Tuesday, February 21, 2012

Get me to the Greek..maybe not

Beware of Greeks Buried by 'Gifts'
I don't know about you, but Greece is getting to me.

50 ways to leave your lover- so why stay like this?
I can't imagine how so many countries and international institutions can get together to put together a deal that is so expensive and yet...achieves so little.

Why can't we live together?
Anyone who is doing any analysis of this program speaks about how much more is going to have to be done even given the optimism of the current baseline is for the plan. Greece's future remains highly suspect. This looks more like the beginning of an exit plan than a real effort at relief.

The Arrow Smith Clause: Dream on
The main mission of the plan is to see that Greece will service its debt in the future. The debt in this deal will be senior to any other debt that Greece might take on while this plan is in force.  That provision will make it easy for Greece to raise any new funds from the private sector, won't it?

Eve of Destruction...what Greece must do
Greece as to have funds set aside for three-months of debt payments. 

Greece will have an oversight board. 

Greece will install a system to track funds' sources and uses...it doesn't have that now? 

My favorite things...What Greece gets
Note all the positive factors to help Greece on this list. Note the development money that is streaming in from Germany and from the European Development Bank. Note the funds for retraining workers. Note the currency depreciation that will make Greece more competitive. Note the tax breaks for capital investment in Greece. Note that everything I have said in this paragraph is MISSING from the real plan.

Border Song
This is not a plan for Greece. This is a plan to try and make sure that the banks are repaid. And before you say well-gosh- those banks took big debt mark-downs, note (note for real) that the Greek government bonds were only marked somewhere close to market value.  The bonds are much better marked relative to mark-to-market value after this deal than they were before mark to Euro Can't-Default-Sovereign debt standards (eCDS).

AND now everyone is talking about Portugal.

If you don't know me by now...
For anyone in Portugal that is hoping to get half the deal that Greece got just look at the destruction that was wreaked upon Greece before it was offered what is still barely a modicum of help. The lesson here is that you will pay dearly for any benefits for the Germans are intent on eradicating 'moral hazard'. Unfortunately, that also means imbuing each participating country with morale hazard.

Get me to the Greek..deal? I don't think so: STAY AWAY! 




Its so unusual that the country in the euro zone to fall from grace first was greece.


Excellent sounding posting.