Greek Government Already Showing Cracks

[Phatscotty]

Forget Merkel, it's the German people don't seem to keen on bailing anyone out (I don't blame them). Since they have the most money, it's Germany that it all eventually falls to to bank the never ending bailouts. Greece, how many times now? Are they on their third bailout now? Now Spain, Italy is asking for money*, Ireland will follow.

It just doesn't end, until it ends. The Central Banks will do what they always do when faced with this sort of thing, print money. It has never ended well every time it has been tried before. Visions of the old Germany during the hyperinflation days aren't even the worst case of hyperinflation recorded in history. Zimbabwe even doesn't have the absolute worst record of hyperinflation.** And it always falls upon the citizens to pay the bill until they finally say "enough is enough" and the knives come out.

No, even if Greece does form a government, even if Greece does somehow manage to renegotiate the terms of the loans from the ECB and the IMF, it won't matter. The problems aren't being addressed. This supposed coalition government is the same people from when it collapsed before! LMAO. You really think the hope and changy message is real?

It's a lie. More attempts to kick the can and eventually everyone will get tired of playing the game. It'll all be a big surprise to those who are buying into the government lines of propaganda of "It'll all be fine now".

Hey, I don't care really. If Germany doesn't mind bankrolling all the weak links in the monetary union then more power to them. Chaining yourself to a sinking ship is a sure way to sink yourself though. The IMF is pumping money in and the IMF gets it's money from the US. When Greece finally accepts the inevitable, the systemic risks on the US will come into play and it won't go over well with the US population when they realize that we are bailing out the PIGS as well.

Romney even said just the other day, if elected not one cent will go to bailouts of Europe. I laughed, he knows the US funds the IMF and the IMF funds the bailouts. No, the circle jerk that is the Eu debt crisis is a massive ponzi scheme. The sooner Greece bites the bullet the better it will be for them in the long run. It'll be a bitter medicine at first, but they'll actually start to have real recovery.

Money, it's a bitter wedge between supposed "friends". All this is doing is fueling certain resentments and before too long the Europeans will be back doing what they've been doing to each other for thousands of years. Getting seriously nationalistic and killing each other.


*On 6/18/12 Italy violated the IMF's definition of "solvency" by having the average cost of their debts surpass 680 basis points. Italy is going to push in a meeting this very week of euro zone finance ministers for a "semi-automatic mechanism involving the European Central Bank or the permanent bailout fund ESM to reduce spreads of euro zone bonds over Germany, Italy's European Affairs Minister Enzo Moavero said on Monday."

**Inflation hit it's monthly peak in Germany between 1920-23 at 29,525% inflation, Zimbabwe hit it's highest monthly inflation between 2007-09 at 2,600% inflation***. The highest ever recorded inflation was in Hungary, 1945-46 at 1.295x10^16 inflation (HOLY SHIT!!! See- "Hungarian pengo") Serbia 1992-94 hit a monthly high at a respectable 309,000,000% inflation.

***Zimbabwe actually stopped keeping track of inflation in July of 2008. The IMF estimates they hit around 489 million % inflation. Still no where close to Hungary's record inflation.

+1 bailout package

I wanted to add that when the knives come out, I hope it isn't all on the same night and I hope all the knives are not long.

As far as the whole debt/inflation scenario is concerned, this is a very normal thing when it comes to printed money that is not backed by anything, and even worse when money is based on debt (less than nothing!). All the paper currencies are in a race to zero value, but it's hard to notice when things seem okay as long as you can keep playing the shell game between currencies and boosting/reducing values against each other comparatively.

Paper money will always revert to it's intrinsic value; zero.

Greece is screwed though, no matter what they do. IMO they are next in line to experience a "lost decade"

[MeDeFe]

One big reason Germany is "chaining [it]self to a sinking ship" as you aptly put it, patches, is because German pension funds hold huge stakes in Southern Europe, and if countries start leaving the Euro or go bankrupt, that money is gone. A large portion of the generation of people up to 35 years old might be disillusioned enough to take it with a "yeah, I never expected to get a retirement pension anyway", those who already have been working for over a decade and paid into the funds with the expectation to actually get money back later on will be pissed off, though. And if retirees suddenly find their income halved (or gone completely) they will at the least stop voting for the party they've always voted for, the same party Merkel belongs to, unless they just take to the streets. Today's retirees were teens and young adults in the 60s and 70s, they were there for the reunification, they're used to social upheavals.


Then there's also the fact that without the Euro, Germany could never have based its economy on exports the way it has in the last decade. Sure, the German economy was strong before the Euro, too, and Germany had a trade surplus year after year. But with the common currency, German industries were able to dominate the trade over all of Europe because Germany has systematically been keeping wage levels flat, inflation far below the average of the rest of Europe, and vastly increased the number of low-paid and temporary jobs. Remove the Euro and this advantage becomes irrelevant, German industries start to struggle against a competition that's no longer hampered, and suddenly there's a decade's worth of stagnation to make up for in order to boost consumer spending. Under controlled forms and a stable Euro that could take 20 years, if the Eurozone starts breaking up there's no good way to go about it. The exporting machine would be stuck with a too strong currency, wage levels would be artificially low and consumption with them, cue the national deficit, someone has to spend. But after the recent railing against wasteful governments, the extolling of "thrifty Swabian housewife"-economics (no, I kid you not), that would be a very tough sell. Even more so if the pension funds are gone.

[patches70]

One big reason Germany is "chaining [it]self to a sinking ship" as you aptly put it, patches, is because German pension funds hold huge stakes in Southern Europe, and if countries start leaving the Euro or go bankrupt, that money is gone. A large portion of the generation of people up to 35 years old might be disillusioned enough to take it with a "yeah, I never expected to get a retirement pension anyway", those who already have been working for over a decade and paid into the funds with the expectation to actually get money back later on will be pissed off, though. And if retirees suddenly find their income halved (or gone completely) they will at the least stop voting for the party they've always voted for, the same party Merkel belongs to, unless they just take to the streets. Today's retirees were teens and young adults in the 60s and 70s, they were there for the reunification, they're used to social upheavals.


Then there's also the fact that without the Euro, Germany could never have based its economy on exports the way it has in the last decade. Sure, the German economy was strong before the Euro, too, and Germany had a trade surplus year after year. But with the common currency, German industries were able to dominate the trade over all of Europe because Germany has systematically been keeping wage levels flat, inflation far below the average of the rest of Europe, and vastly increased the number of low-paid and temporary jobs. Remove the Euro and this advantage becomes irrelevant, German industries start to struggle against a competition that's no longer hampered, and suddenly there's a decade's worth of stagnation to make up for in order to boost consumer spending. Under controlled forms and a stable Euro that could take 20 years, if the Eurozone starts breaking up there's no good way to go about it. The exporting machine would be stuck with a too strong currency, wage levels would be artificially low and consumption with them, cue the national deficit, someone has to spend. But after the recent railing against wasteful governments, the extolling of "thrifty Swabian housewife"-economics (no, I kid you not), that would be a very tough sell. Even more so if the pension funds are gone.

Sure, I understand that. The Euro has been a boon to Germany. That's why Germany has been the focus of a lot of anger, because of how they dominate the EMU.

The Germans are hard workers, as you said an exporter nation. I admire the Germans. But people get tired of having the fruit of their labors taken as Germany is being forced to now. Spiegel wrote this just today-

Merkel was certainly in the hot seat, once again, as many nations pressed her to do more for the euro -- at a time when many Germans feel their country has already done too much.

That's the sentiment. Then you have the Greeks, who must have the money and bailouts but are not willing to sacrifice a thing.

Now lately, with the US' dear leader criticizing the EU (LOL), France fired back that it was the US who caused all this and today Spiegel wrote this on the subject-

It is rather hypocritical when the Americans and the British, whose own mountains of debt have reached a high point, try to lecture the Europeans. One number is sufficient to reveal what a bad tactic this is. At a time when the budget deficits of the US and Great Britain are about 8 percent, the euro-zone members have almost managed to bring their deficits as a whole down to 3 percent.

In news, today in Greece, Venizelos has just announced that the country has a government.
The deal with Italy who is asking for a semi bailout, they got their answer today as well. "
The German government on Wednesday reaffirmed that the European bailout funds EFSF and ESM won't be able to buy bonds of EMU member states on the secondary markets without these countries applying formally for such aid and accepting the conditions tied to it." If Italy wants a bailout, they'll have to go through the process Greece went through.

The Euro is unstable, as all fiat money eventually becomes. Take Germany's circumstances, if you were a nation like Greece, who's economy is tourist based rather than industrial and exporting, how long are you going to put up with other Euro nations telling you what to spend, how to spend, what amount of money you can have, even sending foreign tax collectors to take your money?
If you were Germany, how long are you going to put up with having to bailout other nations time and time again?

What Union? There is no union, it's an illusion. An illusion that is falling away to reality before our eyes. There is no fix.

Germany doesn't want any nations exiting the Euro, for obvious reasons. The Greeks fear leaving the Euro. Eventually though, someone is going to leave. There are arguments of merit for Germany opting out, merits for Greece to leave. In Greece's case, being such a desirable vacation destination (not so much lately), leaving the Euro would be a massive boon for their tourism trade. The Drachma would be so devalued that it would be dirt ass cheap to vacation there. It would lead to record tourism after the dust began settling from the chaos of a Euro exit.

The question is not "if" the Euro will break up, it's a question of "when". That's the cold reality, the truth TPTB don't want to happen but can't stop.

[GreecePwns]

Forget Merkel, it's the German people don't seem to keen on bailing anyone out (I don't blame them). Since they have the most money, it's Germany that it all eventually falls to to bank the never ending bailouts. Greece, how many times now? Are they on their third bailout now? Now Spain, Italy is asking for money*, Ireland will follow.

It just doesn't end, until it ends. The Central Banks will do what they always do when faced with this sort of thing, print money. It has never ended well every time it has been tried before. Visions of the old Germany during the hyperinflation days aren't even the worst case of hyperinflation recorded in history. Zimbabwe even doesn't have the absolute worst record of hyperinflation. And it always falls upon the citizens to pay the bill until they finally say "enough is enough" and the knives come out.

Actually, if opinion polls are right what would probably happen in Germany would be a government more friendly toward Greece's loans. So that theory is kinda dead in the water.

No, even if Greece does form a government, even if Greece does somehow manage to renegotiate the terms of the loans from the ECB and the IMF, it won't matter. The problems aren't being addressed. This supposed coalition government is the same people from when it collapsed before! LMAO. You really think the hope and changy message is real?

It's a lie. More attempts to kick the can and eventually everyone will get tired of playing the game. It'll all be a big surprise to those who are buying into the government lines of propaganda of "It'll all be fine now".

Of course I don't believe it, I never did. You saw throughout this thread who I supported and why I supported them. They proposed solutions to the real problems in Greece, which is a lot more than your "debt is bad and will make things worse" rant.

[patches70]

Actually, if opinion polls are right what would probably happen in Germany would be a government more friendly toward Greece's loans. So that theory is kinda dead in the water.

I quote Spiegel talking about how German's feel they are already doing too much bailing out and you say the opposite?

Of course I don't believe it, I never did. You saw throughout this thread who I supported and why I supported them. They proposed solutions to the real problems in Greece, which is a lot more than your "debt is bad and will make things worse" rant.

Why you mad at me? What solutions? Greece has to stop spending money that they don't have and quit borrowing. Greece needs to produce things, instead of relying on tourism and service industry which is subject to market turmoil. When recessions hit (and recessions always come at some point, it's called the business cycle), it's tourism and the service industries that suffer. When you produce things that people need, no matter what the market conditions, then you have real wealth.

Greece had some insane percentage of population who worked for the government in some shape or form. Massive unemployment in Greece (and Spain) while at the very same time Germany is reporting workforce shortages.
Imagine that.

Greek banks are insolvent, so what do the Greek people do? Run down to the bank and take out their money from the banks. LOL. That'll help, right? The banks in Europe are becoming like the banks in the US, don't need depositors. In the old days, and from how we'd like to think banks operate, is that banks need people depositing money so they can then loan out that money. Not so anymore, the Central Banks take the place of the depositor.
Except, the problem is, when the Central Banks do that then the money they create and loan out (virtually interest free to the banks) must be repaid by the people, with interest.

This change in dynamic from the conventional is the heart of the problems. The more a country borrows ultimately from a Central Bank the further that nation goes into the pit of never ending debt and ever increasing interest payments.

I can tell from your screen name that you apparently don't like any criticism of Greece. So be it. For the record, I find it reprehensible of how the ECB is sapping Greece of all they have. I find it troubling that Greece has basically lost their sovereignty and that their people have been reduced to the state they are in. All from lying politicians and shyster CB's. Greece's economy "grinds to a halt"-
http://www.ft.com/cms/s/0/e79024a2-ba28 ... abdc0.html

You might not be able to view that article if you aren't a subscriber. Greek business is dropping European suppliers and turning to Chinese suppliers. That puts more pressure on EU economics. Will the new coalition government be able to renegotiate a new bailout? It's desperate in Greece-
"We have got to a point where we’re at a complete standstill,” said Constantine Michalos, the president of the Athens Chamber of Commerce. “The first thing a coalition government has to do is recapitalise the Greek banking system.”

What we got here is a game of chicken. Who will blink first? Greece? Germany? The ECB? The IMF? And when one blinks there are consequences. Imagine the Greek government blinking first and agreeing to what TPTB make as conditions, this new government will end up collapsing just like that last one (and for the exact same reasons). If the ECB or the IMF blinks first, it may be Germany who flips it's lid. If Germany blinks they just open themselves up to even more and more liability for other nation's debts.

It's a tangled web, one that can't be solved by more ZIRP lending. Coincidentally, Iceland has just arrested some more bankers. Iceland shows the way, a path the EU and the US should pay attention to. Bankers ran amok, put Iceland at risk, so Iceland tosses the bastards in jail. The EU should be tossing certain ECB officials in prison. The US should be tossing certain "too big to fail" bankers and brokers into prison, all for fraud at the very least.

Until people accept economic reality, don't spend more than you take in, it won't be the Eu going down alone. The US' time is coming as well. And when that happens, well, the EU is doomed anyway.

[patches70]

And as for Spain getting more "favorable" terms for their bailout, best think again.

Finland-
"Finland will demand collateral for its share of emergency loans to shore up the Spanish banking system should the money come from the euro-region’s temporary bailout fund, Finance Minister Jutta Urpilainen said.

“It remains undecided whether the bailout will be granted via the temporary facility, in which case Finland will require collateral,” Urpilainen told reporters in Kokkola, Finland, yesterday. The other alternative is to grant the loan through the European Stability Mechanism, the “permanent crisis mechanism, which will provide better security for taxpayers” and won’t result in demands for extra guarantees, Urpilainen said."

Finland wants Spanish collateral in exchange for a bailout. In the coming days, Germany will demand the same thing. When Germany does that, it will push the EURUSD to parity which will generate record profits for German exporters. Germany won't blink first because the situation in Greece and Spain will only get worse until they will literally be begging for a bailout at any terms. They won't have any other choice.

Listen, the EU nations should understand how this game works. The IMF is infamous for pulling this shit on third world nations over the years. The IMF comes in, gives a loan to some poor schmuck of a nation (knowing full well that the nation can't pay the loan back) and when the nation can't pay the loan+interest the IMF gets to take possession of the actual resources of the nation. Now the ECB through the ESM is doing the same damn thing.

Spain, Greece, put up actual collateral, real things and in exchange they get a bunch of digital numbers representing "money". Money created out of thin air from nothing. Spain and Greece can't pay the money back and lo and behold TBTB take the collateral.

It's sickening. This is the stuff that was done to the African and South American nations over the decades. It's how western companies get possession of those third world nation's natural resources. It is akin to how the mob works. Mob guy comes to a business owner and forces the owner to pay "protection money". The protection payments increase nominally over time and payments are demanded more frequently until the owner can no longer pay. The mob guy then forces the owner to make the guy a co-owner of the business. At that point the mob guy robs the business blind until there is nothing left and in the end firebombs the store to collect the insurance, leaving the poor former business owner with nothing.

That's what's going on. That's the "Union", a mish mash of strong states that are now robbing the weaker states through the auspices of the CB in Brussels.

[thegreekdog]

One big reason Germany is "chaining [it]self to a sinking ship" as you aptly put it, patches, is because German pension funds hold huge stakes in Southern Europe, and if countries start leaving the Euro or go bankrupt, that money is gone. A large portion of the generation of people up to 35 years old might be disillusioned enough to take it with a "yeah, I never expected to get a retirement pension anyway", those who already have been working for over a decade and paid into the funds with the expectation to actually get money back later on will be pissed off, though. And if retirees suddenly find their income halved (or gone completely) they will at the least stop voting for the party they've always voted for, the same party Merkel belongs to, unless they just take to the streets. Today's retirees were teens and young adults in the 60s and 70s, they were there for the reunification, they're used to social upheavals.


Then there's also the fact that without the Euro, Germany could never have based its economy on exports the way it has in the last decade. Sure, the German economy was strong before the Euro, too, and Germany had a trade surplus year after year. But with the common currency, German industries were able to dominate the trade over all of Europe because Germany has systematically been keeping wage levels flat, inflation far below the average of the rest of Europe, and vastly increased the number of low-paid and temporary jobs. Remove the Euro and this advantage becomes irrelevant, German industries start to struggle against a competition that's no longer hampered, and suddenly there's a decade's worth of stagnation to make up for in order to boost consumer spending. Under controlled forms and a stable Euro that could take 20 years, if the Eurozone starts breaking up there's no good way to go about it. The exporting machine would be stuck with a too strong currency, wage levels would be artificially low and consumption with them, cue the national deficit, someone has to spend. But after the recent railing against wasteful governments, the extolling of "thrifty Swabian housewife"-economics (no, I kid you not), that would be a very tough sell. Even more so if the pension funds are gone.

I have a few questions:

(1) Why do German pension funds have huge stakes in southern Europe? I would assume German pensions would have more stakes with Germany rather than Greece, Italy, or Spain.

(2) How movable are pension funds? Could already invested cash be moved to a different investment?

(3) I'm assuming other countries receive benefits from being tied to the Euro. Are those benefits similar or at least substantially similar to those that Germany has?

[GreecePwns]

Actually, if opinion polls are right what would probably happen in Germany would be a government more friendly toward Greece's loans. So that theory is kinda dead in the water.

I quote Spiegel talking about how German's feel they are already doing too much bailing out and you say the opposite?

The only true way to wage the feelings of a people is through opinion polling. And all opinion polls lately show a loss of Merkel's coalition to the SPD and Greens (an aside: Pirate Party winning as much as 15% ). And the SPD refuses to bail any country out...without incentivizing growth. In other words, friendlier terms to the bailout-receiving countries. If the Germans truly were tired of bailouts, you'd think they'd vote for parties who promise not to give them or to give them with harsher terms, right?

Why you mad at me? What solutions? Greece has to stop spending money that they don't have and quit borrowing. Greece needs to produce things, instead of relying on tourism and service industry which is subject to market turmoil. When recessions hit (and recessions always come at some point, it's called the business cycle), it's tourism and the service industries that suffer. When you produce things that people need, no matter what the market conditions, then you have real wealth.

Greece had some insane percentage of population who worked for the government in some shape or form. Massive unemployment in Greece (and Spain) while at the very same time Germany is reporting workforce shortages.
Imagine that.

I'll start of by saying that I am not mad at you, but that your criticism is misapplied and very vague. I like a lot of what you write on central banking, but it is not a one-size-fit-all position to take. Especially when there are other, much more preventable and much more evident causes.

The deficit problem is caused by the major parties' hiring people to jobs-for-life for votes, leading to 21 teachers in a school with 6 students. And choosing to not collect taxes for votes. Tax evasion was 10% of GDP, patches. Sure, tourism is not the most reliable industry to back an economy on, but even in these times, the government would have had constant surpluses if it had collected taxes like it should have.

This is the reason we are in the current situation. Our entire deficit is made from corrupt practices. Nothing else. Despite the fact that tourism suffers in a bad economy, despite the fact that these terrible central banking practices exist, tax evasion was at 10% of GDP at one point. And only one man in the entirety of Greek politics pointed it out (well, Kouvelis partly did as well). And that is why he should have become Prime Minister. Unfortunately, SYRIZA finished in a narrow 2nd place and it didn't happen.

Greek banks are insolvent, so what do the Greek people do? Run down to the bank and take out their money from the banks. LOL. That'll help, right? The banks in Europe are becoming like the banks in the US, don't need depositors. In the old days, and from how we'd like to think banks operate, is that banks need people depositing money so they can then loan out that money. Not so anymore, the Central Banks take the place of the depositor.

Except, the problem is, when the Central Banks do that then the money they create and loan out (virtually interest free to the banks) must be repaid by the people, with interest.

This change in dynamic from the conventional is the heart of the problems. The more a country borrows ultimately from a Central Bank the further that nation goes into the pit of never ending debt and ever increasing interest payments.

I agree with every bit of this of course. I disagree that this is the proximate cause of the Greek economic crisis.

I can tell from your screen name that you apparently don't like any criticism of Greece. So be it.

That's not true at all. I made this username when I was a very different person, before I even went to college. I'd rather stick to it than be a multi. I see no use in being proud of a nationality, something that happens entirely by chance.

For the record, I find it reprehensible of how the ECB is sapping Greece of all they have. I find it troubling that Greece has basically lost their sovereignty and that their people have been reduced to the state they are in. All from lying politicians and shyster CB's. Greece's economy "grinds to a halt"-
http://www.ft.com/cms/s/0/e79024a2-ba28 ... abdc0.html

You might not be able to view that article if you aren't a subscriber. Greek business is dropping European suppliers and turning to Chinese suppliers. That puts more pressure on EU economics. Will the new coalition government be able to renegotiate a new bailout? It's desperate in Greece-
"We have got to a point where we’re at a complete standstill,” said Constantine Michalos, the president of the Athens Chamber of Commerce. “The first thing a coalition government has to do is recapitalise the Greek banking system.”

What we got here is a game of chicken. Who will blink first? Greece? Germany? The ECB? The IMF? And when one blinks there are consequences. Imagine the Greek government blinking first and agreeing to what TPTB make as conditions, this new government will end up collapsing just like that last one (and for the exact same reasons). If the ECB or the IMF blinks first, it may be Germany who flips it's lid. If Germany blinks they just open themselves up to even more and more liability for other nation's debts.

My support for SYRIZA is based on the fact that Tsipras would not blink first whatsoever (even going so far as to annul previous agreements with the troika), knowing the ECB, whose member countries (including the citizens of Germany, as noted above) are all backing away from the Merkozy way of doing things, would. They would give Greece, like they recently did Spain (your point about Finland, the only country you mention, is moot. Finland? Really? How much clout do they have in any of this?) loans with much more growth-friendly measures attached to it as opposed to cutting minimum wage to $5 an hour.

It's a tangled web, one that can't be solved by more ZIRP lending. Coincidentally, Iceland has just arrested some more bankers. Iceland shows the way, a path the EU and the US should pay attention to. Bankers ran amok, put Iceland at risk, so Iceland tosses the bastards in jail. The EU should be tossing certain ECB officials in prison. The US should be tossing certain "too big to fail" bankers and brokers into prison, all for fraud at the very least.

Good for Iceland. They did the right thing.

Until people accept economic reality, don't spend more than you take in, it won't be the Eu going down alone. The US' time is coming as well. And when that happens, well, the EU is doomed anyway.

This is true. We agree on a lot of things here. Of course a country shouldn't spend more than it takes in without finding other ways to pay for it. In Greece, the deficits came entirely from a corrupt two party system that has fallen apart and has only been temporarily taped up by this coalition government. Should things get worse, you'll see the backlash in local elections and EU elections, if the coalition hasn't fallen apart by then.

[GreecePwns]

More news on government formation

-Samaras was sworn in as Prime Minister today.
-The cabinet will be decided today and tomorrow. It will include mostly New Democracy ministers, with some PASOK ministers. Democratic Left is opting to sit out of the cabinet position, deciding to take "an advisory role in picking appropriate members" and that as long as they agree on policy, the people chosen do not matter. Kouvelis' questioned the appropriateness of some of Samras' choices for cabinet, and negotiation on the exact members and positions is ongoing.
-A lot of infighting at the PASOK party meetings. Venizelos is sticking to his "no high-ranking members becoming ministers" rule in an effort to shake up the party and bring in new faces.

If sources close the Pasok parliamentary meeting are to be trusted, then "heated" is no longer a good enough word to describe the goings-on in there. Apparently, former Minister of Citizen Protection Michalis Chrysochoidis asked for "those that have been succesful to enter the government", with Mimis Androulakis offering him an aswer of "and you consider yourself succesful?" If reports are to be believed, the argument escalated and items were thrown, including an iPad.

The party is hurting after being victims of the ND-SYRIZA race for 1st place. They lost most of their pro-bailout voters to long-hated rival New Democracy.

[patches70]

The only true way to wage the feelings of a people is through opinion polling. And all opinion polls lately show a loss of Merkel's coalition to the SPD and Greens (an aside: Pirate Party winning as much as 15% ). And the SPD refuses to bail any country out...without incentivizing growth. In other words, friendlier terms to the bailout-receiving countries. If the Germans truly were tired of bailouts, you'd think they'd vote for parties who promise not to give them or to give them with harsher terms, right?

Ahh, look at the Greeks. It was the PASOK-ND government that went kaput in May. This led to the caretaker government and now the Greeks have elected a ND-PASOK government. What's changed? LOL It's the same freaking people who were in charge before!

Greeks hate the austerity. I don't blame them at all. It was during that caretaker government when Germany sent in the 100 tax collectors. That is BS.

I'll start of by saying that I am not mad at you, but that your criticism is misapplied and very vague. I like a lot of what you write on central banking, but it is not a one-size-fit-all position to take. Especially when there are other, much more preventable and much more evident causes.

The deficit problem is caused by the major parties' hiring people to jobs-for-life for votes, leading to 21 teachers in a school with 6 students. And choosing to not collect taxes for votes. Tax evasion was 10% of GDP, patches. Sure, tourism is not the most reliable industry to back an economy on, but even in these times, the government would have had constant surpluses if it had collected taxes like it should have.

This is the reason we are in the current situation. Our entire deficit is made from corrupt practices. Nothing else. Despite the fact that tourism suffers in a bad economy, despite the fact that these terrible central banking practices exist, tax evasion was at 10% of GDP at one point. And only one man in the entirety of Greek politics pointed it out (well, Kouvelis partly did as well). And that is why he should have become Prime Minister. Unfortunately, SYRIZA finished in a narrow 2nd place and it didn't happen.

Sure, corrupt politicians, we have them in every nation. Especially in the US. They are horrible. But all the politicians are front men for the people who control the money.

The real root of Greece's problem is that they don't control their own money. That's the plan of the central bankers, the central planning collective ideology. Europeans bought it hook line and sinker and now Greece sees what happens when you don't have any say in your own currency.
"Give me control of a nation's money and I care not who makes the laws."

You always have cronyism going on. As for the corrupt practices, do you think those 21 teachers hired look at themselves as "corrupt"?

And of course people are going to evade taxes. Hell, if you paid "X" amount of tax to the city you live in, then the city cuts police, fire, trash pickup, road maintenance, welfare, bus, food stamps, homeless shelters, unemployment benefits, and every other dang service provided by government, you'd think twice about paying your taxes as well!

You know where the Greek taxes are going, what little they collect? It goes to pay the damn interest payments on the freaking loans Greece has gotten. Out of every dollar borrowed, only 27 cents went to the Greek people, the rest went straight back to the ECB to pay the interest. Screw that!

I agree with every bit of this of course. I disagree that this is the proximate cause of the Greek economic crisis.

If it were but so simple because of crony politics and corrupt practices. That's easy to fix and Greece wouldn't need any bailouts, they could handle that quite easily on their own. The real reason is that Greece is stuck on the bottom tier of the pyramid. That's where they'll stay, so long as they stay under the thumb of Brussels.

My support for SYRIZA is based on the fact that Tsipras would not blink first whatsoever (even going so far as to annul previous agreements with the troika), knowing the ECB, whose member countries (including the citizens of Germany, as noted above) are all backing away from the Merkozy way of doing things, would. They would give Greece, like they recently did Spain (your point about Finland, the only country you mention, is moot. Finland? Really? How much clout do they have in any of this?) loans with much more growth-friendly measures attached to it as opposed to cutting minimum wage to $5 an hour.

Oh, don't discount Finland so easily. Sure, they don't contribute a lot of actual money, but they are for a different purpose. Finland is to serve as a consensus. When Germany says "Sorry Greece, a deal is a deal, no renegotiation. Spain, sorry, but you'll have to offer up some collateral. Don't get mad at us! There are others who are demanding the same thing! If you want the money, provide collateral."
Now Finland is more relevant, and there will be others I'd imagine. Though you might not see them so much in the spotlight. Bottom line, for lack of better terms, a scam, a shimsham, a con. But hey, don't take my word for it. Time will show soon enough.

Good for Iceland. They did the right thing.

That they did. They didn't put up with a shakedown. That is what all this debt crisis is, and the "too big to fail" suckers. It's a shakedown of the taxpayers. Look back through history, it happens every freaking generation. A big shakedown. Some generations there will be a few shakedowns.

In the US, there is plenty of talk about cutting this and that. I'm thinking, we gotta cut social security, welfare, social safety nets for lack of money, but we had the money to bailout the banks to the tune of trillions of dollars. I'm seeing a huge disconnect at what a societies priorities should be.
These banks, through their own practices, put themselves into positions where the taxpayer must bend over and take it without the benefit of even vaseline. It happens not just in the US. During the 2008 debt crisis, all those bastards should have gone straight into bankruptcy. All their assets should have been sold off and new institution would have risen to take their place.
Instead, it set off the never ending cascade of bailout after bailout and there is no end in sight until people finally say, "enough".

The world won't end. All the same horses will still be riding, what will change is that there will be different riders is all. Iceland shows this is true. They didn't bailout the Central Bankers. Iceland did the right thing because they put the bankers under the thumb of the people, not the other way around as it is everywhere else.

This is true. We agree on a lot of things here. Of course a country shouldn't spend more than it takes in without finding other ways to pay for it. In Greece, the deficits came entirely from a corrupt two party system that has fallen apart and has only been temporarily taped up by this coalition government. Should things get worse, you'll see the backlash in local elections and EU elections, if the coalition hasn't fallen apart by then.

The debt and deficits come from a currency that is so easily manipulated for the benefit of only those who created the money in the first place. The fact that money itself is really debt right from the get go is what gets nation's. It's by design. The same damn scam that's been going on since around 1,100AD.
The money powers do all they can to convince the people that it's their own fault, not the fault of the money powers. I'm sad to say, too many people buy into that line.

The Greek government accounting practices, which hid the rot for quite a long time, are the same accounting methods used by all the governments. The same accounting methods used by the CB's.

Of course, if you used the same methods to balance your checkbook, you'd get yourself arrested for fraud quite quickly. But for some reason it's not fraud when government and central banks do the same damn thing. Go figure, eh?

Anyway, I truly hope it works out for the new Greek government. I obviously have serious doubts or confidence in this newly formed government. I have little confidence in any government, really. But the ECB are some wily bastards, I'll say that. I thought our own FED was bad, but dang, the ECB. The ESM is one hell of a scam-

[patches70]

This is what Greece has to look forward to.

Greece is now selling land, the Astir Palace, which hosted the Bilderberg conference in 1993 and 2009. The luxury resort hosted famous movie stars, world leaders, people like Jackie Onassis, Nelson Mandela, Tony Blair, Jane Fonda and Frank Sinatra.

The Greeks have been trying to lease their land, but no one was buying leases. Outright sale of Greek land however....

The Astir Palace is State owned. Greece until now has been adamant in not selling State owned property.

“It seems that so far offering long-term leases hasn’t been effective and that the market has given its message to the Greek Republic’s fund,” Perrotis said in a June 6 interview in Athens. “Now the state is seeing that the interest expressed is for outright sales and the fund may have to adjust.”

Taprantzis said the sale of Astir Palace is an exception because the bank is in a position to force the fund to sell.

“We are in a prisoner’s dilemma,” Taprantzis said in a June 6 interview. “Only cooperation will drive the best outcome and if we don’t follow the banks’ lead, our property will be valueless.”

Starwood Hotels & Resorts Worldwide Inc. (HOT) operates the Westin Athens Astir Palace Beach Resort and the Arion Resort & Spa Astir Palace, which includes the bungalows. Among the resort’s restaurant is Matsuhisa Athens, a sushi eatery owned by Nobu Matsuhisa that overlooks the Aegean Sea.

That's how the game works. Greece, worried about the value of their land, trade said land for pieces of paper, which Ironically, will fall in value. Foreigners will get that land that try as they might cannot just pick up and take home with them.

Imagine, when this is all over and things return to semi-normal and Greece gets that tourism business back again, tourists will be visiting resorts that are not owned by Greeks.

Money laundering, it's best done with real estate. In the US, did you know that NAR (National Association of Realtors) is exempt from having to do anti money laundering checks for foreign buyers? I mean, $100 million New York penthouses don't just sell themselves don't ya know.

Someone else put this best-

The irony is that this resort will be bought up on pennies on the dollar by the same crooks that cause the fire sale to commence. Talk about a long term "investing" strategy. Get Greeks to accept fraudulent debts through the ECB buying back, within days, the same bonds they just sold. These debts cause the imposition of austerity on the Greeks. Greeks have a funding shortfall and need to sell assets. Same crooks within the ECB member banks go on a shopping spree. This is just a guess, but it looks pretty masterfully played. All the while the resentment builds in the people.

That's the Greek "renegotiation" for ya.....
Piece by piece, every bit of real wealth will be sold off to foreigners and Greece will be left with nothing.

[MeDeFe]

I have a few questions:

(1) Why do German pension funds have huge stakes in southern Europe? I would assume German pensions would have more stakes with Germany rather than Greece, Italy, or Spain.

(2) How movable are pension funds? Could already invested cash be moved to a different investment?

(3) I'm assuming other countries receive benefits from being tied to the Euro. Are those benefits similar or at least substantially similar to those that Germany has?

1) Because of the higher interest rates. It came with the deregulation of the financial markets. In Germany, pension funds and banks where either the state or one of the Bundesländer (equivalent of the US states) is a major(ity) stakeholder are bound by fairly stringent rules about what they may and may not invest in. But the rules were "aligned" (read: relaxed) over Europe, and here we are now... A way of completely circumventing the rules was by setting up proxies which were not bound by the rules, with the result that you have an investment company with no equity of its own on the Cayman Islands or whereever, but it's backed by a bank which is backed by a Bundesland which is backed by the 3rd (now 4th) largest economy in the world. Germany itself recently got into "negative interest rates" for its government bonds, there's no money to be made there, it can only be kept safe.

2) The money is moved as soon as possible, I'd say. But I imagine it'd be a big loss if the long-term bonds and investments were amortised. You'd have to ask Pedronicus about this really. I only take a keen interest, he's a professional.

3) No other country really benefited from the Euro in the same way as Germany. As I said before, wage levels have been kept artificially low in Germany while they've gone up further in the rest of the Eurozone. That's advantage number 1. Closely related to this is that inflation in Germany was a mere ~11% over one decade. By European agreement it should've been 25% (France hit the mark nearly exactly), and on average it was 25% in the Eurozone. Southern Europe averages out to about 40% inflation over one decade. That's advantage number 2 for Germany.
Internationally, the strong Euro was no big deal for German companies that were already used to a strong Deutsche Mark, within Europe, the stagnating wages and low inflation allowed German companies to outcompete everyone else. It's convenient to blame the wasteful Spaniards and lazy Greeks and all, but Germany has contributed atleast as much to the current problem by contributing to the other side of the imbalance, and its companies and banks profited greatly in the meantime, the population less so.

[thegreekdog]

I have a few questions:

(1) Why do German pension funds have huge stakes in southern Europe? I would assume German pensions would have more stakes with Germany rather than Greece, Italy, or Spain.

(2) How movable are pension funds? Could already invested cash be moved to a different investment?

(3) I'm assuming other countries receive benefits from being tied to the Euro. Are those benefits similar or at least substantially similar to those that Germany has?

1) Because of the higher interest rates. It came with the deregulation of the financial markets. In Germany, pension funds and banks where either the state or one of the Bundesländer (equivalent of the US states) is a major(ity) stakeholder are bound by fairly stringent rules about what they may and may not invest in. But the rules were "aligned" (read: relaxed) over Europe, and here we are now... A way of completely circumventing the rules was by setting up proxies which were not bound by the rules, with the result that you have an investment company with no equity of its own on the Cayman Islands or whereever, but it's backed by a bank which is backed by a Bundesland which is backed by the 3rd (now 4th) largest economy in the world. Germany itself recently got into "negative interest rates" for its government bonds, there's no money to be made there, it can only be kept safe.

2) The money is moved as soon as possible, I'd say. But I imagine it'd be a big loss if the long-term bonds and investments were amortised. You'd have to ask Pedronicus about this really. I only take a keen interest, he's a professional.

3) No other country really benefited from the Euro in the same way as Germany. As I said before, wage levels have been kept artificially low in Germany while they've gone up further in the rest of the Eurozone. That's advantage number 1. Closely related to this is that inflation in Germany was a mere ~11% over one decade. By European agreement it should've been 25% (France hit the mark nearly exactly), and on average it was 25% in the Eurozone. Southern Europe averages out to about 40% inflation over one decade. That's advantage number 2 for Germany.
Internationally, the strong Euro was no big deal for German companies that were already used to a strong Deutsche Mark, within Europe, the stagnating wages and low inflation allowed German companies to outcompete everyone else. It's convenient to blame the wasteful Spaniards and lazy Greeks and all, but Germany has contributed atleast as much to the current problem by contributing to the other side of the imbalance, and its companies and banks profited greatly in the meantime, the population less so.

It's really a fascinating system that I may try to learn more about at some point. Anyway, thanks.

[Fruitcake]

meanwhile....back in the real world (that's the world outside all the nonsense about bail outs, renegotiations of financing etc etc) the good old Euro keeps inexorably slipping downwards. Having breached €1.25/£1 a couple of times recently it has now settled firmly beyond it. Trading today saw it slip to 1.265. I cannot believe people see Sterling as a safe haven currency, but in the topsy turvy world of IMF Director Christine Lagarde, and her stormtroopers this is now something of a fact.

I can only imagine what it must feel like today if I was a government ‘swing’ voter in Greece.

Following its very first meeting with the EU/IMF/ECB troika the new Greek government looks to have abandoned its hope for renegotiation, at least in the short term.

I read earlier, with great interest, the announcement by Finance Minister Yannis Stournaras;

“The programme is off-track and we can’t ask for anything from our creditors before we get it back on course.”

After rolling around chortling, I decided to think this through. I had predicted some time back that this negotiation would never actually happen. It looks to me as if the Greeks have 'blinked first'. I'm not disputing the so called Greek programme is off track – following months of delays from the elections and the near impossibility of achieving the cuts in the first place, even imagining it would be anywhere near on target would have been, frankly, living in a dream world.

Meanwhile, our German friends are quietly building substantial business interests in the BRIC countries, ensuring, as they do, that when the shite really hits the fan (soon) they will be, as usual, in the right position.

[BigBallinStalin]

Gideon Rachman says in his yesterday column in the Financial Times that democratic traditions in Germany are too fragile and the German government - without UK support on the issue of Greek/Italian/Spanish-insolvency - will be taken over by Nazis.

We Isolate and Overload Germany at Our Own Peril

While Ms Merkel’s handling of the crisis has not been faultless (whose has?), she has one huge achievement to her name. She has prevented the political extremes from gaining a foothold in the country. Anybody who thinks that is a phantom danger should take a look at Germany’s neighbours. Germany has all the conditions for a similar backlash. And yet despite the burdens and risks that Germany has already taken on, the country’s government finds itself abused for not doing even more. Isolating and berating Berlin, while trying to force the country to underwrite the finances of the whole of the eurozone, is a politically dangerous course. The rise of far-right nationalists in Greece or the Netherlands is deeply regrettable. The rise of the far right in Germany would be a disaster!

http://www.ft.com/intl/cms/s/0/bfc6959c ... z1xcOP1F4m

So, if they aren't bailed out, we get Nazis 2.0. And if they are bailed out, we get Nazis 2.0 but only in Germany?

[BigBallinStalin]

One big reason Germany is "chaining [it]self to a sinking ship" as you aptly put it, patches, is because German pension funds hold huge stakes in Southern Europe, and if countries start leaving the Euro or go bankrupt, that money is gone. A large portion of the generation of people up to 35 years old might be disillusioned enough to take it with a "yeah, I never expected to get a retirement pension anyway", those who already have been working for over a decade and paid into the funds with the expectation to actually get money back later on will be pissed off, though. And if retirees suddenly find their income halved (or gone completely) they will at the least stop voting for the party they've always voted for, the same party Merkel belongs to, unless they just take to the streets. Today's retirees were teens and young adults in the 60s and 70s, they were there for the reunification, they're used to social upheavals.


Then there's also the fact that without the Euro, Germany could never have based its economy on exports the way it has in the last decade. Sure, the German economy was strong before the Euro, too, and Germany had a trade surplus year after year. But with the common currency, German industries were able to dominate the trade over all of Europe because Germany has systematically been keeping wage levels flat, inflation far below the average of the rest of Europe, and vastly increased the number of low-paid and temporary jobs. Remove the Euro and this advantage becomes irrelevant, German industries start to struggle against a competition that's no longer hampered, and suddenly there's a decade's worth of stagnation to make up for in order to boost consumer spending. Under controlled forms and a stable Euro that could take 20 years, if the Eurozone starts breaking up there's no good way to go about it. The exporting machine would be stuck with a too strong currency, wage levels would be artificially low and consumption with them, cue the national deficit, someone has to spend. But after the recent railing against wasteful governments, the extolling of "thrifty Swabian housewife"-economics (no, I kid you not), that would be a very tough sell. Even more so if the pension funds are gone.

Sounds like the young will be sacrificed for the benefit of the old.

[patches70]

[GreecePwns]

Two ministers have already resigned from the Samaras cabinet, after the Prime Minister decided he will make absolutely no attempt to renegotiate any of the conditions of the bailout before even meeting with European representatives.

In other news, the sun rose in the morning and it set again at night.

[Fruitcake]

The acceleration of the ultimate demise of the Euro as we know it continues to gather pace.

Having finally broken the €1.25/£1 a few weeks back and held there, it has increased the rate of slide and now sits well over €1.28/£1

Going into the market on a daily basis and betting on a further slide is pretty much like picking up money from the ground. The variant swings we are seeing daily are now as wide as a cent give or take. It doesn't take a rocket scientist to see where the bottom of the range is and where the top will be (I actually don't bother with the top, just set my margin profit and my software auto exits me as soon as the mark is breached).

I am still of the belief this slide will continue through the summer and onwards until we see €1.40/£1

Sovereign debt for Greece is still carrying rates that are totally unsustainable (around 24.5% - 25% pa on 10 year notes). Spain has now hit the skids in a major way as it breaks ranks with Italy in terms of rate (7% is pretty much the norm now whilst Italy sticks at 6% odd).

I have been really involved in trading various risk instruments in the sovereign debt markets for a few years now. Looking back at my posts makes chilling reading. here were a couple of choice posts which I looked up:

I posted this on Mon Jun 14, 2010 11:07 pm

rofl... in 2 weeks I may be buying euro after it bottoms out. You guys helping feed the paranoia will make me money. Frankly, I do not understand the euro in that I dont get why so many countries thought it was a good Idea... I never will, because it was not a great idea. But those said countries for whatever reason really believe in the EU. It will not fail. Im sorry.


euro is at a 14 or 15 month low atm.. I think it will hit its rock bottom soon... 2-3 weeks after the paranoia lifts.. then it will be time to invest

Your time scales are way out. 2-3 weeks? I would still be shorting it at that point.

May 12

time will tell which of us is right, i believe it will hit its bottom soon, the same people that had it when it was much higher, will get over tha paranoia and buy back more soon.

Well I do hope you didn't follow your predictions with hard cash. I have sat waiting for the bottom and it ain't anywhere near yet (even though the Euro keeps sliding down that greasy pole of value).

Apropos all this I see the dear Greeks will get an uplift in their economy this week as Athens is invaded by the bureaucrats of the European Commission, the IMF and the ECB who are all in Athens this week to check up on Greek promises to reduce their deficit.

The spreads against the Bund (presently 2.57% yield) are now:

Greece 6.03%
Portugal 2.73%
Spain 2.01%
Italy 1.69%

Alarmingly the Italian spread has tightened. The upside is that the Greek spread has remained stubbornly above 6%

NOTE THE YIELDS BACK THEN

I then posted this on Tue Dec 14, 2010 9:30 pm

Well the six month contracts are now due in the main. Those of us who decided to test the veracity of the so called bail outs have been richly rewarded with 6 month contracts tightening in price to reap a good harvest.

How does this work? Simple, some of us bet the bond markets would pay little heed to the Euro bail out and bet on it not having much effect, others bet that it would.....so those of us who set contracts to purchase Irish bonds this month when the prevailing bond rate was around 5.43% (see my bond yield posting in the Greek collapse thread at the bottom of this page: http://www.conquerclub.com/forum/viewtopic.php?f=8&t=114366&start=165 ) are seeing a very healthy return as we fixed contracts to sell, at a discount to the prevailing prices then, but nowhere near as far as they have fallen. In short, Irish bonds are now worth just 59% of what they were back in July with yields increasing from 5.43% then to 9.21% at close today. One friend of mine forward sold over £10M of bonds at 13.75% discount to the price back then, this means he got contracts to sell at 13.75% discount to the price prevailing and today purchased the lot for around 59% of the original price, netting (after insuring against failure of contract fulfillment) 77.63% sale price against 59% purchase, a near on £2M profit banked once the contracts settle this week. A tidy 31.6% profit margin on actual cash laid out in 3 days flat.

This is but the beginning of the end people....look at the list below and see if you can spot the next big earner over the first half of 2011.
1st number is the yield back in July, the second, the yield today.
Italy 4.02 Italy 4.42
Spain 4.36 Spain 5.18
Ireland 5.43 Ireland 9.20
Portugal 5.55 Portugal 6.99
Greece 11.38 Greece 11.77

Now look at the yields as of today:

Italy 6.07
Spain 6.96
Hungary 7.34
Ireland 8.21
Portugal 10.56
Greece 24.49

Get ready for cliff edge arriving for the Euro as we know it....for it is pretty much here and the dear Germans will not want anything to do with it in its present clothes.

[patches70]

[BigBallinStalin]

How will they pay back the loans?

(1) Can't the ECB simply lend credit into existence? It's what the Fed's been doing, and it's pretty much what all countries with central banks due whenever they engage in deficit spending.

For this circumstance in Europe, in the short-run, the creation of new money props up the financial institutions, and usually the increase in the supply of money reduces its value (depending on the relative value of other currencies), which would put an upward pressure on prices (i.e. inflation). This would cover some of the debt, and the expected increase in inflation is sometimes delayed if the bank's keep that money as reserves (which we've seen in the US).

(2) As we've seen with Greece, to buy more time, they basically renegotiated the terms of repayment.

[patches70]

How will they pay back the loans?

You know those guys are comedians, right? They're making a point, true enough, but it's satire.

(1) Can't the ECB simply lend credit into existence? It's what the Fed's been doing, and it's pretty much what all countries with central banks due whenever they engage in deficit spending.

What? Who is the ECB going to lend the credit to? The Greek government? The Greek banks? If the ECB lends newly created money, don't they expect to be paid back eventually?

The Greek government is insolvent as are the Greek banks. Same goes with Spain and Italy.
So, should the ECB start lending to them? Or should the ECB lend to, oh say, Germany, and then Germany can lend the money to the Greeks? Would that help Greece much or just make it worse? Would they get a better interest rate like that?
The ECB could lend to the Greek government, except the Greek government is having a bit of trouble collecting taxes at the moment. Aren't they?
Isn't the collection of those taxes the way the Greek government would pay back any loans?
But say the Greek government is collecting some taxes. If they were able to collect $100 a year in taxes, how much would that allow the ECB to loan them?
Wouldn't any loan to the Greek's be anchored by the amount of revenue the Greek government takes in?

(2) As we've seen with Greece, to buy more time, they basically renegotiated the terms of repayment.

Yeah, that worked the first two times or so, but that ship has sailed. And every time the Greeks "buy time" their debt load increases, the interest they pay to service the debt increases and more social services are canceled.

The new Greek government has authorized the sale of State property now. Real collateral. All the other "buying time" deals have been to avoid actually putting up any real collateral.

[GreecePwns]

They didn't renegotiate anything, in fact. The agreement remains the same as it was before the election, except privatization has been speeded up.

[BigBallinStalin]

They didn't renegotiate anything, in fact. The agreement remains the same as it was before the election, except privatization has been speeded up.

MOST came quietly in the end. After a tortuous process, the majority of private holders of Greek government bonds had agreed by March 9th to trade in their bonds for new longer-dated ones with less than half the face value of the old ones and a low interest rate. The biggest sovereign-debt restructuring in history allowed Greece to wipe some €100 billion ($130 billion) from its debts of around €350 billion.

http://www.economist.com/node/21550271
Mar 17th 2012

Technically, that was a default; however, the loans were apparently re-negotiated.

[BigBallinStalin]

How will they pay back the loans?

You know those guys are comedians, right? They're making a point, true enough, but it's satire.

(1) Can't the ECB simply lend credit into existence? It's what the Fed's been doing, and it's pretty much what all countries with central banks due whenever they engage in deficit spending.

What? Who is the ECB going to lend the credit to? The Greek government? The Greek banks? If the ECB lends newly created money, don't they expect to be paid back eventually?

The Greek government is insolvent as are the Greek banks. Same goes with Spain and Italy.
So, should the ECB start lending to them? Or should the ECB lend to, oh say, Germany, and then Germany can lend the money to the Greeks? Would that help Greece much or just make it worse? Would they get a better interest rate like that?
The ECB could lend to the Greek government, except the Greek government is having a bit of trouble collecting taxes at the moment. Aren't they?
Isn't the collection of those taxes the way the Greek government would pay back any loans?
But say the Greek government is collecting some taxes. If they were able to collect $100 a year in taxes, how much would that allow the ECB to loan them?
Wouldn't any loan to the Greek's be anchored by the amount of revenue the Greek government takes in?

? They lend credit into existence, meaning if you don't got the funds (i.e. insolvent) and neither does the government, then the ECB will simply add money into their accounts. It's the modern way of "printing money," which is then thrown into the financial institutions.

For example, this describes the event when the ECB stopped lending money to Greece.
http://www.bloomberg.com/news/2012-05-1 ... rect-.html

You pose a lot of great questions, but as far as the central planners were concerned, those are long-term issues. At the moment when Greece was collapsing, they saw two possible scenarios:

(1) Let Greece fail, and the Euro will likely plummet in value.

(2) Lend money to Greece, prop up the Euro, and engage in other means to manage the delayed crisis and other problems as they emerge afterward. We'll see how that pans out...

(2) As we've seen with Greece, to buy more time, they basically renegotiated the terms of repayment.

Yeah, that worked the first two times or so, but that ship has sailed. And every time the Greeks "buy time" their debt load increases, the interest they pay to service the debt increases and more social services are canceled.

The new Greek government has authorized the sale of State property now. Real collateral. All the other "buying time" deals have been to avoid actually putting up any real collateral.

As I said, we'll see how it pans out.