The European Shell Game

 

European links

Four from Spiegel: 

'Even a 1-Trillion Euro Firewall Wouldn't Be Enough'(whoops)

Amid Debt Crisis, Athens Falls Apart (Who would have guessed? *rolleyes*)

Despite Progress, Euro Crisis Is Far From Over (bleeding obvious but worth a read never-the-less)

'The Problem Has Only Been Deferred' (I'd say transferred to the public from the banks and deferred)

Three from ZeroHedge:

Greek Deposit Run Update: Hopeless And Getting Worse  (I've said on this blog before - watch the money flows!)

 

Europe's Scariest Chart Just Got Scarier (I've written here before - remember the 1920s in Germany and what eventuated)

The Greek €107 Billion Contingent Liability Gorilla Exposed (It just gets better!) 

A Dose of Reality:

1. If Greece borrows money from the IMF/EU which means that they have more debt now than they did before they defaulted then they are worse off and not better off as they have a larger debt.
2. If Greece has an additional $107 billion in debt that has not been accounted for because it is not in the name of the Hellenic Republic but is guaranteed by the Hellenic Republic then how are they going to pay off this debt?
3. If the goal of this entire exercise was to reduce Greece’s debt to GDP ratio to 120% then how will a larger debt accomplish this as it is fiscally impossible.
4. If the “real REAL goal” was to pay off the European banks so they wouldn’t default then Europe has accomplished this goal but at a terrible cost to Greece and to the Greek people.

New York Times:

Ranks of Working Poor Grow in Europe (Betcha none are bankers)

Finally, from Bloomberg, what actually occurred (must read!):

Greek Restructuring Delay Helps Banks as Risks Shift (Kleptocracy at its best)

Delaying Greece’s debt restructuring by more than a year reduced banks’ potential losses as firms trimmed their holdings and most of the risk shifted to European taxpayers. 

Just a redesigned Shell Game.

“This is a horrible deal for the EU taxpayer,” said Raoul Ruparel, chief economist at Open Europe, a London-based research group. “The longer we wait for these restructurings, the worse the deal gets for the public. There’s an ongoing risk transfer from the banks to the taxpayers.” 

 The new borrowing -- in effect, replacing private with public debt -- will amount to 78 billion euros, according to the EU, leaving the actual relief from the swap at 59 billion euros. Greece also will need to draw money from a second, 130 billion- euro EU and IMF rescue fund to repay other private debt and finance the government’s budget deficit. 

And, Greece's total debt?

That will leave Greece’s debt at 161 percent of gross domestic product at the end of the year, 4 percentage points less than the current level, according to a March 11 report by the European Commission. The ratio probably will return to 165 percent in 2013, the commission said.  

Got that? Greece's debt is a mere 4 percentage points less and debt will be back to 'normal' in 2013 whilst most risk is now on the EU taxpayer.

When all IMF and EU loans promised to Greece are disbursed, 66 percent to 75 percent of the country’s debt will be held by the public. In 2010, before the first bailout and before the European Central Bank started buying its bonds, Greece had about 310 billion euros of debt, all held by the private sector.  

If Greece has to restructure again, or defaults, taxpayers will be on the hook.

“The swap doesn’t achieve debt sustainability for Greece,” said Nicola Mai, an economist at JPMorgan Chase & Co. in London. “Debt relief going forward will have to come from the public sector.”

Anyone that can't see the European Monetary Union is a Kleptocracy and in full self destruct mode [whilst its citizens get royally screwed], deserves what's coming to his/her investment holdings.