Chaos in Greece

[SubGod22]

3 killed in bank fire during riots as Greeks demonstrate

We've touched on some of this in other topics but Greece is in an interesting position right now and a few other European countries may not be that far behind.

[SB Shock]

Re: Chaos in Greece

3 killed in bank fire during riots as Greeks demonstrate

We've touched on some of this in other topics but Greece is in an interesting position right now and a few other European countries may not be that far behind.

Must admit very interesting times.

Also read a story that implosion of the China banking system may not be to far away. Unfortunately I don't have a link.

[RoyalShock]

If the China bank thing is true, and considering they hold a lot of US debt, what does that mean for us?

[SPEShockAlum]

If the China bank thing is true, and considering they hold a lot of US debt, what does that mean for us?

Then we lose the largest source of liquidity for U.S. treasuries. China should be more concerned with the U.S. than the other way around. If the dollar tanks (currently rallying against the Euro), dollar denominated debt becomes worthless.

[Maggie]

If the China bank thing is true, and considering they hold a lot of US debt, what does that mean for us?

Good question. Never given that much thought.

But I believe I can state with confidence one consequence might be that Thomas Friedman’s head could explode (or he would at least have to find another authoritarian country to obsess over – Venezuela?).

[Maggie]

If the China bank thing is true, and considering they hold a lot of US debt, what does that mean for us?

Then we lose the largest source of liquidity for U.S. treasuries. China should be more concerned with the U.S. than the other way around. If the dollar tanks (currently rallying against the Euro), dollar denominated debt becomes worthless.

True. But I don’t know that the dollar is rallying so much as the Euro is tanking.

[SPEShockAlum]

If the China bank thing is true, and considering they hold a lot of US debt, what does that mean for us?

Then we lose the largest source of liquidity for U.S. treasuries. China should be more concerned with the U.S. than the other way around. If the dollar tanks (currently rallying against the Euro), dollar denominated debt becomes worthless.

True. But I don’t know that the dollar is rallying so much as the Euro is tanking.

Also true, but no matter how you slice it, the dollar is still appreciating regardless of what's driving it. It's even more of an incentive for our own central bank to not move interest rates from the 0.00-0.25% level. Inflation? Pfsh! Just cross our fingers and hope everyone else defaults to prop up the dollar! :roll:

[SB Shock]

Since the U.S. is a member of the IMF, our tax money is going to bailout Greece.

[Maggie]

Europe rewrites its rule book in creating fund to contain financial crisis

People in this country should be paying attention to the situation in Europe. As the current Administration is headed, at ludicrous speed, toward a European model that same European model is running off a cliff.

The massive emergency fund assembled to defend the value of the euro is backed by a political gamble with an uncertain outcome: that European governments will rewrite a post-World War II social contract that has been generous to workers and retirees but has become increasingly unaffordable for an aging population.

"We can't finance our social model anymore -- with 1 percent structural growth we can't play a role in the world," European Council President Herman Van Rompuy said Monday in remarks at the World Economic Forum in Brussels, just hours after European Union finance ministers approved the new program. (emphasis added) European growth rates are lagging behind those in the United States and the rest of the world as the recovery takes shape, with Spain and Greece still in recession.

Access to the fund will be conditional: Countries that think they need help will have to show they are willing to make the changes needed to bring their deficits under control, similar to the process Greece went through in arranging a $140 billion bailout.

But the political challenge looms large, cutting to the heart of Europe's postwar identity. Particularly in the south, unions and socialist movements have established generous work rules and social welfare programs. (emphasis added)

They are just putting their finger in the dike – eventually they are going to run out of digits.

[SPEShockAlum]

They are just putting their finger in the dike – eventually they are going to run out of digits.

Exactly! The bailout, like the Dutch boy or a Band-Aid, shouldn't hide the fact that fiscal and monetary mismanagement at the individual country level undermines any help the EU and IMF can muster.

[Maggie]

They are just putting their finger in the dike – eventually they are going to run out of digits.

Exactly! The bailout, like the Dutch boy or a Band-Aid, shouldn't hide the fact that fiscal and monetary mismanagement at the individual country level undermines any help the EU and IMF can muster.

Correct. And all of Europe has the same problem to one degree or another. They are simply kicking the can down the road.

[SPEShockAlum]

They are simply kicking the can down the road.

I'm headed to Greece in about a month - maybe I can help them kick it a little further.

[Maggie]

They are simply kicking the can down the road.

I'm headed to Greece in about a month - maybe I can help them kick it a little further.

You picked a good time to go. :)

[SubGod22]

STOSSEL: America on Track to Be the Next Greece

Projected debt as a percentage of GDP is expected to reach the same level as Greece in 2020 according to this.

[SubGod22]

Greek Lawmakers Set to Pass Austerity Bill Following Days of Riots

ATHENS, Greece -- Greek lawmakers are set to pass a bill Thursday to fast-track fresh austerity measures demanded by creditors, following two days of rioting in Athens that left some 200 people injured and 50 stores damaged.

Greece's international creditors have insisted that Greece back an austerity package and the associated implementation bill in return for giving more money to the country. On Wednesday, parliament approved the five-year $40 billion package of spending cuts and tax increases, leaving details of the cuts to be approved Thursday.

Once, and if, Thursday's bill to implement the austerity measures is cleared, the eurozone and the International Monetary Fund will be in a position to release the $17 billion that is due from last year's package of rescue loans for Greece. Many of the measures outlined will kick in almost immediately.

Without the financial assistance, Greece was facing bankruptcy as soon as the middle of July. A Greek default on its debts could trigger a major banking crisis and potential turmoil in global markets, similar to what happened when the Lehman Brothers investment house collapsed in 2008 in the United States.

As a result, markets around the world breathed a sigh of relief after Wednesday's vote -- while municipal authorities in the Greek capital grappled with the damage caused by two days of violent protests.

The next euro12 billion EU-IMF loan installment will tide Greece over till mid-September, according to government officials, but it looks like it will need a lot more money in the years to come. Creditors are considering giving Greece a second, major support package to cover upcoming financing gaps.

Last year's $159 billion package was predicated on Greece being able to tap bond market investors for cash next year but with the country's interest rates at exorbitant levels, that looks highly unlikely.

The austerity measures being imposed in Greece in return for outside help are being met with resistance.