Tuesday, February 7, 2012

Evening Post ! What happens When The Car Stops Running On Fumes ?

While hardly surprising to anyone who actually paid attention over the past two months to events in Greece (instead of just reacting to headlines) where among those on strike were the very tax collectors tasked with "fixing the problem", we now get a first glimpse of the sheer collapse in the Greek economy, which also confirms why Germany is now dying for Greece to pull its own Eurozone plug (predicated by a naive belief that Greece is firewalled as was discussed before . As a reminder Hank Paulson thought that Lehman, too, was firewalled on September 15, 2008). And what a collapse it is: according to just released data from Kathimerini, budget revenues lagged projections by €1 billion in the very first month of the year. "Revenues posted a 7 percent decline compared with January 2011, while the target that had been set in the budget provided for an 8.9 percent annual increase.Worse still, value-added tax receipts posted an 18.7 percent decrease last month from January 2011 as the economy continues to tread the path of recession: VAT receipts only amounted to 1.85 billion euros in January compared to 2.29 billion in the same month last year." This it the point where any referee would throw in the towel. But no: for Europe's bankers there apparently are still some leftover organs in the corpse worth harvesting. Unfortunately, at this point we fail to see how this setup ends with anything but civil war, as the April elections will merely once again reinstate the existing bloodsucking regime. We hope we are wrong. ( Source ZH )

    When the car stops running on fumes , the car stops ! end of the story and sadly , that's what're seeing happen in Greece . but how could this be a shocker ? On an annual basis , revenues  are on a pace to shrink by 12 billion euros - and keep in mind , this is before the further austerity measures which could include 15,000 jobs lost from the public sector , a cut of perhaps 20 percent to the minimum wage , basic and supplemental pension cuts and  changes to the collective bargaining agreement ! Those further austerity measures will naturally provide additional downward pressure and of course more Troika demands for austerity - note that cuts to the minimum wage will by themselves lead to a 1.3 billion drop in tax revenues and a 2.4 drop in social security contributions ! . This will be a the cycle of misery until Greece finally explodes into mass protests and riots or Greece just says the heck with this and defaults . The one year greek bond purported yield of 528 percent is a flashing red light that a hard default is coming. So is the debt to GDP ratio hitting 159 percent - that ratio keeps heading the wrong way. Critical meeting supposedly set to finally resolve the PSI and Second Rescue deals over the weekend , have slipped from Saturday until now we see Wednesday is the latest date for PM L-Papa and his own Troika ( Pasok , New Democracy and Laos ) , to supposedly wrap up the Rescue talks. Meanwhile the March 20th 14.5 billion euro debt cliff approached. Even if or when these two sets of talks are concluded , will the MPs fro Greece approve the further harsh austerity ? Will the second rescue deal be 130 billion euros , 145 billion euros  or some higher number yet presently unarticulated number  ( 160 billion +  euros if one takes the slipping revenue numbers in account ) ? Will the private investors accept a 70 percent ( or will if be 80 + percent ) haircut and if not , does Greece pass a Collective Action Clause to ram the deal down private investors throats ? Meanwhile , Ireland , Portugal , Spain and Italy watch and wait -  how long before they line up to see 70 - 80 percent of their debt cut too ? Does the ECB foist onto the EFSF 25 billion in losses and how will the Japanese and Chinese buyers ( let alone any GCC buyers of this sucker debt ) react ? Will Wednesday's meeting slip to thursday - Is Bill Murray really living out day after day in Athens , learning out to play classical music and jazz  on the piano ? 
   Meanwhile Spain joins Greece in protesting loudly against austerity and did you note the PM in Romania just stepped down as a result of huge protests against austerity there ? Taking note Greece and Spain ? To those fighting the good fight in Greece - hang in there , fight the powers that would crush you under their heels , throw out the bums who agree to these death dealing poverty measures and don't ever forget what has been done to your country ! To Ireland , Portugal , Spain and Italy - get off your arses and hit the streets - you should be able to figure out your next in line ! In France , the UK and US , don't get smug - what is happening in Europe is a prediction of the future played out in real time - wake up before it's too late ! Okay , got my rant off the chest - hope everyone had a great day , cue the Sonny and Cher song again .....