08:58 – Greek Prime Minister George Papandreou is being universally reviled for doing the right thing: calling for a referendum to allow the Greek people to decide their future. Merkozy are spitting nails right now, because Papandreou has just thrown a gigantic monkey wrench into the save-the-euro plan they came up with at their failed summit last week.
The real problem, of course, is that the EU wrote off Greece long ago as unsalvageable. Their plan has nothing whatsoever to do with helping Greece; it’s all about helping Greece’s creditors, many of whom are German and French banks. Whether or not the plan goes forward, Greece is toast. In either case, Greece faces literally decades of economic disaster and human suffering.
Calling for a referendum really is a stroke of genius. At this point, Papandreou has basically called the EU’s bluff and, at the same time, shifted responsibility for the decision from his own government to the Greek people. It almost doesn’t matter if the referendum is actually held or, if it is, what the outcome is. It is, if not win-win for Papandreou, at least a less-lose either way. The ideal outcome from Papandreou’s point of view would be for the EU to write off Greece’s debts without requiring the austerity measures that they have so far demanded. I have no doubt that that’s one of the options that Merkozy will be discussing during their emergency phone conference today. Alas for Greece, I don’t think that’s what’s going to happen.
I think what’s more likely to happen is Merkozy deciding to drop Greece like a hot potato, even if that does make a chaotic Greek default almost certain. Make no mistake. Right now, Angie and Nick are seriously pissed. From their point of view, they held out an olive branch to Papandreou and he just shit on them. There are so many players involved, not least the IMF, that it’s difficult to predict short-term outcomes, but I think it’s even possible that the EU/IMF/ECB will decide to withdraw the sixth aid tranche that was to be paid to Greece in the next couple weeks.
That would, of course, immediately topple Greece into chaotic default, but ultimately it won’t matter. Merkozy certainly understand by now that that outcome is inevitable, so from their point of view the only real question is whether it’s worth buying a few more weeks before they have to deal with the fallout. Ultimately, the aid payments are just paper shuffling anyway. Each of the bailout payments is simply an accounting transfer from the bailout fund to Greek creditors. Why not take Greece out of the loop entirely and simply make those transfers directly to the creditors? Or, more specifically, why not simply have the German government make bailout payments to the German banks who have Greek payments due, the French government make payments to French banks, and so on? The EU governments, the IMF, and the ECB also hold Greek debt, but you can be sure they’re first in line to be paid, and Greece cannot afford to default on those debts if it ever wants to be able to borrow again before the 22nd century. Of course, that leaves non-EU creditors without anyone to pay them. Too bad. So sad.
09:43 – Rule, Britannia! Believe it or not, the Home Fleet is now down to zero vessels. The once-proud Royal Navy, which within living memory deployed huge battleships, battle cruisers, and aircraft carriers by the dozen, is unable to come up with even a tiny destroyer or frigate to protect home waters.
Bob, would that all ruminations on the Greek fiasco be as lucid as yours. My compliments.
“Rule, Britannia! Believe it or not, the Home Fleet is now down to zero vessels. The once-proud Royal Navy, which within living memory deployed huge battleships, battle cruisers, and aircraft carriers by the dozen, is unable to come up with even a tiny destroyer or frigate to protect home waters.”
That’s what the Vanguard class subs are for. At least one is always on patrol IIRC.
You can’t be serious. One doesn’t use boomers for coastal defense. Just as with US boomers, as soon as the Vanguards deploy their first job is to get themselves far away and deep to make sure they can launch if necessary.
Incidentally, before anyone corrects me, I’m aware the the UK hasn’t had a Home Fleet since I was in high school.
Also, I intended no criticism of the RN when I called it “once-proud”. The RN is still proud, and rightly so given its history. Perhaps I should have said “once-large”.
Get this. The haircut that Greek bond holders are supposed to take, is purely voluntary. Banks have agreed to the haircut. But hedge funds are going out and buying the bonds for 50¢ on the euro, then demanding full payment at maturity, and making off like bandits. Estimates are that 20 billion of the 350 billion outstanding may be in the hands of hedge funds.
That leaves the EU between a rock and a hard place: if they make the haircut mandatory, bonds throughout the EU will quickly become worthless; on the other hand, they do not want to touch the issue of outlawing hedge funds trading in bonds, as the courts have already indicated they will not support that.
Meanwhile, close to home, this is not a good sign: the local Walmart is eliminating jobs and laying people off. The guy across the street — a 5 year employee — just got his walking papers, as did some others. With the holidays coming up, that cannot be good news.
Perhaps Greg means the Trafalgar class submarines, or the Astute class submarine.
Perhaps so, but the Trafalgars’ and Astutes’ mix of armaments doesn’t seem ideal for coastal defense against likely threats. IIRC, they carry Tomahawk land-attack cruise missiles and heavy torpedoes.
That is certainly bad news. The question is how widespread is the bad news? Is it just bad news for Tiny Town, or is it bad news for towns all over the US?
“…..Greece is toast.”
And now for something completely different (well, at least of the other side of the size spectrum):
http://www.latimes.com/news/local/la-me-compton-20111101,0,7089212.story?track=rss
Compton is a small LA suburb southeast of downtown LA. As with Greece, their politicians are spending themselves into financial oblivion.
That is certainly bad news. The question is how widespread is the bad news? Is it just bad news for Tiny Town, or is it bad news for towns all over the US?
That is a good question, and Walmart generally holds that close to their chest. Apparently, they are basically eliminating physical work on the ‘third’ shift–which I presume is basically overnight. Have you been in a Walmart late at night lately? All the ones around here close off one of the entrances and make you use just one. That started earlier in the year, here.
If you know anybody that works at Walmart, ask them if they are cutting back staff, and let us know.
In re: Walmart and similar nooz: I hear from my relatives still down in the benighted Commonwealth of Maffachufetts that the power companies had been laying off working stiffs in droves this past year and have not had adequate work crew staffing just now to handle all the outages, transformer repairs, etc. after this recent snow storm. Thus very long waits for hundreds of thousands of people in the Northeast Megalopolis. We can expect more of this in the near and long-term future, and we can also expect the various statist entities to practice their civil disturbance and public order drill exercises throughout.
I keep telling them down there to prep for long-term brownouts and blackouts and for the local store shelves going empty in three days or less. And prepare for it occurring during the cold and snowy months of the year. Several things the preppers often forget: adequate water source/storage/purification; toilet paper; and whatever meds they need for themselves along with contact lens fluid, spare specs, etc.
As for the Greek PM, he has been the only gummint official over there lately who has exhibited any sense at all, stuck as they are between a rock and a hard place, and really no one to blame but themselves. The days of wine and roses are over, as they will be for the rest of the Mediterranean southern tier, initially, and then the northern countries. We in North America and the former Brit colonies will be extremely lucky to somehow muddle through.
I just went to Walmart because I was in the area and I knew I needed some important bulk items (like dog food). No lack of business but then after I was in the store it dawned on me. Today is the first.
Re: Greece, to quote the Clash:
Should I stay or should I go now,
If I go there will be trouble,
And if I stay it will be double.
“You can’t be serious. One doesn’t use boomers for coastal defense. Just as with US boomers, as soon as the Vanguards deploy their first job is to get themselves far away and deep to make sure they can launch if necessary.”
I wasn’t serious, of course. Perhaps I should have been a poker player… 🙂
And the trend nowadays for missile subs is to stay near their home coast to make ASW efforts by the other side more difficult and to enjoy the protection of their own navy. No need to get near the enemy coast unless they want to use a depressed trajectory flight – Tridents can hit just about anywhere in the world you’d want to hit from their docks.
“Perhaps Greg means the Trafalgar class submarines, or the Astute class submarine.”
Nah, I meant Vanguard, and I *was* joking. I’ve read that the warheads on SLBMs launched by Vanguard can be tuned down to almost nothing, so the Brits could even use them to take out Sarkozy or Merkel without too much collateral damage.
So did Greece take MF Global down ? It is beginning to look very Madof-fy:
http://finance.yahoo.com/news/FBI-to-probe-MF-Globals-use-apf-602167470.html?x=0&sec=topStories&pos=3&asset=&ccode=
I guess somebody forgot to tell Corzine that the haircut on EU bonds is voluntary. If MF Global holds them to maturity, they get full value. If — that is — the country in question is still in existence when maturity rolls around.
FWIW, I got a real laugh out of this comment on another site:
Voluntary 50% to 60% haircut?! That’s like volunteering to stick your hand in a blender to get your Bloody Mary.
But of course human nature has changed, hasn’t it?
Had to stop at Walmart and just got back. At our Walmart in Tiny Town, today is the day they switched to all Xmas music all the time. I got out of there as quickly as possible. Yeah, ours was busy, too. Even the clerk commented that it was the first of the month rush. Same busyness over at Aldi, too. Two checkouts were open, and that almost never happens in Tiny Town.
I’m guessing that business is not really getting worse; it is just that many of them are finally realizing that the economy is not ever going to snap back to pre-2007 levels in the foreseeable future, and are adjusting for the permanent lower level of trade that is actually out there.
Meanwhile, Walmart in Tiny Town is down to 3 racks of CD’s (that’s half of one side of one aisle), and they are no longer alphabetizing the CD’s. Most were priced at $5. Times must be tough for the music industry. Louisville just lost a Midwest treasure as the music retailer ‘ear X-tacy’ closed over the weekend.
http://www.billboard.biz/bbbiz/industry/retail/ear-x-tacy-legendary-louisville-record-store-1005460862.story
http://en.wikipedia.org/wiki/Ear_X-tacy
Roger that, Jim, and here is another contribution:
“FICA Withholding. FICA, an acronym that stands for Federal Insurance Contributions Act, is a federally imposed payroll tax used to fund Social Security …
IIRC, my FICA is PIF thru EOY.
There are a few Wal Mart stores in Indianapolis that are no longer open 24 hours. They are now closing at midnight and reopening at 6 AM. I can see why they would consider doing that if they don’t have much early morning business. I’m wondering why they’d do it this close to the Christmas shopping season. I’d be inclined to think if they were going to cut store hours, that they would postpone it until after Christmas.
It was a combination of being leveraged like it’s 2007 and investing in volatile EU debt. As I understand it, Greece wasn’t the problem, it was the other EU countries with debt problems. Corzine could have saved MF Global if he only read our host’s blog.