Tag Archives: Greece

RANDOM THOTS on BLAGO, BACHMANN and GREECE

From Power Line
Blagojevich will be the fourth former governor of Illinois to go to jail since 1973. It is quite remarkable that President Obama has been able to avoid any significant association with the political culture from which he emerged.

About Michelle Bachmann
No, she is not a flake. She is, however, a gaffe a minute. The MSM would love to see her become the Republican candidate. I am concerned that she could suddenly blow it they way Howard Dean did. Pawlenty polls far below Bachman nationally but well ahead of her in Minnesota where they are both very well known.

Sovereign debt
Gross Domestic Product (GDP) is a measure of the size of a national economy. Comparing a nation’s level of debt to the size of their economy is a measure of prudence
in the level of borrowing. It is also a measure of their ability to make good on their loans.

We all know that Greece is deep in a pile of organic fertilizer; but few seem to realize the United States is headed even deeper. Here are some samples of debt as a percentage of GDP according to the IMF. Portugal 83, Ireland 94, Iceland 116, Greece 143. Germany and France are 74 and 82 respectively. The Congressional Budget Office currently puts the United States at 93 percent and projects it to be 140% in 1928 and 190% by 1935. And you know no one is going to bail us out.

It is no winder the Democrats have not met their obligation to present a budget for 2 ½ years. It would mean they would be held responsible following in the footsteps of Greece.

THE TROUBLE WITH EUROPE

Excerpts from European Union: A coalition of irresponsibility by George Will as published in the Washington Post.

  1. By socializing the consequences of Greece’s misgovernment, Europe has become the world’s leading producer of a toxic product — moral hazard. The dishonesty and indiscipline of a nation with 2.6 percent of the eurozone’s economic product have moved nations with the other 97.4 percent — and the United States and the International Monetary Fund — to say, essentially: The consequences of such vices cannot be quarantined, so we are all hostages to one another and hence no nation will be allowed to sink beneath the weight of its recklessness.
  2. Recklessness will proliferate.
  3. [T]he European Union is neither a state nor sovereign enough to enforce its rules: No euro-zone nation is complying with the E.U. requirement that deficits not exceed 3 percent of gross domestic product.
  4. The European Union has a flag no one salutes, an anthem no one sings, a president no one can name, a parliament (in Strasbourg) no one other than its members wants to have power (which must subtract from the powers of national legislatures), a capital (Brussels) of coagulated bureaucracy no one admires or controls, a currency that presupposes what neither does nor should nor soon will exist (a European central government), and rules of fiscal behavior that no member has been penalized for ignoring.

There is nothing I dare add after the eloquence of George Will.

Bob B

PAPANDREOU BLAMES AMERICAN BANKS

The Greek leader has said he might consider suing American banks as responsible for Greece’s insolvency. This is not as stupid as it sounds. Papandreou knows the lenders are not responsible for his nation’s virtual bankruptcy. He also knows his popularity is plunging and he must focus the anger of the Greek people away from himself if he is to have any hope of continued political power.

There lies throughout Europe an underlying resentment of America and a distrust of banks, Wall Street and capitalism. They serve well as straw men toward which the arrows of public discontent may easily be deflected. The idea of suing the banks may be absurd on its merits but at the same time a wise step for the man who put it forth. This is the mud of which the building blocks of a political house are formed.

This one is for Citibank! And the people cheered.

Nor does it appear the man is fighting a lost cause. Papandreou’s popularity has sunk below 50% but he still leads his closest opponent by 17%. His chances for re-election appear good. In a nation with multiple parties a plurality is all that’s needed.

One should not be too quick to take a politician’s actions at face value. There is an old joke that asks, “How can you tell when a politician is lying?” The answer is “His lips are moving.”

Bob B

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GREEK CRISIS, U.S. PARALLELS

Regarding the Greek crisis today in the New York Times we read,

“…the basic problem is the same. Both countries have a bigger government than they’re paying for.”
And,

“We have not figured out the kind of government we want. We’re in favor of Medicare, Social Security, good schools, wide highways, a strong military — and low taxes. Dealing with this disconnect will be the central economic issue of the next decade, in Europe, Japan and this country.

Many people, including some who claim to be outraged by the deficit, still haven’t acknowledged the disconnect.”

One begins to wonder if it is really the New York Times one is reading. The paper of record continues, “…politicians, spendthrift as some may be, are not the main source of the problem. We, the people, are.” First mention on the list of those responsible for governmental overspending goes to Tea Party members. All doubts are removed; it is indeed the New York Times.

The article characterizes Obama’s promise of no tax increase for those earning less than 250,000 as unrealistic. That’s kind of them. The Chief Economist at Treasury is quoted, “It’s not a matter of whether we have the resources to solve our problems, it’s a matter of political will.” and the NYT adds their own comment “For now at least, our elected officials are hardly the only ones who lack that will.”

Can’t blame Bush, he’s gone. Can’t blame the current administration, that’s against newspaper policy. Can’t blame politicians while the Democrats are in control. That leaves the public. My fellow American’s, pleased be advised, you and I are the problem, not Washington.

Bob B

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EUROPE SAVES ITSELF

Fat finger Freddie freed from fault

All it took was a trillion dollars worth of Euros. We said it would happen…this time. It happened…this time. The bailout will likely bring about 10 years of relative peace, or call it 3 election cycles. During this period we will find out if the close call put the fear of God in the minds of European voters or if they will continue with their socialistically modified form of capitalism.

On May 7th we wrote regarding the market gyrations, “the word is, that someone at Citigroup placed an order to sell Proctor and Gamble and hit the B key instead of the M key”. Indeed, that was the word at the time. The fat finger theory has faded, to be replaced by a big question mark. Nobody knows, so let’s speculate.

It was an act of inhumanity. Once upon a time human beings decided which stocks to buy or sell and at what price. This is no longer the practice except by a few elderly people who probably don’t have cell phones yet either. Today humans set strategy, and then delegate the details to computers to carry out the strategy. To paraphrase a well known cliché, “computers do, or crash and die, but never reason why”. Computerization, which I am calling inhumanity, is rampant on both sides of the street as well as in the middle of the pavement itself. By that I mean the buying community, the selling community and the exchange are all programmed to leave it to an Intel processor to handle the actual trading.

There was a great deal of nervousness milling about, stocks had run up too fast, Greece was scaring everyone, etc. So the strategists drew lines in the sand and told their computers to take immediate action if the lines were crossed. Normal procedure, but this time there was more uniformity of opinion among the players as to where to put the line and it was a tight line. Triggers triggered triggers and down she went, faster than humans could figure out why.

That’s my speculation. It remains, as usual, for Congress to investigate and deliver the final word so that we need speculate no more.

Bob B

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CITIGROUP? PROCTOR & GAMBLE? OR GREECE?

What caused the market crash of May 6th?


A thousand points a minute is 11 minutes to zero. Will Armageddon start tomorrow? At the end it was “only” down 365 points. At that rate it’s almost a month to zero, so there is time to plan.

At this hour the word is that someone at Citigroup placed an order to sell Proctor and Gamble and hit the B key instead of the M key. M is an awful lot of illions and a B is a thousand times an awful lot of illions. Supposedly this was not dollars; it was the number of shares ordered to be sold. In that case we have to multiply again, this time by 63 which was more or less the price of each share, more in the morning. less in the evening.

Proctor & Gamble is one of the 30 companies in the Dow Jones market index. When P&G got slaughtered the market index sunk faster than an oil rig and everybody yelled, it’s Greece! It’s Greece! Citigroup denies the trader story. Greece is too busy to address the issue.

In any event, market panic was the knee jerk (no hyphen) reaction. Relax; Greece is not coming to America. We have headed in that direction, to be sure, but even the biggest ships can be turned around. We are not going down, not this week, not ever without a fight. Fight we will, and win we will. It is 6 months to November.

Bob B

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ABOUT GREECE

A high ranking official in the Greek government invited my wife and me to dine with him, a highly principled man whom I know very well. He came to greet us at a private residence on a very crowded street in central Athens. Following some pleasant conversation we emerged to find the car standing on the busy sidewalk smack in front of the door. Once we were all comfortably seated in the car, the driver charged off the sidewalk, cut off all traffic and proceeded down the other side of the street as though on the way to the proverbial fire. No one protested.

My friend sensed my astonishment. He said I have tried to get him not to drive like that, but he says he must, because I am too important. It was an unmarked car so I asked why everyone gave way without protest. The people of Athens know a government car when they see one, he replied. The restaurant was Greek casual exclusive. For an added touch the US Ambassador paid us his respects while we were there. It was in the Old city, snuggled up against the mount upon which sits the Parthenon. It was a pedestrian only zone, but no matter, when we were done the car and driver were waiting right at the front door.

We were not surprised. I thought if privilege so soon becomes expected, is it any wonder that after a few years, privilege becomes seen as a right. Add that to the list of arguments for term limits.

I found Greece to be a fun place. It is a disorganized land where no one takes the details of law very seriously. Perhaps that is why it is a fun place. A one-way street sign simply indicates which way most of the traffic will be going. A No Parking sign means you may get a ticket but it does not mean you have to pay it.

That was all before the crisis. My host of a couple years ago is now a diplomat with the European Union and a mere observer of the Grecian scene The New York Times, with all its faults, is very good at covering things like this, but to paraphrase Ronald Reagan, one should “Trust the Times, but verify, especially if you have access to inside information”. So I called and asked an open question, “What are your comments”. The essence of his response was:

Too much spending, of course.

However, it goes beyond that. It would barely qualify as hyperbole to say the government has no computers. They literally do not know how many people are on the payroll. They are ill-equipped to enforce income tax compliance because they do not know who owes what. And everyone knows they don’t know.

Typically, a very high income earner declares something, partly because he wants to support society and partly because he knows he cannot get away with declaring nothing.

Unlike the United States where much employment is with large companies, in Greece 60 percent of workers are self-employed. If you need a plumber he has a price. If you need a receipt the price is 30% more. If you want to see a doctor you must bring something known as an “envelope”. There is nothing murky about all this, it’s just how it’s done.

It looks like the New York Times got it right. My friend is not of conservative persuasion. We rarely discuss American politics, but at the conclusion of the phone call he said “I see democracy is working very well in your country, unfortunately.”

Bob B

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