This can’t be good:
The euro hit a one-year low on Tuesday as concerns over the sovereign debt crisis in Europe and the risk of contagion continued to hang over the market.***
One lingering question is whether the $144 billion is enough to settle Greece’s problems and keep them from spreading.
Investors were also watching Spain and Portugal, which have both had their debt downgraded in the last week. Greek government debt fell Tuesday, with the yield on the 10-year benchmark bond rising 36 basis points to 8.8 percent. In a sign of spreading nervousness, Portuguese and Spain bond yields also rose Tuesday.
“If there are real sovereign debt risks in Spain that is an issue for all multinational banks,” said Uri Landesman, president of Platinum Partners.
“What is going on in Europe is eventually going to result in defaults,” said Jeffrey Saut, the chief investment strategist for Raymond James. “They Band-Aided over the situation, and I think it is going to be very bad for the European banking complex.”
I forget where I read it, but even I was shocked to learn that Greece was paying people the equivalent of two months pay as a bonus. Just wait until our city and state pensions blow up in the US. That should be good times.
A bonus for what? As a replacement for pensions the government can’t pay now?
You ever get the feeling we are all terribly, deeply screwed?
But I think every generation feels that at one time or another.
But seriously: the world is going mad.
Everything was fine until the financial crisis.
The Europeans are tied together and they are now a big unit instead of small countries.
To big to fail doesn’t apply here.
What a mess.
It’s not enough that Bush screwed our economy. The crash he caused in 2008 screwed everybody else’s.
Make sure you keep tabs on CalculatedRisk’s blog. When the Commercial Real Estate bubble completely deflates, you’ll have had ample warning to get “safe”.
We are not out of danger, by a long shot.
They will only blow up because as typical in government (and business in general) they made promises, but then deliberately underfund those promises (or raid their “surplus” to pay for other things with the promise of future receipts).
Interesting how it’s southern European nations that are hovering toward the brink lately, rather than the more nordic European countries like Denmark, Sweden, Norway, etc., who a decade or so ago were having serious problems sustaining their progressively socialist governing/economic structures. Not that the latter are bastions of balanced-budgets or Randian laissez-faire economics nowdays, but interesting that their still-socialist-by-American standards systems aren’t the ones threatening the European Union’s stability. (And yes, I know – Denmark retained its own currency, the Kroner rather than adopting the Euro, but otherwise it’s a participant in the EU).
I’ve been following this story at Zero Hedge for a few months, and while they’re a bit ridiculous in their coverage (they’re known as a perma-bear site), they’ve been right about Greece.
I was also surprised to learn that the retirement age in Greece is 53.
Rather common in most of Western Europe, and often enforced by law or at least by collective bargaining agreements. It isn’t really a bonus, it’s deferred and guaranteed pay. Instead of getting 1/12th of your yearly salary every month, you basically get 1/14th every month and another 1/14th in June for the summer vacation and another 1/14th in December for Christmas.
Might sounds strange to American and British ears, but that’s just the way the system works over there and everyone calculates it in.
Even more fun, the German banks like Deutsche Bank (State Owned!) are leveraged in excess of 50 to 1. For these keeping score at home, when the Bush admin gave enough rope to the top five U.S. investment banks like Lehman Brothers to hang themselves. That insanely high, self destructive leverage ratio was only 30 to 1.
There is no mystery to the German leadership’s desire to keep the house of cards intact. The German people don’t grasp why this is happening, however.
As one sick of the terrible exchange rate, I have to admit to popping some popcorn and enjoying this particular matinee.
@someguy: The German banks went along with the game willingly. Don’t delude yourself on that point. They were thrilled, tickled, gemulitkeited (?) to get cheap cheap capital. They damn well knew it was garbage, and in the end the American people through the bailout of AIG made good on the ratings lie on those securities, so their bet was a good one. Trouble is now, there has been no systematic repair of the underlying problems because of the bailout. So, ding the bell for round two.
But right-wingers ran the Greek government from 2004 to 2009, and everyone knows right-wingers are fiscally responsible, right?
That’s gone up then. I’m pretty sure in the 80s or 90s it was 45 for men and 40 for women. Not that people became economically inactive then btw, all those small hotels (favorite investment for retired Greeks) don’t run themselves.
Here’s the fun thing. In the US, wingnuts blamed blacks and Hispanics (and also, too, Bill Clinton and all Democrats) for sparking the financial crisis by deliberately buying houses they could not afford. And so, an article in the magazine Stern accused Greeks of forcing Germany to bail them out by borrowin more money than they could afford.
Some Greeks, in return, are going full Godwin:
On top of all this, Greek public sector workers are demanding an economic stimulus, despite that country’s credit woes.
Ouzo, baby, ouzo!
How Italy has managed to stay afloat thus far is something that amazes me. It is the California of the Eurozone, too big to fail like Greece, but too poorly run to not fail.
Not to downplay the seriousness of the Meltdown in Mediterranea® but my sense is that the Euro has been trading at artificially high exchange rates for quite a while now. There was simply no way it was ever worth a buck and a half so forget that. Even at $1.30, I think it probably still has some fairly significant correcting left to do.
@BR: The retirement age is 53 and yet the young people have no jobs. Something is fishy in the Aegean.
@beltane: Italy somehow has managed to keep their banks out of the gutter. I haven’t had a chance yet to read exactly how, but it’s on my short list to research a bit. It’s possible that Berlusconi, while playing a Guiliani style dictator, kept a bootheel on things just because that’s the kind of guy he was. That’s just the only guess I can come up with that would explain it.
What I don’t get is that:
1) Most Greeks under-report income and pay little or no taxes. See: Christian Science Monitor: Why are Greeks not paying their taxes?
2) 20% of Greeks have public sector jobs
3) Public sector Greek unions are angry that their public wages are being cut.
4) It’s the Germans’ fault.
This is American style wingnuttery.
Euro is garbage. Buy dollars, they are backed by the United States Marine Corps.
Right now the DOW is down 240-ish in the 10900’s because of Greece’s debt “worries”. The US economy is too closely tied to Europe’s for us not to feel some real pain from this, so please don’t get too comfortable.
The way the national (US) karma is going lately, I fully expect the CRE crash right around the time Spain and Portugal go belly-up.
There was an article a few weeks ago on this: one of the problems that Greece has is that the economy is so dominated by family-owned and operated businesses that if you’re not the favored son of the owner you’re looking at one dead-end job after another or working for The Gummint.
Life expectancy for men is 76 and women average 81.
That is a lot of years to drive a Winnebago and eat at Shoney’s.
@CalD: One of my in-laws is a Dutch banker who was boasting to us a couple of years ago that the dollar was history, and that the Euro was the currency of the future. He’s a really nice person, but the schadenfreude is overwhelming nonetheless.
How do you say teabagger in Greek?
Bill E Pilgrim
This guy has some pretty good posts about Europe, he’s a long time diarist at GOS who works in finance in Paris, so in other words actually knows something about the issues rather than just the usual Stateside wild guesses:
comrade scott's agenda of rage
This. The Bushies monetary policy was to turn the dollar into the lira under the usual conservative idea that a cheap dollar fuels exports and encourages furrrners to come here and spend *their* money.
If you go back to Nov 2001, the euro was somewhere in the 90 cent range. When it got up to the $1.50 range (which is where the British pound usually sat), yes, things had gotten enormously out of whack.
Oh yeah, a weak dollar also made it easy for the Bushies to sell ‘Murkin debt overseas. Those fucktards would have had a (slightly) harder time paying for 2 wars while enacting the largest tax cuts in history without the corresponding change to it’s monetary policy vis a vis the dollar.
My hatred for the Bush years grows with every disaster that can be traced to those asshole. Someday I’m sure I’ll explode.
Drive By Wisdom
Ah, all these progressive European governments and all their fabulous regulatory authorities. What a triumphal success for liberalism.
But we can all be sure it is all the fault of Goldman Sachs or Chimpy McHalliburton.
@Comrade Darkness: The Italians invented the modern banking system, and seem to know how to play the banks rather than the other way around. If they do go under, however, it would be the death knell for the Euro. There will be tremendous pressure for Germany to go back to the Deutsch mark and be done with this experiment.
My goodness, John. You are a little bundle of sunshine, aren’t you? Any more good news?
Okay, okay, I’ll try to be good. Yes, I appreciate the heads up.
I suppose that inflation will catch on fire about the time that the next crash occurs and we won’t be able to buy bread and Some Jerk will be wondering out loud why we don’t eat cake.
Should have asked him how his tulip futures were doing.
@Linda Featheringill: Correction: some jerk on the right will be wondering why we don’t eat cake, while some other jerk on the left will berate us for not eating the organic bread.
General Egali Tarian Stuck
This is what I think about the motherfucking “markets”
@Poopyman: My reply got lost. Sorry for the reiteration if it reappears.
I’ve never been comfortable. We are in a second bubble. I’ll relax when things are priced right and that includes the Euro. I’ll relax when household balance sheets are repaired (they are rapidly improving but have a long way to go).
No worries. Your 1st reply probably got et by the moderation troll for some reason.
@beltane: I don’t think the Euro is dead. I don’t see Germany leaving it. The countries most likely to exit are those that can’t operate politically without devaluation.
Latvia is interesting, they are “devaluing” through deflation right now rather than unlock the fixed exchange rate.
While Bush did lots of bad things to the economy (cutting taxes on the parasitic rich, attacking Iraq which led to the better part of $1T down the tubes), I don’t think he ranks super high on the list of people to blame for the housing bubble and credit crisis.
Greenspan is probably the #1 villain.
If you want elected Republican officials, there’s Gramm, and even Ray-gun.
The bonuses are are a month’s wages for a Christmas check, and again at Easter. You can’t celebrate properly without some cabbage in the pocket, I guess.
Nice gig if you can get it. Every time my wife would come back from visiting her folks she would be amazed at how wealthy everyone seemed to have become. We could not figure why making the household budget balance here in the States could be such a struggle, when people with sixth-grade educations in Greece seemed to be on easy street. I thought we were just doing things wrong all that time.
The ice age is coming, the sun’s zooming in
Engines stop running, the wheat is growing thin
A nuclear error, but I have no fear
Cause London is drowning and I, I live by the river
I feel this pain. The oil spill, combined with the Arizona law, combined with the economic news have put me in one of the foulest moods I’ve experienced in a really long time (and that’s saying something). Almost inexplicably foul.
I think it’s the result of a very profound feeling of impotence combined with the awareness that it’s all just pointless destruction. I see very little evidence that any of it is going to teach us any long-term lessons. We’re not going to see any meaningful policy shifts from any of it. If anything, all we learn from it is that a majority of Americans are nativist, NIMBY douchebags who don’t care about anything that they think doesn’t affect them directly. Narcissists. Almost nihilists. And, say what you will about the tenets of National Socialism, Dude, at least it’s an ethos. But seriously, what can you possibly do with a bunch of narcissists? Besides hold the world’s longest American Idol competition, that is?
Not to say that I haven’t been warning all my friends that the inflation of the Euro made zero sense in terms of demographics, stringent immigration policies that allow for minimal integration, limited monetary flexibility, a poorer research – university complex and industrial capacity, and a lack of interest on the part of the Chinese to seriously invest in the Euro but shoot if even this lowly person could have figured on this happening, you would have thought that one of the PTB could have done something…
@slag: Let me chime in here. I don’t know where you were or what you were doing 40 years ago today but when I heard the news about Kent State I literally broke down, I don’t mean just crying, I thought we were going to war with ourselves. I had been home from VN just seven months and “bring the war home” was the battle cry. Things are tough right now but, IMHO, it doesn’t compare. Keep your chin up.
Third Eye Open
Some pie just drove by, but all I can smell is the putrid stench of shit…
I was in 10th grade, my sister was ready to graduate from Otterbein, my cousin was faculty at Kent State. No, it really doesn’t compare, but if I were younger than, say, 45, I probably wouldn’t see it that way.
Quite a few Greek workers also get hazard pay. Hairdressers, because of the toxic chemicals they work with, and broadcast journalists and djs because of the germs on the microphones. I kid you not. My husband is just mad his family emigrated back in the day — he figures he’d be retired by now, pulling down a fabulous pension while sipping ouzo and hanging out at the taverna, instead of struggling to make ends meet in New Jersey with Fox News on the TV.
You know, some things just don’t translate… But I am sure they are New Democrats. A party that had it’s founding slogan as ‘Karamanlis or Tanks!’ (and meant it) scores pretty high on the teabag quotient.
@stuckinred: True. I wasn’t alive then. But I imagine that there is no comparison between now and then.
trying a link from the touch
guess who is being blamed for the euro crash?
Actually, all three of the scandinavian countries you listed, Denmark, Sweden, Norway, have retained their own currencies. And Norway isn’t even in the EU. The only nordic country in the Euro zone is Finland, a socialist country, by US standards, with a budget surplus.
I know how to spell it in Greek letters, but I’ll do my best in Latin Alphabet;
Thanks for that, stuckinred. And you can go back to the 1800s and find partisan mudslinging about as bad as today’s, and the 1930s for a world economy worse than today’s, for most people.
Gonna buy me a Greek villa. Seriously. Or maybe something on the Costa del Sol. Sweet.
Gonna buy me a Greek villa. Seriously. Or maybe something on the Costa del Sol. Sweet.
Ahhh — I do feel your pain…
But then I remember, we are not in heaven and so the point of living is to deal with challenges and travail. We are not supposed to be sitting around counting angels and strumming lyres. Life is supposed to be about learning and some suffering around that learning (to kind of see, cause and effect, success failure). That these experiments play out in our lives, in my opinion, is entirely just and expected. Those of us wanting a life without want, hardship and travail are not on this planet and have NEVER been on this planet. Not a thing on this planet exists without day to day and overall stress and competition. Sometimes things dont work.
So. What to do. Well, I believe, our work here is to help solve problems, help our fellow humans and to advance knowledge and wisdom a click or two upwards while we spend time breaking rocks for the man. A little bit of pleasure and making each other feel good through music, visual and other arts, food and pleasures of the flesh is important too.
But — no one is leaving this existence alive. So. We.Might.As.Well.Work.to.Leave.Something.Good.Behind.
We are not and have never been “perfect”. Stop pretending this could ever be achieved but that we should continuously work towards (without the creepy judgement part).
Deutsche Bank is a 100% private company, no government ownership at all, not a single share.
Re: how Italy stays afloat.
It is because, you see, how may I put it, this thing, the economy… it’s our thing. The banks? Ours. The debt? Yep, you guessed it – 90% in Italian hands.
It’s all cosa nostra.