Tuesday, 1 November 2011

Greece risks meltdown after bailout vote bombshell

Hmmm, did the Greeks get their tanks from the US? Am I being paranoid, but it struck me that this little lot might just have been arranged earlier, knowing what was at hand. Just a thought!

Greece risks meltdown after bailout vote bombshell

The Greek government faced possible collapse on Tuesday as ruling party lawmakers demanded Prime Minister George Papandreou resign for throwing the nation's euro membership into jeopardy with a shock call for a referendum.

Caught unawares by his high-risk gamble, the leaders of France and Germany summoned Papandreou to crisis talks in Cannes on Wednesday to push for a quick implementation of Greece's new bailout deal ahead of a summit of the G20 major world economies.

Posted by Britannia Radio at 21:41


Grrrr – eeeeek - by Richard... Tuesday, November 01, 2011

UPDATE: In a surprise move, the defence minister has proposed the complete replacement of the country's military chiefs of staff - the chief of the Greek National Defence General Staff and all the service chiefs (pictured below). It is understood that the personnel changes took many members of the government and of the armed forces by surprise. What did we say at the end of this piece? Was this to pre-empt a military coup?


UPDATE: "This was completely unanticipated ... It is not needed and it is just sort of an internal political thing," said John Canally investment strategist and economist for LPL Financial in Boston. "This vote in Greece is going to hang over the market for next week or so, unfortunately".

UPDATE: Stocks are falling even harder now on talk that the Greek government may be on the verge of collapse, says the WSJ Clog.

All 10 groups in the S&P 500 fell as financial and commodity shares had the biggest declines, saysBloomberg Morgan Stanley and Citigroup Inc. retreated more than 7.2 percent as a gauge of European lenders tumbled 6.7 percent. Alcoa Inc., Boeing Co. and Cisco Systems Inc. decreased at least 3.4 percent, pacing losses among companies most-dependent on economic growth. Baker Hughes Inc. sank 8.6 percent as earnings missed analysts’ estimates.

The S&P 500 fell 2.6 percent to 1,221.35 as of 12:15 p.m. New York time. The benchmark gauge for U.S. equities slumped 2.5 percent yesterday. The Dow Jones Industrial Average declined 277.68 points, or 2.3 percent, to 11,677.33 today.

"I just don’t get it", says Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust in Boston. "A Greek referendum is a very risky proposition. Everybody thought last week that this crisis was behind us on a near-term basis, but Europe is going to be front and center".

UPDATE: Caught unawares by his high-risk gamble, says The Irish Times, Merkel and Sarkozy have summoned Papandreou to crisis talks in Cannes tomorrow. They will push for a quick implementation of the bailout deal ahead of the G20 summit. And the Athens Stock Exchange has suffered its biggest daily drop since October 2008, with the general index shedding 7.7 percent.


The lines are 'umming, the Progressive Contrarian is being, er … contrarian, Helen warns that you should never play poker with Greeks, Ambrose is being Armageddon-ish and Bruno is saying that there has to be a three-fifths majority for a referendum, so it ain't going to happen. Mary Ellen Synon ruminates about Greece being chucked out of the euro, and says that can't happen either.

The Daily Wail has taken tits and bums off its lead long enough to tell us that the markets are in freefall, and that MF Global has gone bankrupt. Merkel is said to be stunned and Sarkozy "dismayed". From over the Atlantic, the New York Times is talking of the Greek government being plunged into chaos, with the prospect of a collapse that would not only render the referendum plan moot but likely scuttle — or at least delay — the bailout.

Everything is on hold now, waiting for the great Merkel to speak. But I've already written her speech. It's the title of this piece.

COMMENT: "JOKER" THREAD

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Happiness, happiness - by Richard...

It struck me the other day that, with great events afoot, how irrelevant our own political establishment has become. Then, as if to confirm this, up pops the moronic Boy. His particular piece of fatuity this time is having the ONS spend £2 million over the course of a year working out what questions to ask for his happiness survey.

What Dave clearly does not seem to appreciate, though, is that the happiness of a growing number of people would be best secured by an announcement of his own departure from politics.

COMMENT THREAD

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Exposure - by Richard...


Well, as pointed up yesterday, the "Exposure" documentary on bailiffs was aired on ITV1. It is now available on the web. For the record, I thought the programme pulled its punches, its only real high spot being a bravura performance by Austin Mitchell, whose daughter had been caught out by a bailiff seeking to recover a fine of which she was totally unaware.

The worst of the programme was that it starting off on a false premise, declaring of the star of the programme, bailiff John Boast - who had worked for Rossendales for three years: "There are no laws governing how he conducts his business – only guidelines", intones the voice-over. Of course there are laws, not least the Fraud Act 2006 – but you never get a hint of that from the programme.

Boast was recorded by an undercover reporter working for Exposure. He applied for a job as a trainee … the post needs no formal qualifications, just personal and previous job references, giving no hint that the job of bailiff does require a formal "qualification", a certificate from a judge after an oral examination - a process which brings in a raft of additional laws.

With some irony, the egregious Boast complains of the debtors not respecting the law, yet himself gallops a coach and horse through the law, breaking almost every one you can imagine.

The programme was two weeks late in transmission, having sustained a major assault from the bailiff industry, trying to keep it off the air. And the effort during the programme was made to present Boast as a "rogue bailiff", as does the damage limitation after the event.

However, Boast's exposition of the economics of the industry tell the story. "The pen will make you money" he told his "trainee", advocating the very practice of "phantom visits" about which I have complained. Basically, if the bailiffs play it straight, they cannot make a decent living.

Here, one has a little sympathy for the people engaged. They have to make a living, and someone has to do the job ... we cannot have a situation where debts go unpaid and there is no enforcement. But then, the rationale is the same as any thief ... they need to make money, and obeying the law becomes optional.

What was also very interesting is the claim by Rossendale that they have very few complaints. But here, the system is designed to deter complaints. It is a closed loop which always refers you back to the bailiff about whom you wish to complain ... with results we saw with Boast's attitude, while the local authorities turn blind eyes.

Boast is working for Hounslow council which runs a good line in BS. It was "appalled by the allegations about John Boast" and "takes them very seriously". It says it has a "rigorous complaints procedure". It "continually reviews the provision of its bailiff services" and will be "looking to minimise the risks of any repeat behaviour".

As to Rossendales, Boast had worked three years for the company and had "visited" 7,000 premises, "yet we've never had a complaint about him". Right!

The great disappointment with programme though was its failure to mention the Fraud Act and the role of the police. And while the police have enough on their plate, the ultimate regulator has to be the constabulary, insofar as there are very clear breaches of the criminal code. Perhaps a jolt to the system will force the pace, and bring on the very necessary reform.

If, on the other hand, one has to rely on low-grade documentaries of the "Exposure" variety - a programme which buys into the "rogue baliff" meme and calls for "more regulation" – the public will remain as ill-informed as they ever have been. Why people think the "telly" will ever be able to do a worthwhile job is one of life's great mysteries.

COMMENT: "BAILIFF" THREAD

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I'm shocked - by Richard...

It's like last week never happened, wibbles The Failygraph. The FTSE 100 is now trading at around 5,400 points - below the level it reached after the bail-out was agreed in the wee hours of Thursday morning.

I almost feel like sniggering. What did they expect?

Posted by Britannia Radio at 21:24



David Marsh

MARSH ON MONDAY Archives | Email alerts

Oct. 31, 2011, 12:00 a.m. EDT

China advocates Europe borrow in renminbi

Commentary: If you want a friend in Beijing, get a dog

by David Marsh, MarketWatch

BEIJING (MarketWatch) — In the wake of last week’s new deal on European debt, China is serving up a steely reminder to Europe: you may have to start borrowing in renminbi to gain a sympathetic hearing from the world’s largest creditor.

Already officially enshrined by U.S. Secretary of State Hillary Clinton as bankers to the world’s biggest debtor the Americans, the Chinese have no wish to become, too, a last-ditch lender to the Europeans. The idea of renminbi borrowing has been put forward by Beijing advisers and officials as a way of lowering Chinese foreign-exchange risks caused by further exposure to Europe — and also of using the Europeans’ latest discomfiture to advance China’s international monetary-policy agenda.

If this happened, it might pave the way for the U.S. Treasury eventually to issue renminbi-denominated paper — a momentous moment in world monetary history .

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Europe's week ahead: ECB, G20 meetings

Investors are awaiting an interest-rate decision from the European Central Bank and the meeting of the Group of 20 leading economies in France next week.

Klaus Regling, the head of the European EFSF rescue fund, was in Beijing on Friday to display to his Chinese hosts the latest selection of wares from Europe’s bargain-basement bailout bazaar. During his visit, when he gave a lecture at Tsinghua University, Regling did not rule out renminbi funding in future.

It was a mistake for the European authorities to give the impression that Regling’s visit was part of a post-summit funding spree. Publicity surrounding his journey to Beijing immediately after the Brussels summit was bound to raise expectations to unmanageable heights.

The Chinese were already unamused by last week’s European Union postponement of regular high-level consultations because of the elongated EU summit. Allowing headlines to develop — however unrealistically — that Europe expects Oriental largess to flow in the wake of the bailouts was not a clever move.

Regling somewhat unwisely commented that China had been “a good, loyal” buyer of EFSF bonds in the past. Confusing day-to-day bond market sentiment with human characteristics like loyalty appears to suggest a fundamental inability to understand what markets are all about: making money.

Unfortunately that’s exactly what investment in Greek bonds has not done for those holders luckless enough to be sitting on 50% losses on the face value of their purchases. Never in the field of bond market write-downs has one country’s credit standing — Greece’s — been verbally defended by so many, to so little avail. China is not likely to forget that when the next crowd of European sovereign-debt salesmen hits town.

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The Chinese have shown impatience with Europe’s stop-start approach to the European debt crisis. Like other large investors throughout Asia, they are surprised that travelling Europeans expect them to buy bonds from hard-pressed European governments when the institution they have expected to be the lender of last resort, the European Central Bank, balks (for whatever reason) at staunching the rise in Italian bond yields.

Certainly, any expectation by Regling — who was at pains to point out that his trip represented “one of my regular visits” to China — that his foray will result in new bonds of financial friendship looks likely to go unrequited. One has to adapt only slightly Harry Truman’s phrase: “If you want a friend in Beijing, get a dog.”

In a telephone call on Thursday to discuss this week’s G20 summit in Cannes, President Nicolas Sarkozy explained the latest bailout measures to President Hu Jintao. The Chinese leader said he hoped they would “help Europe stabilize financial markets, overcome difficulties and push forward economic recovery and development,” according to the Chinese Foreign Ministry’s website. Well, that’s all right then.

Chinese officials say that, rather than considering further bilateral lending to Europe through the byzantine assortment of additional EFSF instruments, China is far more likely to agree financing via additional multilateral agreements with the International Monetary Fund. These would provide the Chinese with more leverage over conditionality, expose them to fewer risks and also allow the emerging-market economies as a bloc to lay down the law more effectively with regard to the Western nations that still dominate the Fund.

Chinese observers say the Beijing government is under more pressure than ever before from an alert Internet-savvy public to resist cash appeals from errant European governments when millions of ordinary Chinese are struggling with worrisome social, economic and environmental conditions and even abject poverty.

One well-connected Chinese source points out that, during the Asian currency crisis, Koreans sold gold to help the government, whereas the Greeks go on strike. He underlines that, even if Europe does get more vendor finance from creditor countries, China is not expecting Europe dramatically to increase its higher value imports from China . “We export a lot of labor-intensive products, we get dollars in return, we buy euro bonds, and they decline. We’d be better of investing in developing countries’ infrastructure or buying high-tech European companies.”

David Marsh is co-chairman of the Official Monetary and Financial Institutions Forum.

Comments on this story

101 Comments
Oldest comments listed first

siteleader 1 day ago

+1 Vote
I also think that we will be hearing soon of a new gold reserve from China. They have many gold mines there and are the largest in the world at refining metals, especially silver. I also think they are fighting many large banks that are shorting the metals and standing for delivery. If JPM et al are naked shorting gold they should be afraid, though with their arrogence I don;t think so.

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ThoughtfulMonkey 1 day ago

0 Votes
Europe is China's largest export market - even ahead of the US. IF Europeans are holding a large amount of renminbi/Yuan denominated debt then that effectively pegs the value of the Euro to the value of the renminbi/Yuan so that China can allow their currency to float against the US Dollar - which would be an effective strategy for helping China to try to counter rapidly inflating energy costs.

China is betting that they can allow the Yuan to float against the USD (and reduce energy cost inflation) so long as they have enough contracted debt to substantiate a strong Euro/Yuan currency link - preventing the possibility of loss of Chinese exports to Europe.

This is not China being evil, it's just the Chinese being ... more
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pioneer 19 hours ago

+1 Vote
China is going to do what is the BEST interest for China. Talking about China wrecking the US economy would be the same as China committing economic suicide. China now has major problems. If the world economy slips into a full blown recession China will be one of the first countries hardest hit.
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enemynumberone 18 hours ago

0 Votes
Don't kid yourself, China isn't as reliant on us buying junk as we are on them loaning us money...they have the ability to make things, and we don't. Business has for the most part left the U.S. and no country can be wealthy without a manufacturing base.
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traderjoeny 5 hours ago

0 Votes
yes and half of things produced in China now go to emerging affluent middle class. they DO NOT depend on US 'consuming' chinese sh*) anymore.....

US is already third world. most in gilded mansions don't know it.
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indianajohn 8 hours ago

0 Votes
Counterfeiting vs manufacturing. And the decay product of the dumbing down of white man.
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Tessarajan 6 hours ago

0 Votes
Chinese YUAN Very expensive, Europe should BORROW INDONESIA RUPIYAH, is Very CHEAP, look at example ---- 100USD = 1 000 000 Rupiyah, so EU can obtain TRILLIONS,and easy to solve DEBT problem.
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Posted by Britannia Radio at 20:55

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