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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: skinowski who wrote (90656)	5/27/2012 3:53:20 PM
From: elmatador	Read Replies (1) \| Respond to of 217860

Greece's public finances could collapse as early as next month, leaving salaries and pensions unpaid unless a stable government emerges from the June 17 election, according to Lucas Papademos, the technocrat prime minister who left office after this month's inconclusive vote. Mr Papademos warned that conditions were deteriorating faster than expected with cash flow likely to turn negative in early June amid a sharp fall in tax revenues and a loosening of spending controls during two back-to-back election campaigns. Mounting anxiety that Greece is headed for further political instability and a possible exit from the euro has prompted many Greeks to postpone making tax payments, and has also accelerated outflows of deposits from local banks. Athens bankers estimate that more than €3bn of cash withdrawn since the May 6 election has been stashed in safe-deposit boxes and under mattresses in case the country is forced to readopt the drachma. The looming cash crunch was revealed on Sunday in an eight-point document published by the Greek newspaper To Vima. A senior government official confirmed its accuracy, adding that Mr Papademos gave the document to President Karolos Papoulias, who discussed it with political party leaders as part of a failed attempt to form a national unity government. "The state will face considerable difficulty covering its expenses in June," the document said. George Zanias, the caretaker finance minister, may try to divert up to €3bn from the Hellenic Financial Stability Fund – set up by official lenders to help recapitalise struggling Greek banks – to provide temporary support for the budget, a ministry official said at the weekend. But such a move could be opposed by the Fund’s board, which set aside the extra financing as a buffer in case of delays in implementing a €45bn recapitalisation plan agreed in March with the EU and International Monetary Fund as part of Greece’s €174bn bailout. The EU has held back €1bn from its latest tranche of bailout money pending formation of a stable government in Athens. Another option being considered is to raise larger amounts of short-term government debt at monthly auctions held to maintain a €4bn-€5bn cash reserve in case of emergencies, the same official said. Greece’s fiscal problems are purely domestic for the moment as its next sovereign debt repayment is not due until August, when a €3.3bn bond held by the European Central Bank and several other eurozone central banks is due to mature. Yet the knock-on effects of the tax shortfall are already being felt. The finance ministry has halted repayment of value-added tax to Greek exporters, and slashed public investment spending by more than 20 per cent in the first four months. Transfers to the health ministry to pay debts owed to hospital suppliers and pharmacies have been temporarily suspended, obliging patients to pay the full cost of prescription drugs for the first time. The struggling state electricity utility PPC has received a €250m special payment from the budget to help cover a widening deficit. The utility has been hit by a sharp rise in non-payments of household electricity bills after the finance ministry imposed an extra “solidarity tax” last year that was added to the bills. “The situation is getting out of hand,” said a private sector economist. “If a government is formed after the June election, it’s going to find that the fiscal programme agreed in March has already been derailed.” Five opinion polls published over the weekend put the centre-right New Democracy ahead of the radical left Syriza coalition, indicating that efforts by the conservatives to consolidate pro-bailout voters may be making progress. A poll by Kappa Research gave New Democracy as much as 25.8 per cent, against 20.1 per cent for Syriza, with the PanHellenic Socialist Movement trailing in third place with 13 per cent. The conservatives gained seven points over last week’s poll, their strongest showing since the May 6 election, after persuading leading members of the small centre-right Democratic Alliance party to join their campaign. The veteran New Democracy leader Antonis Samaras was seen as the most suitable prime minister with a 40.3 per cent approval rating, compared with 29.8 per cent for Alexis Tsipras of Syriza. Christine Lagarde, IMF managing director, appeared to row back from comments in an interview with the Guardian newspaper where she professed a lack of sympathy for some Greeks facing hardships including “those people who are trying to escape tax all the time”. In a comment posted on Facebook, Ms Lagarde said she was “very sympathetic to the Greek people and the challenges they are facing” . “The last thing we in Greece seek is her compassion,” Mr Tsipras said. Copyright The Financial Times Limited 2012 ibnlive.in.com

To: skinowski who wrote (90656)	5/27/2012 5:04:56 PM
From: Snowshoe	1 Recommendation Read Replies (2) \| Respond to of 217860

These quotes from the article you posted make me wonder of Germany will pull out of the euro... The Separation of Bank and State - By David Zervos The euro monetary system is flawed. It is a system that was cobbled together for political purposes; and sadly it was set up in such a way that each member state retained significant sovereign powers – most importantly the ability to exit the system and default on debts in times of stress. There is virtually NO federal power in the Union, as witnessed by the complete breakdown of the Maastrict and Lisbon treaties. In fact, what we are seeing today is that the structure of the monetary system is so poorly designed, it actually creates perverse fiscal linkages across member states that incentivize strategic default and exit. *** Can anyone in the US imagine ever designing a system so fundamentally flawed? It’s insane! Without some form of FDIC insurance and national banking resolution authority, the European Monetary System will surely tear itself to shreds. In fact, as Target2 imbalances rise, it is clear that Germany is already being placed on the hook for Greek and other peripheral deposits. The system has de facto insurance, and no one in the south is even paying a fee for it. Crazy! *** The reality is that European Monetary System was broken from the start. It just took a crisis to expose the flaws. Because the member nations failed to federalize early on, they created a structure that allows strategic default and exit to tear apart the entire financial system. If the Greek people get their euros out of the system, then there is very little pain of exit. With the banks and government insolvent, repudiating the debt and reintroducing the drachma is a winning strategy! The fact that this is even possible is amazing. The Greeks have nothing to lose if they can keep their deposits in euros and exit!

To: skinowski who wrote (90656)	5/27/2012 6:37:27 PM
From: skinowski	Respond to of 217860

edit

To: skinowski who wrote (90656)	5/28/2012 9:40:19 AM
From: Hawkmoon	Read Replies (1) \| Respond to of 217860

Yep.. that was a pretty well written article.. I subscribe to his email newsletters, if only for the insight provided by many of Mauldin's associates. There really isn't much choice for the Greek people, except to "pull an Iceland" and "reset", especially for the lower and middle class who would bear most of the burden of increased taxes (wage and sales tax based) because the wealthy are damn good at tax avoidance. Same will go with Spain, Portugal, and Italy. The question will be whether they leave the Euro, or whether the German people ultimately force Merkel to take Germany out of it to avoid being left holding the bag. Hawk