Greece, the gloves are off

[CitizenCain]

bailing Greece and some other countries is still doable.

Honestly, though, seeing as how there's really no chance of getting this money back, and even less of a chance that the PIGS can pull off anything even resembling fiscal responsibility, isn't this bail out just delaying the inevitable and inflating the bubble even more so that the eventual collapse of these PIGieS will be all the more catastrophic, and drag everyone down with them?

Not that I have a problem with that happening - I'd finally get a chance to really use my guns - but calling this bailout a solution is kind of inaccurate. It's a delaying tactic, at best, and will make things all that much worse when the inevitable collapse does come.

[Loki]

FYI - the reserve rate in the US is only 10%, (dunno about the UK), so using the simple math, banks invest 90% of the money that's deposited (it actually works out to even more than that, but whatever), so, say a trillion or so dollars in defaulted bank loans are kind of a big deal.

That's not what a reserve ratio is. It's actually the ratio of reserves to deposits. If you put in $100 in a bank, the bank can lend $900, not $90 (if the reserve ratio is 10%).

[Hazir]

Honestly, though, seeing as how there's really no chance of getting this money back, and even less of a chance that the PIGS can pull off anything even resembling fiscal responsibility, isn't this bail out just delaying the inevitable and inflating the bubble even more so that the eventual collapse of these PIGieS will be all the more catastrophic, and drag everyone down with them?

Not that I have a problem with that happening - I'd finally get a chance to really use my guns - but calling this bailout a solution is kind of inaccurate. It's a delaying tactic, at best, and will make things all that much worse when the inevitable collapse does come.

It is a delaying tactic, but by delaying you also create a possibility of changing things in a way that in the end prevents the worst case scenario alltogether. For me it's replacing the near-certainty of a financial catastrophy with a risk of it. It's not going to help if the PIGS aren't going to restructure effectively and soon.

They've taken Greece by the balls, Portugal and Spain seem to have gotten the message. And Ireland already is starting to look better.

Oh, to my surprise I saw that Estonia is considering to apply for EMU membership in July. They qualify, on all counts better than any of the existing members

[Loki]

I actually want to see a mini-run on the dollar, just to force the politicians here to take the deficit seriously.

[Hazir]

I actually want to see a mini-run on the dollar, just to force the politicians here to take the deficit seriously.

But that's not going to happen if you see how California recently was upgraded by the rating agencies with virtually nothing done about their hopeless budget.

[CitizenCain]

That's not what a reserve ratio is. It's actually the ratio of reserves to deposits. If you put in $100 in a bank, the bank can lend $900, not $90 (if the reserve ratio is 10%).

Yes it is - it's just how you arrive at the number. Calculus vs Algebra, and forgive me for dumbing it down to algebra, but we are in a discussion with Lewk, and I don't feel like walking him through how to calculate an integral. (I don't even feel like going into what an asymptote is.) Do you?

Of course, now that you've thrown that whole "fractional-reserve lending creates money out of thin air" thing out there, we'll probably get to revel in the joys of that discussion instead of the fundamental "banks losing trillions means we all lose trillions" discussion we were having. Nice going.

[Lewkowski]

At this moment I can not think of a single UK bank that could survive a sovereign debt default by the PIIGS at the moment. Relative to the US the UK has an exponentially bigger problem with its financial sector. The banking sector in the UK also couldn't be bailed out if such a situation would occur, bailing Greece and some other countries is still doable.

So all UK banks lent money to PIIGS? Did not a single bank have a halfway competent risk management team? Meh what am I talking about. Why not invest in shaky countries - they will just be bailed out anyway.

[Loki]

But that's not going to happen if you see how California recently was upgraded by the rating agencies with virtually nothing done about their hopeless budget.

Finance relies on herd mentality. As long as no American state collapses, all states will be given overly generous ratings. The second one state does collapse, all states with the slightest financial problem will be sharply downgraded. That's why I think there's at least a small chance that the US faces a run on the dollar, as the finance sheep now realize that large deficits are bad. Of course they also think that large countries don't collapse (financially), which means all large countries have overly generous ratings. We probably need a mini-run on the UK before we get one on the US.

[GGT]

E.U. Details $957 Billion Rescue Package

By JAMES KANTER and LANDON THOMAS Jr.
Published: May 9, 2010


BRUSSELS - European leaders, pressured by sliding markets and doubts over their ability to act in unison, agreed on Sunday to provide a huge rescue package of nearly one trillion dollars in a sweeping effort to regain lost credibility with investors.

After more than 10 hours of talks, finance ministers from the European Union agreed on a deal that would provide $560 billion in new loans and $76 billion under an existing lending program. Elena Salgado, the Spanish finance minister, who announced the deal, also said the International Monetary Fund was prepared to give up to $321 billion separately.

Officials are hoping the size of the program - a total of $957 billion - will signal a "shock and awe" commitment that will be viewed in the same vein as the $700 billion package the United States government provided to help its own ailing financial institutions in 2008.

http://www.nytimes.com/2010/05/10/bu...rachma.html?hp

[Lewkowski]

Well that is interesting. Didn't expect such a number.

Here is the thing that I am not seeing though.

1. Europe refuses to give a free hand out to Greece. Germany's voters seem particularly against giving out a hand out.

2. Greece seems incapable of following through on the 'draconian' austerity measures. Riots? Seems like just the tip of the iceberg.

As long as Europe doesn't want to hand out free money (and who can blame them for that) and Greece can't end its socialistic nonsense then Greece WILL default. Maybe not in the next three years but after these terms are over Greece will have to come back to the EU for more loans or face default again.

[Hazir]

So all UK banks lent money to PIIGS? Did not a single bank have a halfway competent risk management team? Meh what am I talking about. Why not invest in shaky countries - they will just be bailed out anyway.

Well, what can I say, credit rating agencies not so long ago gave Greece a superb rating. Granted, partially based on fraudulent Greek numbers, but still. I agree that anybody could have understood that Greece is not quite as secure as Germany. Same as for the other PIGS (I don't consider Italy to be of similar risk). But here we are; with a financial sector already at risk and deep into PIGS-debt, we're talking about a possible default.

The number is huge, even I am shocked/surprised. As are the markets its seems.

[GGT]

http://voices.washingtonpost.com/ezr...bailing_o.html

Remember that this is no more a bailout of Greece and Spain and Portugal than TARP was a bailout of subprime borrowers. The indebted countries are still looking at low growth, painful budget cuts, aching recession, high-borrowing costs, and an inflexible currency that will stop them from increasing their exports. Remember what Desmond Lachman said.

Rather, this is a bailout of the European banking system (and possibly some international banks), much like TARP was a bailout of our banking systems (and some international banks). The way people understand the European crisis is that a few countries hold much too much debt. But you can flip that around, too: Many banks loaned a few countries much too much money. And if those banks don't get paid back, they're going to go insolvent, and the banking system is going to freeze.

Intra-European resentment is probably going to protect the banks from becoming the villains here (Germans would prefer to blame the Greeks than Deutsche Bank), but they're a big part of the story. Note the New York Times' report on the market's reaction the bailout: "European banks were the early winners. In France, BNP Paribas soared 14 percent and Credit Agricole rose 16 percent; Germany’s largest bank, Deutsche Bank, gained 10 percent."

ECB is also going to buy private and public bonds (something that was once off the table). Central banks of US, Japan, Canada (and some others) are doing USD/currency swap trades. Sounds like we're going to print dollars to swap for euros, so ECB can buy bonds from broke banks and governments, using the bad bonds as collateral to swap the currency?

Monetizing debt = musical chairs

[EyeKhan]

Greece's corrupt society is fucking with my retirement account. There's a nice illustration of the fuck ups inherrant in globalization.

[Hazir]

Greece's corrupt society is fucking with my retirement account. There's a nice illustration of the fuck ups inherrant in globalization.

At the moment the only 'fucking' with that retirement account is that it went up in value today. Also, it's mostly guarantees, so it may never materialize.

[EyeKhan]

At the moment the only 'fucking' with that retirement account is that it went up in value today. Also, it's mostly guarantees, so it may never materialize.

Yours? Most of my retirement money is in the stock market. We've lost something like 9 months of straight gains because the same rating agency that said mortgage based credit default swaps were AAA said Greece's rating was DD. Go figure.

[Hazir]

Yours? Most of my retirement money is in the stock market. We've lost something like 9 months of straight gains because the same rating agency that said mortgage based credit default swaps were AAA said Greece's rating was DD. Go figure.

I don't really know I don't have a personal retirement plan. But I noticed the markets went up rather dramatically today.

On CRA's, yeah, well, what can I say. Their verdicts are the Word of God or something, it's a bit of a fickle God, but who are we to call the Truth in doubt?

[EyeKhan]

I don't really know I don't have a personal retirement plan. But I noticed the markets went up rather dramatically today.

On CRA's, yeah, well, what can I say. Their verdicts are the Word of God or something, it's a bit of a fickle God, but who are we to call the Truth in doubt?

Yes. Who are we to do that.

[GGT]

Hey, I call foul! When I was bitching about the credit rating agencies, I was called stupid (or ignorant or some such thing). But now that it's out in the open.....



Not to say I told you so, but yeah, I told you so. Why it takes some loathed gummint agency to make it a respectable complaint, I don't know.

[CitizenCain]

Hey, I call foul! When I was bitching about the credit rating agencies, I was called stupid (or ignorant or some such thing).

A broken clock is also right twice a day. Likewise, you running around and ignorantly bashing the status quo is liable to produce a correct result every once in a while, even the reasoning behind your ideas is completely ignorant or stupid or some such thing. That doesn't make you smart or knowledgeable; it just demonstrates the law of averages in action.

[GGT]

A broken clock is also right twice a day. Likewise, you running around and ignorantly bashing the status quo is liable to produce a correct result every once in a while, even the reasoning behind your ideas is completely ignorant or stupid or some such thing. That doesn't make you smart or knowledgeable; it just demonstrates the law of averages in action.

Right. You don't spend much time looking at the big pictures, OR take time to do jigsaw puzzles. Do you?

[CitizenCain]

Jigsaw puzzles do suck, but that has nothing to do with you not understanding the issues you cry Chicken Little about.

[GGT]

What you call chicken little I call being present in the world.

Jigsaws are great, they make one take the time (patience) to piece the micro into the macro. Sometimes they make you decide which tiny pieces should be set aside, until the larger picture makes sense. As anyone who does puzzles knows, you take the miscellaneous things to the side while you construct the borders/boundaries.

In this big crappy jigsaw we've got going on, one huge chunk is the banking industry. Because it's connected to everyone. It's on the border and it's in the middle. Ditto for "gummint" regulation. It's like you talking about shooting your food with licensed guns.

[CitizenCain]

What you call chicken little I call being present in the world.

Yeah, well, you can call it anything you want, but that doesn't change the reality of the situation. Reminds me of how I didn't get off the sex offender registry.

It's like you talking about shooting your food with licensed guns.

When have I ever done that?

Guns are for shooting people, or for creating food, not for licensing or shooting the meatloaf.

[Loki]

One of the main weaknesses of human beings is their need to see patterns everywhere. Believe it or not, but some things simply happen randomly, and most things are not connected to other things in more than the loosest sense. Seeing connections everywhere is as bad as seeing them nowhere.

[GGT]

Yeah, well, you can call it anything you want, but that doesn't change the reality of the situation. Reminds me of how I didn't get off the sex offender registry.

Don't compare the peons (we, the ignorant, retarded, uneducated) who are simply trying to make sense of the world moving forward, with your sexual perversions of the past. Merci.

When have I ever done that?

Guns are for shooting people, not for licensing.

Oh. So it's really not "guns don't kill people, people kill people", as most guns rights folks say. You really just wanna kill people?

[CitizenCain]

Don't compare the peons (we, the ignorant, retarded, uneducated) who are simply trying to make sense of the world moving forward,

One of the main weaknesses of human beings is their need to see patterns everywhere. Believe it or not, but some things simply happen randomly, and most things are not connected to other things in more than the loosest sense. Seeing connections everywhere is as bad as seeing them nowhere.

Hey, and Loki said that *before* your post.

Must mean that the best way to make sense of this situation, is to believe that Loki can see the future. And, since Loki can see the future, there's no way he could possibly be wrong about anything, so you can't disagree with him anymore! And, you should pay him vast sums of money to tell you your future. And the winning PowerBall numbers. Talk about about a great investment opportunity!

with your sexual perversions of the past. Merci.

Stop putting words in my mouth. I've never said my sexual perversions were all in the past. Well, OK, once, but that was a lie to get a lighter sentence, so it doesn't count.

Oh. So it's really not "guns don't kill people, people kill people", as most guns rights folks say. You really just wanna kill people?

Well, killing people *is* fun, no getting around that... but it's really more about the thrill of the hunt and the adrenaline rush of having them shoot back at you and the miscellaneous joys of combat than it is about killing people, per se.

So, again, kindly knock off the slanderous characterizations of my character.

[GGT]

One of the main weaknesses of human beings is their need to see patterns everywhere. Believe it or not, but some things simply happen randomly, and most things are not connected to other things in more than the loosest sense. Seeing connections everywhere is as bad as seeing them nowhere.

Reminds me of an old architectural art thesis called Pattern Language, or Pattern Design.

I don't see that as a human weakness, finding patterns everywhere. It's almost baked into our biological cake.

Take a woman who can't find her ovulatory pattern, and a random event of coitus can make her pregnant. Take a farmer who can't find weather patterns, and a random event like a flood or drought can wipe out his whole crop. Take a person who can't find seasonal patterns, and a random event like a power outage can turn them into a starving popsicle.

You can call those "loose sensibilities" but I call it survival.

The other side of patterns, algorithms and computers on steroids trying to find a pattern and make money from it, isn't so clear in my mind (or as it turns out, a lot of other people's minds). Faster and bigger doesn't always mean better. Taking THAT pattern into everything has actually done us quite a bit of harm.

[CitizenCain]

Wow, the way you say it, "survival" bears an odd resemblance to "insanity."

[GGT]

Do I need to adjust my crazy meds, or just get another cat?



Look Cain, you can't keep saying you're a Libertarian, and then turn around and make fun of people who take care of themselves. A certain degree of independence means understanding patterns and natural cycles.

Or maybe you're just used to vapid sex partners who take the Pill "because my doctor says I won't get pregnant" but they have no idea how it works.

[CitizenCain]

Do I need to adjust my crazy meds, or just get another cat?

Well, my theory on life is "why choose if you don't have to?"

So, do both! Just... uh, don't get the two mixed up. Things get really messy if you try to neuter your pills, and swallow your cats with a glass of water.

Look Cain, you can't keep saying you're a Libertarian, and then turn around and make fun of people who take care of themselves.

That's not true. Yes, I can. This goes back to the whole you not quite getting what libertarianism is. (And, just for the record, I'm libertarian with a small 'l, not a big 'L'.)

Come to think of it, are you sure we don't know each other in real life? Because I made fun of someone for trying to "take care of herself" by investing in Hydro electricity in Iran. "600% ROI, no way it's a scam!!!! So what about Iran having oceans of oil... they still need electricity, right? Yes, legitimate investing firms *do* contact people with mass emails." And then she said pretty much the same thing you just did. She was also surprised when she lost her entire $10,000 "investment."

A certain degree of independence means understanding patterns and natural cycles.

Yes, understanding patterns - not inventing patterns.

Or maybe you're just used to vapid sex partners who take the Pill "because my doctor says I won't get pregnant" but they have no idea how it works.

Actually, preferably, they don't take the pill, and thus, insist on taking it up the butt as their form of birth control.

See, vapid anal sluts recognize "patterns" too.