Wednesday, June 22, 2011

storm clouds



 the fork in the row is here.
either greece stays in the EU or leaves.
either way, they are going to need a bailout.
a third possibility is that greece bails on the bondholders.
that didnt happen in the us or the uk
the banks in iceland went down, but the bondholders were fine.
big european banks bought the iceland banks.
iceland lost its financial independence entirely, just as ireland is likely to do.
the bankers of all these nations are being bailed out, and you and are paying for it.
why shouldnt the bondholders, mostly big banks and financials take a haircut on these bonds?
the banks in latin and south america took huge haircuts when the argentine debt was written down.
much of that debt was held by u.s. banks.
the haircut to the bondholders was about 35%.
the argentine currency was pegged to our dollar(1 to 1 ratio).
after the currency was floated, the ratio was 5 to 1.
this is a route the greek situation could go.
they could write off some of their debt, stiffing to some degree, the bondholders.
the new currency would be worth about 20% of the current.
lurking on the horizon is the big dog, spain.
does anyone really think austerity measures will work anywhere, especially in the u.s?
before argentina bailed, we went to argentina, with billions of dollars and called it restructuring.
"we are lending you this money, but we are taking it right back, or hald of it, as an interest payment.
we will take the other half back and call the loan 'performing."
does this sound familiar?
greece could stay in the eu, and eschew the eu common currency.
the currency, as i said, would end up about 20%.
for now, the greek can will be kicked down the road.
people, pay attention to what is going on in greece.
it will happen here, eventually.
NOBODY here wants to address the situation to any meaningful extent.
the bowles-simpson commission report was created and completely ignored, after the medicine was found to be too strong.
devaluing the greek currency wont help them so much.
they dont make anything to sell the world  but olive oil, it seems.
greek shipbuilding is not in good shape these days.
the tourism industry would bourgeon,of course,  if greek nation ever settled down.

 recent austerity protests in greece

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