Greece As 6 Million Dollar Man..

"She's breaking up! She's breaking up!"(heh..) The question remains: Can we rebuild him?? Suddeutsche Zeitung: EU prepares for Greece to declare bankruptcy Short, and not sweet excerpts:

According to EU sources in the European capitals it is already running the preparation on Greece to declare bankruptcy, German newspaper Suddeutsche Zeitung announced.
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Meanwhile, the Ministry of Finance denied preparing an emergency plan for Greece.

Not that Greece isn't going bankrupt, mind you, it's just that France doesn't have an emergency plan in place. Already gone (and probably not ever coming back) is Greece's refugee/asylum system, at least from the German perspective.. Excerpts:

Berlin announced this week that it is halting deportations to Greece for a year, despite European Union rules stating that the first country a refugee arrives in is responsible for processing any asylum request.

Germany's Interior Ministry announced on Wednesday that the new measure is aimed at reducing the burden on Greek authorities, who are struggling to deal with the volume of refugees reaching the country's shores and borders.
And:
Humanitarian organizations, including the United Nations Refugee Agency (UNHCR), have voiced concern about the conditions that asylum seekers and illegal immigrants are forced to endure in Greece, with overcrowded detention facilities and a dysfunctional and overstretched system of assessing asylum claims.

Kind of like their banking system! Speaking of which, the Finance Minister says that Greece won't try debt re-structuring(read; anything new) as it might worsen the country's financial situation. Instead, they'll continue to follow the EU/IMF approved directives for their bailout. Although they wouldn't mind to(unofficially) stretch those payments out a little..

Hell, it's worked really well so far!

The Lull Before The Storm: What’s Coming in 2011

Artfully phrased economic Dooooooom!  From Gonzalo Lira.  Excerpts:

To be sure, there were other important stories in 2010—the Mortgage Mess, Wikileaks, Wayne Rooney. But these three issues—auguries of EMU collapse, successful Fed monetization, and commodity price rises—are the ones that mattered on a macro-economic level this past year.

In 2011, every other financial story will be either a cause or consequence of one of these three issues: Guaranteed.
Europe..
Europe is in deep shit—there’s really no polite way to say it.

All of the EU, really(Germany and France also.  Indirectly, at the moment, but they are not insulated from events.) but specifically, Spain..

Not “Spain is in trouble”—that’s obvious, but that’s not my point: Spain is trouble. Trouble for the German banks that own so much of the Spanish debt. Trouble for Germany, which is propping up its insolvent banks (What, you think German politicians are any less craven than American politicians?). Spain is trouble for the European Union, for what a German banking crisis might mean for the EU as a whole and as an institution.

More than anything, Spain is trouble for the European Financial Stability Facility, because Spain is too big to be saved—and there’s really no way to finesse that hard fact.
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How the EU and the ECB handle an eventual Spanish sovereign debt crisis will determine the very future of the European Union.

Because there will be a Spanish sovereign debt crisis—it’s inevitable. The Spanish balance sheet is not improving fast enough, even with so-called “austerity” measures, because even though the Spanish government might be cutting spending, the comunidades autónomas—roughly analogous to states or regions—are expanding their budgets in order to take up the slack, and thereby increasing the Spanish deficit.
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So when Spain goes into crisis—which should take place no later than August 2011, and perhaps as early as this coming March—the European Union’s collective and institutional reaction to this crisis event will determine whether a smaller, healthier European Monetary Union continues to exist, or whether the whole concept of EMU is ripped to shreds by events.

Which brings us to the United States..

There is a limit to sympathy: You can feel sorry for someone—but only up to a point. Insofar as the United States’ fiscal situation is concerned, that point has been reached, at least for me: I can no longer feel sorry for the American people.

Americans want more services and entitlements, but with less taxes—and then they’re all surprised when their local, state and Federal governments cross the edge of insolvency, and into the nightmare land of feverishly staving off bankruptcy.

During 2010, the Federal government debt finally crossed the 100% of GDP mark—and continued rising non-stop. Actually, the debt’s growth accelerated. Why? Because the Bush tax cuts of 2001—implemented when there was an expectation of surplus, with clear sunset provisions, and no massive war expenditures—were extended by the mindless Republican Congress and the spineless President, Barack Obama.
And:
In late 2010, we finally started to notice something which has been festering for years, like one of those yucky worms that winds up eating your brains and driving you mad: The financial condition of the U.S. States and municipalities—they’re bankrupt.

For fiscal year 2010, the states’ combined budget shortfall is $191 billion. Of that figure, $68 billion is offset by the Recovery Act—Obama’s stimulus. Currently, the 2011 combined deficit of the States will be in the neighborhood of $160 billion—but that doesn’t seem credible, considering the ongoing unemployment. Regardless, $59 billion of those will be offset by the Recovery Act—which still leaves at least $100 billion up in the air.

However you look at it, the States have a huge collective hole in their budgets. And this hole is going to get worse, before it gets any better—just like the Federal government’s massive yearly deficit.

Which brings us to Commodities:

Commodities rose drastically all throughout 2010: Every single commodity class, every single one of them rising by double digit percentage points—at least.
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I know I have the reputation for being the crazed hyperinflationista—but you don’t have to buy any of my dollar-hyperinflation arguments to acknowledge the fact that, a., commodity prices have experienced a sustained and enormous rise in their prices, and b., this sustained rise in the prices of commodities will inevitably hit consumers at all levels of the economy.

Therefore, I would expect food, heating oil and gas prices to rise considerably over the winter of 2011—that is, now. This will be a knee to the ‘nads of the American economy—indeed, to the world economies.

There’s really not much more to say, about the issue: A sharp rise in consumer spending on essentials would shove the American and world economies firmly back into recession, this time potentially with negative growth.

What happens after that? It depends on the fools at the helm of the good ship S.S. Depression II.

Lira's bottom line?

So bottom line: It’s looking like 2011 is gonna suck. But hey! At least two of these three story-lines are gonna come to their respective climaxes this year—so 2011 might well suck, but at least it’ll be exciting!

I'm wondering how each of these huge economic phenomenons will effect each other.  Any one of these three in stronger economic times would influence, drag, or overlap into the other sets of events.  With each of these world engines at critical and vulnerable points, what will happen if they all seize up close to the same time?  Could the overall effects be so much more than the sum of its monetary parts?  The cynic in me says "Of course."

Troubling News: EU Edition

Moody's warns it may downgrade Spain's debt

Citi: Ireland, Greece And Portugal Are Insolvent, Spain Will Be Soon, Italy And Belgium Are Threatened

Worries About Italy and Belgium in Euro Zone

Germany Opposes Bailout Boost in Face-Off With ECB

Irish parliament to vote on EU/IMF bailout (Hey! This happens today! More fireworks..)

If You Live Anywhere Other Than America Or Korea, These Will Be The Two Big News Stories Today..

Asia Session: Awaiting the Irish Budget

The Euro continued to move higher in Asia as markets looked ahead to the hopeful passing of the 2011 Irish budget which is due later in the day. Now loaded with new austerity measures in order to appease the EU and IMF after securing a bailout package the proposed Irish budget for 2011 was to be put in front of the parliament later today. The passing of the budget without any hitches would surely help the Euro currency and that optimism was seen in today’s Asian moves from 1.3280 to 1.3350 in EUR/USD. The ECB’s move to extend its bond purchasing program also proved beneficial to the European currency as investors welcomed the determination of the European Central bank.

At the moment, the proposed budget looks like it will pass. Of course, bankers and politicians are pretty happy with that projected outcome, but the non-ultra rich, non banker, non politicians aren't happy, and will be expressing their displeasure later today, and probably frequently for quite some time..

And then there's the World wide bank run, originating in France, scheduled for today.  Your host?  Eric Cantona.:

Following an idea put forward by Eric Cantona recently the 7th December is planned to be ‘bank run’ day. The general idea is that nowadays protesting in the street doesn’t achieve much – but if we all withdraw our money from the banks at the same time the banks will collapse.

Will this destroy the European banking system?  Probably not, and most likely not in America, but people in other countries are paying attention, and we won't know what the end result will be tomorrow, or in the near term..  And it all starts today.

So much information, so much to disseminate, so little time..

Ireland's Ruling Government Is About To Have Their Ass Handed To Them

Come January, it's payback.  The Irish are mad, and ready to kick some Fianna Fail ass.  The other traditional opposition parties(Fine Gael, in first, at the moment, Labour in second and Sinn Fein, third) are crushing Fianna Fail(by default) which has dropped to last place in the "major" parties (not counting the Greens), and elections are slated for the second week of January.  In a quirk of Irish politics, Fine Gael is to the right of Fianna Fail, but works with Labour, which is similar in spirit to the progressive left of the American Democratic Party.  (It would be nice to have that cooperation stateside, but, you know..)

Fianna Fail has seen their popularity plummet from 42 percent to 13 percent, and are projected to lose as many as 55 seats in this disaster election scenario created by their greed and unshakable allegiance to the banks that got them in trouble in the first place.  And now, members of its own party might not follow suit for  December 7th's budget vote.  And if the budget doesn't pass and Ireland refuses the bailout and the entire government collapses, this will cause a whole new set of problems for the EU, the IMF, and bankers from other countries.  Stay tuned..

For Europe’s Future, Spain Is All That Matters

Another great analysis from Gonzalo Lira. Excerpts:

If I had to bet on which country will bring about the end of the Euro—and perhaps even the end of the European Union—I’d have to say it’s Spain.

Right now, no one is talking about Spain—Spanish spreads are as quiet as a guilty man in a police line-up—everyone’s too concerned over Ireland, and the upcoming Portuguese Situation.

But Spain is the key—Spain is what you should be paying attention to, if you want to find out what will happen to the European Monetary Union (EMU), and the European Union (EU) itself.
And:
According to IMF numbers for 2009, the gross domestic product of Greece was $331 billion, Ireland was $221 billion, and Portugal was $233 billion—

—but Spain’s GDP in 2009 was $1.468 trillion. Roughly twice Greece, Ireland and Portugal combined. In other words, close to half of Germany’s GDP.
And:
Therefore, to bail out Spain, and plug up its fiscal balance sheet hole over the next three years would cost €450 billion—minimum. That’s about $600 billion.

Look at that number again—look at it closely, and take your time:

€450 billion.(600 billion US)

That’s twice the size of Ireland’s total GDP for 2009.

In order to figure out how much each party would have to shoulder of this €450 billion price tag, Bruce Krasting, in some private e-mail exchanges, thought that the percentages that the EU, the ECB and the IMF were shouldering for the Greek and Irish bailouts could serve as a template.

Fair enough: If we go by Greek and Irish percentages, then roughly a third of that €450 billion price tag to bail out Spain would be shouldered by the IMF—and as everyone knows, the U.S. puts up 20% of IMF money.

So the U.S. would be on the line for €30 billion—$40 billion—to save Spain.

Then Bruce delivered his verdict: “The U.S. is going to say ‘Yes’ to that and ‘No’ to California? No way. Not going to happen with this new Congress."
And:
Therefore, the IMF’s participation in a Spanish bail-out will be severely reduced, if not marginal. Therefore, bailing out Spain will be a strictly European affair.

Does Europe have €450 billion to bail out Spain? That is, does Germany have €450 billion to bail out Spain?

No it does not. It does not have the money for such a bailout—and even if it did, it does not have the political will to push through such a bailout.

Period.
And Finally:
Best case?

Though they remain in the European Union, the weaker economies exit the EMU and go back to local currencies, which they quickly depreciate, while their Euro-denominated sovereign debts are restructured and paid off over time. The Euro becomes the currency of France, Germany, Holland, Finland and Austria.

Worst case?

I can imagine a number of worst cases, all of them different, except for one thing in common: They’ll all be bad.

Well, That Was Quick, Ireland Edition

Irish PM is forced to agree to dissolve government. Holy Crap! Excerpts in italics:

Amid calls for his immediate resignation from at least two MPs in his own Fianna Fail party and the withdrawal of support from coalition partners the Green Party, Prime Minister Brian Cowen was forced on Monday to announce the pending dissolution of his government.
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The turmoil and political uncertainty following a bailout that was meant to bring stability has done little to calm markets; despite hopes the package would ease Ireland’s debt crisis, borrowing costs barely budged and the euro declined in the markets Monday. This has heightened concerns among European leaders that the rescue has failed and that further bailouts may be needed to prevent a run on Portuguese and Spanish banks and bond markets.

Hours after the European Union and the Washington-based International Monetary Fund negotiated an €85-billion bailout-loan package on Sunday, the Green Party, which holds the balance of seats that allows Mr. Cowen’s Fianna Fail to govern, delivered a poison-pill announcement: it will pass the brutal austerity measures required as part of the bailout, but at the cost of killing the government.

Green Leader John Gormley, expressing the views of increasingly furious Irish citizens, said he would allow the government to pass a four-year program to slash a further €15-billion from government spending through tax hikes and service cuts in the Dec. 7 budget bill. But he demanded a national election in January in return, a move that will almost certainly end the career of Mr. Cowen and possibly eviscerate his party.
And:
The allies of the Prime Minister, or Taoiseach, wasted little time in delivering the long knives on Monday, distancing themselves from a leader who has infuriated voters by insisting for weeks that Ireland’s sovereignty would be kept intact – and by keeping Ireland’s low 12.5-per-cent corporate tax in place while raising taxes and slashing welfare.

Let the protests begin!

And, because it's Ireland, the Real IRA's gonna kick it up a few notches..

The speed of this whole process has been so much faster than any "mainstream" analyst dreamed it could be.. Last week, a bailout was proposed and implemented, and yesterday, it failed. And Ireland begins a descent into.. No one knows. And the pace of these events is accelerating..

Portugal's next(Oops!). Then Spain. And Italy? And then?

Pay close attention: History is being made right before our eyes.

Opposition Claims Government Understated Debt And Deficit Figures By About 25%

This time; It's Portugal. And Payback. And Twice The VanDamage..(Thanks, Janeane Garafalo)

Portugal, it seems, has a different set of problems than Ireland. Here's how: (from the Payback link..)

Ireland’s government has money, but its banks are drowning in debt, and the government has vowed to guarantee debts, making the state itself vulnerable. Portugal’s problem is different. Its banks are not especially troubled, but the state itself has high debts and low growth, and the mound of both public and private debt is considerable. The total debt is larger than the annual gross domestic product, some $275 billion of debt in an economy of $232 billion a year, one of the highest ratios in the developed world.
And:
So the interest rates Portugal would have to pay on the markets, should it have to borrow money now, would be much too high, forcing it to seek money from the European Union and the International Monetary Fund. The government here, as in Dublin, hopes the markets will calm down. But other European Union governments are concerned that unless the markets are appeased now, by protecting Ireland and Portugal, the contagion will spread to huge Spain, the fourth largest economy among the countries that use the euro.

The more I learn about this crisis, the more I tend to believe the worst possible outcomes will actually occur. There aren't any general answers applicable to more than one country, as economic circumstances will be country wide, but not regional. Solutions that appeal to both France and Germany would financially cripple or kill other EU countries. The solutions will be complex and incredibly painful for the weakest countries, and protests and riots are almost sure to follow. And still, the system will most likely collapse.

To drive the point home.. So, if the EU fractures, what sort of effect will it have here in America? Our financial structures And our government are both perilously close to collapse, and locked in tight with all of Europe. How could we possibly absorb the implosion of so many economically interwoven allies? How?

Having Trouble Understanding The Machinations and Implications Of The EU Financial Crisis?

Gonzalo Lira can help. Why is the EU Crisis important? Globalist financial/banking policy has tangled not only neighboring European countries economies together in a way impossible to decouple without serious turbulence, but the majority of the world's collective economy is also locked in a larger magnification of what currently ails the EU. And, as goes Europe, so goes the Global Financial System. Lira writes simply, directly, distilling complex financial situations into an easy to understand narrative of real-time economic events, and why there are no easy or immediate answers to this rapidly blooming global catastrophe..

Lira also thinks the European situation is deteriorating rapidly, even more than he recently predicted. I know, I know.. The economic crisis is no where near as fun as Bristol Palin or even the Royal Engagement, but hopefully a few of you will take the 15 minutes or so required to read both articles. You should, then, have a much better handle on the implications this has for America's immediate financial future.

Short answer: Huge, and Terrible.