BRUSSELS (Dow Jones)--Some Greek banks may have to be nationalized after the application of the agreed 50% write down in nominal value of Greek bonds held by the private sector, as part of new euro-zone package for the country, Greek prime minister George Papandreou said Thursday. Speaking to reporters after the conclusion of a marathon euro area leaders΄ summit, Papandreou said Greek banks would be re capitalized with official funds that would come out of the country΄s fresh EUR130B bailout package. "If the private sector can overcapitalize the banks they can do that but if they can΄t it means the official sector will need to. That will mean a temporary passage of ownership to the state. After restructuring they will be sold back to the private sector," Papandreou said. He also said the details of the new package would be worked out over the next few weeks. "We want to be done with this," he added. Asked if he was contemplating calling an early election or seeking the formation of a government of national unity, Papandreou said that Greeks want changes, not elections. "We will continue to seek the maximum level of consensus possible," he added.
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Friday, October 28, 2011
Greece has a "governor" - Horst Reichenbach
BRUSSELS (Dow Jones)--Some Greek banks may have to be nationalized after the application of the agreed 50% write down in nominal value of Greek bonds held by the private sector, as part of new euro-zone package for the country, Greek prime minister George Papandreou said Thursday. Speaking to reporters after the conclusion of a marathon euro area leaders΄ summit, Papandreou said Greek banks would be re capitalized with official funds that would come out of the country΄s fresh EUR130B bailout package. "If the private sector can overcapitalize the banks they can do that but if they can΄t it means the official sector will need to. That will mean a temporary passage of ownership to the state. After restructuring they will be sold back to the private sector," Papandreou said. He also said the details of the new package would be worked out over the next few weeks. "We want to be done with this," he added. Asked if he was contemplating calling an early election or seeking the formation of a government of national unity, Papandreou said that Greeks want changes, not elections. "We will continue to seek the maximum level of consensus possible," he added.
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A Controlled Demolition
Merkel took great care in preparaing the demolition of a ramshackle house. But she resisted the temptation to push the detonator immediately. Now, the explosion will be a controlled one. Those in its immediate path have been provided with a minimum of safety equipment and a firewall has been erected to contain the rubble.
The Brussels summit is an interim step and it will be followed by many further summits. A number of questions remain unresolved. Will Europe soon become dependent on China should Beijing invest in Italian bonds? Will the banks really survive the 50 percnet debt haircut agreed to on Thursday morning? Will Greece, Italy and other countries perpetually guilty of violating deficit rules submit to Germany's austerity dictate? And how can deeper European integration be forged? Yet at least now there has been some progress in a few key areas.
Greek debt reduction was necessary in order to get the country back on its feet. It is equally important that it not be the taxpayers alone who are forced to carry the burden of policies of unfettered borrowing in countries that created the current mess. The banks -- e.g. those who profited from these policies -- are also being forced to pick up a considerable part of the tab. It is also correct that the debt haircut will first be applied when it has been assured that the action will not lead to financial collapse in other highly indebted countries. Were that to happen, at least the euro backstop fund, the European Financial Stability Facility (EFSF), now has the firepower to address the problem.
If it's true that maintaining power is a politician's ultimate goal, then Angela Merkel came a good step closer to fulfiling that aim last night. The deal in Brussels was first and foremost a success for the German chancellor. She managed to get her way on a number of key issues and, with a little luck, Europe may now be on the right path towards overcoming the debt crisis.
Things could still go wrong, of course. The bailout process is far from complete. But for the first time now there is some clarity amid Greece's debt chaos. Merkel would appear to have learned in recent months. She has transformed herself from a leader merely reacting to events into one who now designs steps to control those events. She has also built up trust, which could ultimately pay out in the form of votes.
The Brown Bluff
How Waffen SS Veterans Exploited Postwar Politics
SPIEGEL ONLINE - October 21, 2011
While hunting for new voters, both the conservative Christian Democratic Union and the center-left Social Democratic Party courted veterans of Hitler's Waffen-SS after World War II. A recent study illustrates how the major parties were taken advantage of in the process. By Rafael Binkowski and Klaus Wiegrefe
Barton Biggs, managing partner of hedge fund firm Traxis Partners, says the world is threatened by a "catastrophic" recession while European leaders are trying to impose austerity – mostly on other European nations – as a way to escape the continent’s debt crisis.
But Biggs says that’s not the way to go. “In general, I think austerity is a big mistake,” he tells Yahoo.
“We’re threatened with a global double-dip recession, which I think would be catastrophic for the world and social order. We’ve got to have fiscal stimulus to get out of it, and then we can deal with other issues.”
In the United States, Biggs says the congressional supercommittee on deficit reduction should steer clear of austerity too.
Read more: Barton Biggs: We’re at Risk of ‘Catastrophic’ Global Recession
Important: Can you afford to Retire? Shocking Poll Results
the need for fiscal stimulus.
“There are two facts about our current economic situation that can no longer be denied,” Shiller writes in The New Republic.
“Our economy is in desperate need of government stimulus, and our political system won’t abide any increase in our national deficit.”
The solution is to combine spending increases with tax increases. But that idea won’t fly far with Republicans, he acknowledges.
“Their resistance might be softened if they were made aware that a balanced-budget stimulus would not lower average after-tax income,” Shiller writes. “Every dollar of increased taxes could go toward giving someone extra income.”
Read more: Barton Biggs: We’re at Risk of ‘Catastrophic’ Global Recession
Important: Can you afford to Retire? Shocking Poll Results
He’s actually wrong. The euro was a currency with interest rates set to suit Germany and France – low. Their economies were stagnating. Greece, Ireland and the others in trouble had booming economies and needed higher interest rates, something like 7-7.5% percent. This would curb their borrowing and cool down their economies.
Before joining the euro Greece was a country with little debt and Ireland with almost none.
Germany though, encouraged countries like Greece to borrow with the euro’s cheap interest rates so that they may buy German goods.
Then the Greeks, who have the 2nd longest working hours of OECD countries next to South Korea, are slandered and libelled as lazy café lounging buggers. That’s a rich one coming from beer swilling Germans who appropriately sold the Greeks lopsided submarines.
So Sarko is wrong by only being half right, Greece should not have been allowed into the euro but neither should Germany or any other country. It’s a scam and always was and we’ll see what the next crisis brings.
However, how on earth can an article such as this ignore the crookedness of Goldman Sachs in the what happened when Greece was moving towards the Euro? It really is quite an eye opener to understand how corrupt bankers behave.
I agree with you, but the bankers only do what they're allowed to. The real culprits are the political leaders, who are supposed to answer to us and who allowed their power to slip from their fingers. They have let themselves be bulied by finance leaders and lobbies when they forever claim to work for the good of the people. When you go and give your vote to either party you effectively endorse their meekness
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