Greeks vote to reject incumbants, austerity

[aleCcowaN]

Very interesting the survey made by Endeavour Greece and published yesterday.

I had underestimated the memory of the bank deposits being levied 47.5% in Cyprus a few years ago. If you, like me, had forgotten, they had "solved" the bank equation by confiscating part of all bank deposits above 100,000€. That is, if you had 100,000€, you continued to have them; if you had 200,000€ in a bank account, now you had 152,500€, and if you had 1,100,000 you got 625,000 left.

That is the ghost behind the run on the banks. In the survey, made among 300 business managers -I'd criticize it a lot, but in the economy forum- it is told that 54% of them believe there are going to be haircuts in bank deposits, and 22% of the total sample think the cuts are going to be more than 25%.

Not surprisingly the cash in the hands of the public has raised by the end of June to 50,500 million euro, from 45,200 by the end of May. The appetite for cash can't be quenched. Only capital controls keep it from raising without stop. At the same time, so much capital has fled the country that the banks are indebted with the ECB in 38,000 millions, almost 90,000 millions more on ELA, which means above 100,000 millions in loans are kept by the ECB as a guarantee for payment.

Greek banks are thought to have a "negative capital" now, an aberrant situation I suppose nobody wants to address to avoid throwing more fuel into the bonfire.

 

[aleCcowaN]

The parade of Halloween Eve like statistics completes with fresh data from ELSTAT and the government results.

In May, manufactures had dropped 4.2% when compared with the same month last year. Mines and quarries output had dropped 8.7%.

And what about public finances? Well, be sure you're sitting. Public revenue felt during the first quarter. Income was 16,817 million, a 6.2% drop when compared with the 17,917 of 2014-I. What about public expenditures? You guessed, they went up: 20,809 millions, a 4% more than the 20,006 millions one year ago. So the deficit sky-rocketed, from 2,085 to 3,992 million. But maybe they were paying their debts. Well, public debt shrunk, but they paid squat: 1,900 millions last year, 1,700 this one.

Now, all of you can connect the dots and "guess" what is going to happen sooner than later.

 

[aleCcowaN]

Following the troikish logic of "no reforms, no money", today they have a parliament session with a mega-bill, surely to pass, including reforms in the banking system and civil code guaranteeing bank deposits under 100,000 €, making bank creditors and shareholders and not taxpayers the first to bear the loses of future bank failures (are they afraid of something imminent? ), that is, if you have much money not trapped in the current corralito you better think in nice welcoming banks in Frankfurt or Zürich ().

It also provides an expedite way to get money back through forced home foreclosures (I wonder if in the "friendly" "American" style), with the only sensitive exception of a tiny only roof over the family's heads.

Their financial genius has arrived early:

Much ado from Greeks and people living or reporting from Greece (not me ) about his "haircuts". I add from my isolated, gratuitous and agnostic-reality point of view -so defined by others- that he, like all the populists and pseudo-leftists who we elect for them to learn at our expense, is now finally getting how he has to dress to discuss billions. He left back those mechanic-in-a-garage looks of Brussels. I hope he's not overdoing it and returning to Brussels wearing a tuxedo. A funeral parlour manager or funeral director style would suit him better.

 

[CapelDodger]

Now, all of you can connect the dots and "guess" what is going to happen sooner than later.

I guess, sooner or later, the Sun will go out.

I'm far from convinced many of the dots connect to each other coherently anyway. I'm going to kick back and watch for the spectacle of it, not the betting.

 

[aleCcowaN]

I guess, sooner or later, the Sun will go out.

I'm far from convinced many of the dots connect to each other coherently anyway. I'm going to kick back and watch for the spectacle of it, not the betting.

I expect last quarter this year, Greece's GDP down 10-12% from last quarter last year and public revenue dropping 10-15% and public deficit still going up no matter the desperate cuts. It all go that way until the ECB pulls the plug on their +900 millions a week on ELA. I don't know what is coming first, no more cash so there's nothing to give in banks and ATMs, or a default because all public accounts go red or the Troika pulls the plug because some condition to negotiate in the near future isn't met, or the ECB calling for the liquidation of the entire Greek banking system. Whatever the means, default, lack of cash or banking crash, we're saying goodbye to Greece in the Eurozone later this year or during the next Winter at most.

My estimation is that if the bluff is not called soon the Greeks will have some 70,000 million euros in banknotes stashed, which would be enough to negotiate a bi-monetary system or to reintroduce the drachma without letting it drop much below the euro, maybe a 15 or 20% in the mid-term (25-40% at first), putting an end at last to this festering economic depression and unbelievable unemployment.

On a side note, the Dantesque scenes we are going to see in the Greek stage are in fact a boost for Podemos and any other populist, nationalistic, socialistoid or chauvinist forces all around Europe. Their best campaign "look what the Eurozone's medicinal syrup did to Greece when they consented and swallowed it!". Let's face it, people who has the 90% of the money to be lost are only 10% of an electorate, and people who has the 10% left are 99% of the unemployed. It's not an ideology, unless common sense and decency are ideologies.

 

[McHrozni]

The parade of Halloween Eve like statistics completes with fresh data from ELSTAT and the government results.

In May, manufactures had dropped 4.2% when compared with the same month last year. Mines and quarries output had dropped 8.7%.

And what about public finances? Well, be sure you're sitting. Public revenue felt during the first quarter. Income was 16,817 million, a 6.2% drop when compared with the 17,917 of 2014-I. What about public expenditures? You guessed, they went up: 20,809 millions, a 4% more than the 20,006 millions one year ago. So the deficit sky-rocketed, from 2,085 to 3,992 million. But maybe they were paying their debts. Well, public debt shrunk, but they paid squat: 1,900 millions last year, 1,700 this one.

Yikes.

I've red that Syriza will cost Greece €50 billion. Apparently that was an understatement.

McHrozni

 

[McHrozni]

Basically he says the plan means more economic hardship and misery and the Troika has created the worst conditions for reforms to succeed.

I think that Troika has long since realized most of Greek debts will have to be written off at some point. The difference, however, is when and how will that happen. If Greece can be persuaded (at gunpoint) to reform and debts are written off, then Eurozone solved a massive problem within it's ranks and can move towards making the EMU sustainable (by forming a political union, preferably). If Troika folds at Greek economic suicide gunpoint and Greek debts are written off and the whole issue is just hand-waved away "we can afford it", the EMU, EU and more are bound to fail within a few years.

You could say politics trumped economics, but I think it's more accurate to say there's much more to economics than mere economy.

MCHrozni

 

[Hlafordlaes]

If these numbers are anywhere close to right, Greece has zero hope unless there is a substantial haircut and restructuring.

 

[aleCcowaN]

If Troika folds at Greek economic suicide gunpoint and Greek debts are written off and the whole issue is just hand-waved away "we can afford it", the EMU, EU and more are bound to fail within a few years.

You could say politics trumped economics, but I think it's more accurate to say there's much more to economics than mere economy.

I'd say that economics trumps politics in this case. And you're right, the EMU and EU are in danger if they don't make deep changes.

Regarding "the euro made the Greek crisis and not the other way around" I've started a specific thread in the Economic, Business and Finances sub-forum, as the technical aspects and number crunching may be unsuitable for many posters participating in this sub-forum.

 

[CapelDodger]

If these numbers are anywhere close to right, Greece has zero hope unless there is a substantial haircut and restructuring.

Hard to see it any differently. The question seems to be when and how that is acknowledged and who goes first.

I agree with McHrozni that it was not going to be acknowledged until the Troika got at least what they have done nailed down. A sclerotic legal system, crazy labour practices, and a predatory bureaucracy make for a terrible business environment and poor prospects for privatisation. That's changed already, I suspect.

 

[aleCcowaN]

Two more graphics. Greeks consulting a website specialized in jobs in Britain:

And how the GDP evolves. You can already imagine a value of -27.5-28 for Q2 2015, and by Q4 I'm pretty sure that graphic is needing a new step down bellow. Of course, info will come late as it's usual with official statistics in Greece.

 

[dudalb]

Yikes.

I've red that Syriza will cost Greece €50 billion. Apparently that was an understatement.

McHrozni

Nothing compared to what Podesta would cost Spain if they got into power, since Podesta;s ideas are even crazier then Syriza's.

 

[CapelDodger]

Nothing compared to what Podesta would cost Spain if they got into power, since Podesta;s ideas are even crazier then Syriza's.

I don't think Syriza and the Greek experience are going to be any advertisement for Podesta, or any leftists for that matter, even the practical rational ones. That, I suspect, will be the main legacy of Syriza.

That's leftist options consigned to medium-term oblivion. Rightists remain a concern, in my opinion. As for the centre it's not got much of a clue, really, has it?

 

[aleCcowaN]

Nothing compared to what Podesta would cost Spain if they got into power, since Podesta;s ideas are even crazier then Syriza's.

There's no Podestá in first or second row politics in Spain today (Podestá is a Ligurian surname, common in Argentina but rare in Spain). Who is this guy Podestá of yours? Your own version of Emmanuel Goldstein?

 

[Hlafordlaes]

Name of the party is "Podemos." I hear them on TV every day. Agree with dudalb, these people are freaking nuts, and admire Venezuelan leadership. Their policies read like a letter to Santa; all wishful thinking without any hint of a notion that one thing might be connected to another in this complex world.

That said, there is also a hard push by the right to enact a new law while it still has the majority, prior to upcoming general elections. This law would stipulate that the party recieving the largest plurality of votes in any election must run the government, and the other parties may not join in a majority pact (simplifying, but not much). You can do the math for yourself and find many ways to understand that as a near coup-like law.

Meanwhile, the change in the monarchy was evidently to set a new and fresh popular face in the bully pulpit, mostly to beat up on the Catalans.

Busy today, but hopefully at some future time we could take up that topic, Catalan independence. Contrary to outside perceptions, I find its motives quite founded. The rushed implementation of a political way to declare independence is sure to doom any real chances, which do exist. A shame, as it would boil down to modernity finally throwing off the clutches of old Catholic fascism if Catalunya were to successfully break away.

ETA: Lost my train of thought. Should add that Podemos and other fringe movements are the quite natural popular reaction to a closed system, at least in Spain rampantly corrupt, that is allowing little real voice. The fault lies squarely with the traditional parties for dropping the ball... hiding it, selling it, lying about that, then dropping it again.

 

[McHrozni]

Nothing compared to what Podesta would cost Spain if they got into power, since Podesta;s ideas are even crazier then Syriza's.

Probably, which is why Syriza must fail. Yielding to them will only empower the crazies elsewhere, starting a chain reaction where everyone will suffer. Whether or not this can be described as "democratic" is up to debate.

McHrozni

 

[McHrozni]

That said, there is also a hard push by the right to enact a new law while it still has the majority, prior to upcoming general elections. This law would stipulate that the party recieving the largest plurality of votes in any election must run the government, and the other parties may not join in a majority pact (simplifying, but not much). You can do the math for yourself and find many ways to understand that as a near coup-like law.

Hm. Anyone marginally familiar with Venezuelan situation and who admires Venezuelan leadership should find a law like this to be very good and proper.

McHrozni

 

[McHrozni]

If these numbers are anywhere close to right, Greece has zero hope unless there is a substantial haircut and restructuring.

As I said earlier, I imagine the Troika knows this well. This can be used to persuade Greece to become sustainable in exchange for debt relief, however.

Just writing their debts off would appear to solve their immediate situation, with a new problem arising a few years - maybe even a decade or two - down the line. Plus, of course, Spain is a problem that must be prevented, since it can't be solved.

McHrozni

 

[McHrozni]

On a side note, the Dantesque scenes we are going to see in the Greek stage are in fact a boost for Podemos and any other populist, nationalistic, socialistoid or chauvinist forces all around Europe. Their best campaign "look what the Eurozone's medicinal syrup did to Greece when they consented and swallowed it!". Let's face it, people who has the 90% of the money to be lost are only 10% of an electorate, and people who has the 10% left are 99% of the unemployed. It's not an ideology, unless common sense and decency are ideologies.

Thankfully this was proven wrong.

http://www.businessinsider.com/podemos-falling-in-spanish-polls-2015-7

But in the wake of Greece's most recent bailout negotiations, Podemos' popularity has begun to slide, and markets have all but ruled out the possibility that Podemos will take power in a Syriza-like fashion.

McHrozni

 

[aleCcowaN]

The problem is there was no "Plan B". No, wait! the problem is there was some sort of "Plan B". No, wait! the problem is that they're talking about a "Plan B". What is this Varoufakis guy trying to do? Sabotage the talks? Jinx them? Is he a secret agent of Golden Dawn?

C'mon! We have now to add Grexit to Seinfeld's list of things that make people whisper:

rich people: "there's a lot of money around"
black people: "talk to the black guy"
cancer: "it might be cancer"
tipping: "did you tip?"
sexual attractiveness: "she's so hot!"

Grexit is like cancer. If you don't talk about it, it won't get you. If you talk about it, you're summoning it. With such kind of thinking no wonder the economy is so forked up. And also no wonder such kind of thinking escape the attention of the self-called skeptics.