, good old Germany and the ECB and EFSF will just bail them out again, with more “haircuts” for their bonds and more leverage. Dream on. The German people are already PO’d! And with good reason.
As this author points out, the party can’t go on forever. They are tightening the noose around Europe’s neck.
“Leverage” in this context means that the banks will be able to lend 4-5 times more than before simply by issuing more credit — NOT MONEY, because they have no money at the bottom line of the balance sheets, only debt. Now even before this re-leveraging, they were leveraged to the max and already issuing loans against nothing but hot air. That’s the same as printing money, as they did in the failed Weimar Republic. Weimar failed BECAUSE they did this, but the money printing was sold as a “solution” to their problem. Now they’re trying a little — no a LOT — of hair of the dog that bit them in the butt before, except not just Germany but most of Europe. How short their memories are.
This money the banks are lending is money they don’t have. It is debt, the opposite of money. They are dealing in red numbers, paying off red numbers with more red numbers. That is like climbing higher up the mountain to reach the bottom. GUARANTEED it won’t work and when the crash comes it will be dramatic, people will get hurt and Greeks will be back burning tires again.
Maybe someone will hire them to do that. They’re getting pretty proficient at it.
|Europe Tries To Kick The Can Down The Road But It Will Only Lead To Financial Disaster|
Fleecing the lambs once more: the Greek debt “haircut”
October 29th, 2011 LAIGLESFORUM
by Don Hank
The site linked to below (The Economic Collapse) had predicted just a day or two ago that the “haircut” on Greek debt would increase the chances of recovery of the PIIGS. It didn’t take long for that prophecy to be realized, as they report today.
Here are my 2 cents, incl a prediction of my own. I hope it turns out to be wrong:
According to the Greek language online newspaper “Express,” the European “leaders” met with the bankers before this “haircut” edict was handed down. They had originally spoken of a 21% hiarcut, but they were faking. They knew it would be 50% but they had to soften up the bankers.
It is my humble opinion that they made these bankers a deal they couldn’t refuse. First they TOLD them the haircut would be 50%, at variance with what they had said (they had lied, to put it nicely).
According to this Greek article, the rip-off to the European banks amounted to 67.5 billion euros, or 20$ less that the Greek government would have to pay.
My prediction (I truly hope I am wrong):
The European powers (remember, this is the group that exported “democracy” the the Arabs, but they won’t give their own people democracy. THEY make all the decisions) will eventually get around to utilizing one of their many financial tentacles — e.g., the ECB, the EFSF (European Financial Stability Facility) or other, perhaps one to be created — either to BUY PIIGS bonds outright or to financially assist private buyers to buy them (using both European and US public funds — see last link below!), in order to circumvent the market. This is because no private person or entity will eventually touch a Greek bond, for ex, with a 3 meter pole, unless enticed with promises of public money.
I say this because I know:
1–the past behavior of the European elites
2–their Marxist philosophy underlying that behavior.
By allowing the fiscally irresponsible Greece to join the Euro Zone, they knew they would ultimately be able to transfer billions of euros of wealth to that country under the pretext of “stabilization.” They won’t quit even now that they have literally destabilized the whole continent by their so-called “stabilization measures.”
They have all the power and they will continue to rob the citizens of each member country until they — and we — are dirt poor or until the people rise up and throw off their yoke.
It will be a true European Spring and the elites will not be in charge this time.