Gawain Towler invokes the dreary Hans Brinker imagery and at the same time pays homage to the late, great Wim Duisenberg, who led the ECB before that lowlife and Chirac henchman Trichet took over. All that to convey to us the delightful news that the shit has hit the fan: EU official says Greece knows it must restructure.
Greece has accepted that it cannot avoid restructuring its debt, a Greek newspaper cited a senior European Commission official as saying on Tuesday as market fears of such a move persisted despite denials by Athens.
Financial markets are increasingly convinced Greece will have to renegotiate the terms of its public debt, recognising that its economy cannot grow fast enough to service a burden that is set to swell to 160 percent of national output.
“The Greek government has realised that there is no other way and has accepted a mild debt restructuring,” daily Eleftherotypia said, quoting a senior Commission official speaking on condition of anonymity.
This has some implications, all of them not good if you pay your taxes. Those ‘guarantees’, or at least an important part of them are gone. We, sad little inhabitants of this damp corner of the world just lost 4.8 billion of OUR money and who knows how much more to save banks exposed to Greek bonds. Just to remind you: the Netherlands holds 244 billion euros in PIIGS junk bonds, equal to some 60% of the annual budget of Dutch government (national, provincial AND local!). How much of that will be left after the a bout of restructuring (Greece may be the first, but it sure as hell will *not* be the last) is anybody’s guess. I for one will put my money on a number close to zero…
It all kinda, sorta plays out as we predicted almost exactly a year ago:
As soon as Greece gets its money, the banks will be paid off. And then, all of a sudden, the ‘colleagues’ will decide a restructuring of Greek debt is in order. Restructuring debts is a euphemism for not paying the debt (partly or in whole). Which would mean the money handed over by Merkel and our own Finance minster Jan-Kees de Jager, your money, will disappear into the black hole that is de Greek government budget. The markets won’t give a damn because no party, other then the IMF and EUnion member states are affected. The only thing that will have gone missing is tax money. But hey, tax money is free money, isn’t it?
Be that as it may, we may be witnessing the beginning of the end here. Over on ZeroHedge we find a guest column by Chris Martenson arguing that ‘The Breakdown Draws Near’.
The IMF, the World Bank, the BIS, and numerous other institutions with access to $2 calculators have finally arrived at the conclusion that there’s still ‘too much debt’ and that it cannot all be paid back. And they are now alert to the idea that the predicament only has two outcomes: either the living standards of over-indebted countries will be allowed to fall, or the global fiat regime will suffer a catastrophic failure.
All this on the day when the EUnion published a draft budget that is increased by 4.9% over the previous budget.
The draft budget for 2012 represents € 132.7 bn in payments amounting to a 4.9 % increase on 2011. Commitments amount to €147.4bn (+3.7%). The key objective of the 2012 Draft Budget is to fully support the European economy and EU citizens.
[UPDATE001] ZeroHedge: Going…
[B]ack to reality, where Greece apparently has about 48 hours before it sets off a domino effect whereby bank asset writedowns are about to escalate and result in the same shadow banking system “Ice-Nine” effect that nearly destroyed capitalism back in September 2008.
[UPDATE0012] … going …
The deficit in the Greek government’s budget amounted to 10.5pc of GDP in 2010, EU statistics agency Eurostat reported on Tuesday, putting it significantly above February’s 9.6pc estimate from Brussels.
The continued flight from Greek sovereign debt pushed the yield, or return, on the 10-year government bonds to new highs of 15.5pc.
The European Central Bank, the only major potential buyer, “won’t buy whilst [some eurozone countries such as Germany] continue to speak and put pressure on Greece to restructure”, said one trader.