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Greece is boned, but Mario Draghi says "Everything's gonna be allllll right.." Zero Hedge. Excerpts:
On one hand we have Mario Draghi promising he has a magic wand (not a printer - remember the keys to that are now held by Angela Merkel who is on vacation) and to "believe him" that the EUR will survive. On the other we have Greece which is a poster child of everything that is wrong in Europe. And that we summarize as follows: i) an epic and now relentless deposit outflow from Greek banks which continues as all trust in the local banking system is now gone, as €7 billion in deposits or the second biggest amount ever, is pulled and 20% of the entire corporate and household deposit base has vaporized in the past year, and ii) an economy in which it is every man for himself and where nobody pays any taxes any more, period. Best of luck in preserving that EUR Super Mario.
And a quick story on which Greece will never be fixed no matter what magic Draghi and Potter concoct between them:
The Financial Crimes Squad (SDOE) on Thursday reported that six in 10 businesses inspected at popular tourist resorts were not issuing sales receipts, and that of the 1,410 checks conducted in July, 57.1 percent found business owners to be in breach of the law.
..
In Zakynthos in the Ionian and Rethymno on Crete, every business inspected was breaking the law, while on the islands of Paros and Myconos, 70 percent were avoiding taxes.
No deposits, and no tax revenues: thank you Germany for continuing to fund this slow motion trainwreck thus providing everyone with hours of taxpayer-subsidized entertainment.
I think he's being sarcastic. I don't think he thinks it's really entertainment.
Ahh, the great PASOK flip-flop. Nice.. Sensible Greeks, you have every reason to believe the two parties that brought you to the brink of financial DOOM will find the way back to prosperity! Good for you; Here's a participation ribbon! Rest up, Riot Dog; You'll be busy soon enough! Zero Hedge. Excerpts:
One of the biggest caveats from yesterday's Greek election result was that Pasok announced it would only participate in a broad coalition government that includes Syriza. Obviously Syriza promptly turned down the offer, which has now put the ball back in the court of the Pasok leader - Venizeloz. Being a career politicians, and knowing quite well what the final outcome of the Greek fiasco would be, it was only a matter of time before the former minister of defense, finance, and yes, sport, would flip flop, and hint that a government of just ND and Pasok would also work, as the alternative is just too harsh to even consider. In other words, we may shortly get a repeat of the precisely same leadership that brought Greece to 23% unemployment and a completely destroyed financial and economic system, with Veni back in the role of finance minister once again.
And:
Does this mean a Greek government just may happen, evading a 3rd Greek election in as many months? We will know for sure by tomorrow night, when Pasok said is the deadline by which a new government has to be formed. As for bets on the longevity of the new cabinet, we have no idea what the spread is, but we take the under.
What's the definition of insanity? Happy fun times are just ahead with your "new" old leaders, Greece! Opa! When you take back to the streets, remember to hydrate? It's gonna be a long, hot summer!
From Zero Hedge. Emphasis from post itself. Excerpts:
Five days ahead of the Greek parliamentary re-vote, the media propaganda machine has gone mute due to the moratorium on the RAND() known as popular polling: forgotten are the days when Syriza' popularity rating would swing from -100 to +100 in the span of hours, Diebold notwithstanding. Which leaves the media machine just one tactic: updates on the economic collapse as a tacit suggestion of what may happen if situation is not fixed. And while at this point it is nearly impossible to distinguish propaganda from fact, the latest numbers out of Kathimerini are just stunning. As Bloomberg's Marcus Bensasson reports, citing Kathimerini, the Greek banking system has continued to hemorrhage deposits this month, amid uncertainty over the outcome of elections on June 17.
..
"Deposits are leaving the banking system at a rate of 100 million to 500 million euros ($125 million to $625 million) a day, Kathimerini said, without specifying over how long a period that rate of outflow has continued."
And:
Putting this in the US context, which has over $8 trillion in various forms of deposits, this would be equivalents to about $25 billion getting withdrawn. Every day.
It all happens/accelerates next week!
If Greece Exits, Here Is What Happens Zero Hedge thinks maybe/grain of salt. More importantly, will Greece follow Iceland or Germany? Greek skata hits fan in three.. Two..
An unprecedented financial crisis is lurking on the horizon as Market Oracle warns of Greece’s exit from the Eurozone The Extinction Protocol. Excerpts:
What may be lost in the noise that is the mainstream press is the fact that Greece has not been in a recession or even a depression, Greece has been in a state of slow motion economic collapse on the scale of past economic collapses such as that of Argentina but so far without the ability to default, devalue and inflate.
And:
Greek politicians traded insults and accusations Sunday following an effort by President Karolos Papoulias to broker a coalition government, increasing the possibility of new elections in the debt-stricken country. Papoulias called together the leaders of the three biggest parties on Sunday, a week after indecisive elections and three failed attempts to form a government. A default by Greece could drag down other troubled governments such as Spain and Portugal. Europe is keeping a nervous eye on Greece, fearing that the political chaos there could lead to defaults on debt that could threaten the future of the euro. Greek failure — or refusal — to make debt payments could hurt banks across Europe. The eurozone economy is fragile, and any financial shock could plunge the region into a deep recession, a development that would ripple across the globe. A default by Greece also could drag down other troubled governments such as Spain and Portugal.
Merkel's CDU Trounced In Most Populous State Elections Over Austerity; Pirates Strong Also from Zero Hedge. Excerpts:
Another weekend, another stunner in local European elections, this time as Merkel's CDU gets a record low vote in the state elections of Germany's most populous state North Rhein-Westphalia. According to a preliminary projections by ARD, the breakdown is as follows:
•SPD:39%
•CDU: 26%
•Greens:12%
•Pirates: 7.5%
•FDP: 8.5%
•Left:2.5%
And:
Chancellor Angela Merkel's conservatives suffered a crushing defeat on Sunday in an election in Germany's most populous state, exit polls showed, a result which could embolden the left opposition to step up attacks on her European austerity policies.
Merkel remains popular at home for her steady handling of the euro zone debt crisis, but the sheer scale of her party's defeat represents a heavy blow that could tilt the German political landscape and leave her more vulnerable to domestic critics.
According to an exit poll for public broadcaster ARD, the centre-left Social Democrats (SPD) won 39 percent of the vote and will have enough to form a stable majority with the Greens, who scored 12 percent.
The two left-leaning parties had run a fragile minority government for the past two years under popular SPD leader Hannelore Kraft, whose decisive victory on Sunday could propel her to national prominence.
Merkel's Christian Democrats (CDU) saw their support plunge to just 26 percent, down from nearly 35 percent in 2010, and the worst result in the state since World War Two.
Merkel's attention will now be divided between the financial crisis and domestic concerns, like keeping her job. I think Germany has begun to de-stabilize. Albeit a long way away, this vote was a pretty visible step in that direction..
Three JPMorgan executives expected to resign over $2 billion loss This is only the beginning. Of everything.. Raw Story. Excerpts:
Three top executives at JPMorgan are expected to resign this week in the wake of a $2 billion trading loss.
The Wall Street Journal reported on Sunday that the three include Ina R. Drew, the head of the risk-management division responsible for the loss, along with the top executive and a managing director at the London branch that placed the trades under her direction.
According to several JPMorgan executives, Drew had offered her resignation several times since the extent of the losses became known in late April, but CEO Jamie Dimon had previously refused to accept it.
The situation changed however, when Dimon revealed the loss on Thursday and it led to a 10% drop in the firm’s stock price the next day. “We made a terrible, egregious mistake,” Dimon has since admitted. ‘There’s almost no excuse for it.”
The Jaime Dimon Countdown-To-Quitting clock begins!
Australia the most ‘obvious’ bubble in 30 years, says economist Financial Post. Excerpts:
As far as bubbles go, they don’t get more obvious than Australia, according to one economist and noted bear.
Albert Edwards, economist with Société Générale, put out a note on Thursday morning whose title says it all: “The biggest bubble in recent history is heading for the mother of all hard landings.”
Mr. Edwards cites Australia’s extreme reliance on the Chinese economy as the foundation for the current bubble. After all, Australia, a global heavyweight in mining, is dependent on the global commodity boom that China has largely helped fuel over the last decade.
“All we have in Australia, at its simplest, is a credit bubble built upon a commodity boom dependent for its sustenance on an even greater credit bubble in China,” he said.
And:
Mr. Edwards adds that the current bubble has been precipitated by the fact that Australia has not experienced a recession for more than 20 years — making investors complacent as a result.
“The absence of any recession since 1991 has led Australians to have an excessive appetite for debt in the belief the future will reflect the past,” he said.
And complacency, of course, is a big factor in bubble creation. That has led Mr. Edwards to conclude the following about Australia:
“Of all the bubbles I have seen over the last 30 years in this industry, this one is even more obvious than the rather prominent nose on my increasingly haggard face,” he said.
What we have here is some of them "Unintended Consequences" mixing with "Negative Death Sprial." Greece is boned, and that's good news for no one, including Germany. The entire post from Zero Hedge. Wow(Emphasis theirs)..
As if the Greeks haven't suffered enough from Northern European actions (admittedly in response to their own actions), it seems the anti-German sentiment is keeping the wealthy tourists away from the beaches. As Reuters notes today, 'German tourists are in short supply in Greece these days, frightened away by reports of visceral anti-German sentiment in some places'. Data for the main summer holiday season shows pre-bookings from Germany down by some 30 percent. We guess the pictures of Molotov cocktails being thrown, city-wide strikes, and cardboard cities full of unemployed youths was too much but as one Greek tourist-shop-owner clarified "They're not coming because of the problems. But we don't have a problem with German people, only their government." Tourism - the one remaining possibility for Greece to drag themselves out of the quagmire (aside from olive oil and yoghurt) - is now under pressure as The Germans ("That's just the way Germans are: if there's trouble in some country, then Germans just don't go there on their holidays.") wage "an economic war against Greece". Sadly the xenophobic and nationalist tensions are indeed rising (as we warned many times in the past - and suggest will be the ultimate undoing of the political compact in Europe) as the crisis had revived anti-German sentiment from World War Two that most thought had long since disappeared. "The Greeks moved on and tried to forget, then this. If you ask me, Germany owes Greece billions for all the murders and war crimes. Germany should pay Greece what it owes."
I think German economic reparations as a theme could have legs, especially in countries Germany destroyed just 77 to 83 years ago, especially in countries like Greece that faces yet another type of destruction, again by German hands.. This situation could hop, skip, and jump from old wounds, to bad blood, to visceral hatred much faster than the Germans can understand or quantify. Greece's economic crisis is just beginning to bloom. Germany, and the rest of the E.U. will all be impacted. After that, how much longer will it be before diplomacy, decorum, and civility are fully abandoned?
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