Tomorow is national NO day for Greeks everywhere. It is the 71st anniversary of that day in 1940 when the Greek prime minister refused passage to the Italian ambassador. Passage was a way to ask for sovereignty over another land. It is a way to declare war and blame the other party for it. "Will you grant me passage" is the question and if the answer is "no" then one just passes by force. In the fifties war was rebaptized as a "police action". Nowadays things are much more confusing.
Today, October 27th 2011 will go down in history as national YES day. As opposed to that day when we said no to fascism 71 years ago this is the day we say yes to credit write off. I am not sure how it works, nobody realy is, but we are erasing one half of our debt in some kind of strange agreement with our European partners. We can all sigh a sigh of relief knowing that half of that national debt of ours was finaly miraculously erased. In the same way it appeared it simply vanished. A debt of 300-700 billion euros, depending on who you believe, will now be reduced to 150-350 billion euros. By 2020 it should round out to 120% of GNP. That is if we continue to raise taxes, drop salaries and reduce pensions.
I am filled with awe as I look around this great country of narrow sidewalks, roads filled with potholes, third world school fascilities and MASH style hospitals. Of ill health care, of line-ups, of red tape, of a corrupt civil service, of non-existent government services on all levels. I look around at our glorious leftover infrastructure so little changed from the days of our little military junta. Those habits of favouritism and who you know civil service were so well entrenched that a quarter century of democracy could not erase. Even joining the EU could not undo these old habits. The EU has bad habits of its own. It is science fiction to believe that even one tenth of that debt has ever been spent in Greece.
So what ever happened to the Alexander The Great Plan? Just stay tuned...
Πέμπτη 27 Οκτωβρίου 2011
Σάββατο 15 Οκτωβρίου 2011
great algorhythm, great plan, what it means to you...
Using loans to underwrite loans is a bad policy in general. It is similar to using your VISA card to borrow cash for your mortgage payment. Governments have been doing this as a regular practice since the Reagan years. They have had no choice as the rules set back in the eighties make it cheaper to borrow money than to print your own. Imagine you are a government issuing bonds and with the money from them paying off past loans in the hopes that economic growth will offset the net loss in interest and allow you to dig your way out of the debt hole. The only other option throughout the entire decade of the 90s was to devalue your own currency to help balance the books. Canadians know exactly what this means with their 85 cent dollar. Funny how it is cheaper to shop south of the border regardless of the weaker currency.
Ever realy wonder about that. How is it possible with a weaker currency that you still get more for your buck even after taking a beating on exchange? I don't know exactly how that mechanism works but I do know that it helps you sell bonds and guarantee a higher rate of return. Greek bonds of the pre-euro era guarantee a return of 5-8%, much much higher than any other European Union member bond of the same era. Investors bought these up like candy and in 2001 the Greek drachma locked in at 340 drachmas to the euro, or 410 drachmas to the US dollar, forever. We good citizens took all our cash to the bank and were issued new funny looking bank notes in return for our old ones. The euro had arrived and the drachma was no more. Or was it? Bond holders got to cash in eight years later, 2009, and not only get a high return but also cash in on the higher euro by exchanging the bonds at the '01 fixed rate inflating their worth an extra 45% against the dollar. Like shopping south of the border in those brief periods when the loonie is suddenly worth a buck ten american. A landfall for sure.
The Greek government can no longer devalue its currency to offset this loss. But it can issue new bonds at a lower interest. Euribor is the interest rate of the central European bank, Budensbank in reality, and Greece was well within its rights to buy back its '01 bonds of 5-8% returns at the new rate of Euribor plus 1 point or 2.2%. Can you imagine remortgaging your home and dropping 3-5 percentage points off your loan? It would save you over 50% or one half of your payment. A good deal.
Well what's good for the goose is good for the gander eh? Sure unless the goose decides to snap it away dude. The European north that has so largely invested in the south and then spent the difference investing elsewhere was not about to stop chewing the fat. Euribor is great unless of course you lose your credit rating and then nobody will buy your bonds. This is the equivallent of being trapped in your old mortgage at a higher rate because no bank will issue a new loan. It is the oldest mechanism of keeping the poor poor and making the rich richer. Someone who doesn't realy need a loan gets a much cheaper rate from the bank than someone who is desperate to borrow. Only makes sense eh?
So what can the meek do in order to inherit the Earth, eh?
Alexander the Great plan has the answers...
Ever realy wonder about that. How is it possible with a weaker currency that you still get more for your buck even after taking a beating on exchange? I don't know exactly how that mechanism works but I do know that it helps you sell bonds and guarantee a higher rate of return. Greek bonds of the pre-euro era guarantee a return of 5-8%, much much higher than any other European Union member bond of the same era. Investors bought these up like candy and in 2001 the Greek drachma locked in at 340 drachmas to the euro, or 410 drachmas to the US dollar, forever. We good citizens took all our cash to the bank and were issued new funny looking bank notes in return for our old ones. The euro had arrived and the drachma was no more. Or was it? Bond holders got to cash in eight years later, 2009, and not only get a high return but also cash in on the higher euro by exchanging the bonds at the '01 fixed rate inflating their worth an extra 45% against the dollar. Like shopping south of the border in those brief periods when the loonie is suddenly worth a buck ten american. A landfall for sure.
The Greek government can no longer devalue its currency to offset this loss. But it can issue new bonds at a lower interest. Euribor is the interest rate of the central European bank, Budensbank in reality, and Greece was well within its rights to buy back its '01 bonds of 5-8% returns at the new rate of Euribor plus 1 point or 2.2%. Can you imagine remortgaging your home and dropping 3-5 percentage points off your loan? It would save you over 50% or one half of your payment. A good deal.
Well what's good for the goose is good for the gander eh? Sure unless the goose decides to snap it away dude. The European north that has so largely invested in the south and then spent the difference investing elsewhere was not about to stop chewing the fat. Euribor is great unless of course you lose your credit rating and then nobody will buy your bonds. This is the equivallent of being trapped in your old mortgage at a higher rate because no bank will issue a new loan. It is the oldest mechanism of keeping the poor poor and making the rich richer. Someone who doesn't realy need a loan gets a much cheaper rate from the bank than someone who is desperate to borrow. Only makes sense eh?
So what can the meek do in order to inherit the Earth, eh?
Alexander the Great plan has the answers...
The Alexander the Great Plan unmasked
Using an extremely complicated algorhythm the ESA was able to estimate the proper financial moves to offset a possible housing crash in the US. Due to Budensbank and Credit Agricole massive investments in US mortgages it was decided that Europe was too exposed to fluctuations of the US market. So a vast program of lending was undertaken to offset this imbalance. According to the algorhythm it was wise to simultaneously funnel large sums into the European south to offset possible downturns in the US. True the countries of the south, and their banks, avoided high risk investments and overseas investments altogether. For the most part banks of southern Europe entrust their investments in Northern European banks. The very same banks that invest in US markets. When the crash did happen and the US with its new president, Obama, was in the compromised position of having to cover bank bankruptcies guess who were the first to go. Yup, the US government bought back its banks from European investors for cents on the dollar and of course the european banks used the investments of the south to cover the losses. A dominoe effect that set into motion the Alexander the Great algorhythm. Now Greece may not need to cover a multitrillion dollar hole but with its measly write off of 100 billion euros will set off a new dominoe effect. Exactly because of its position at the bottom of the totem pole the trickle effect will be a topling effect. You see a hundred billion euros of real money is the equivallent of two to three trillion in loans. Since it is a 30 percent slashing of debt in government bonds it is a slashing of that paperwork that the banks use to underwrite loans. Like a ripple reaching the shore and transforming into a tidal wave the defunct loans will topple each other till even the largest economies crumble. For real this time...
Κυριακή 2 Οκτωβρίου 2011
Greek debt crisis
After many conversations with friends and associates I have decided to finaly publish, at least in part, the Alexander the Great Plan. Sure it might sound strange and one may be unsure of how great a plan it realy is but here are some of its key points. It all was set in motion in 2008 with a wave of borrowing and lending aimed to buffer the wounds that our economic allies were suffering from losses in overseas investments. Europe is of course forced to invest in the US economy so that it may continue to enjoy robust economic growth inspite of shrinknig exports to the US. A wise move to offset a trade imbalance and to keep dollars flowing inspite of the stronger euro. So everytime a large corporation in the US goes belly up it of course drags down many many euros. Billions in fact. Like far away dying galaxies european investments in the US market have dissapeared more than once. The latest crashes included many toxic products that were gobbled up by European bankers who are now scrambling to fill in the black hole. Many may not want to admit to the legacy of the Bush years and its multibillion dollar bankruptcies and nonexistent regulation of financial markets. Many may want to blame our little country for their woes. Few realize the intricate workings of the Alexander the Great Plan...
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