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Countdown to ‘World-Shaking News’ from Europe

By Rick Ackerman Posted on February 10, 2012, 12:01 am EST Last Updated February 10, 2012, 3:23 pm EST

[I’m running this commentary for a second day because of the high-minded discussion it has elicited.  Please be aware that an announcement next week concerning the latest bailout for Greece would probably generate a short-squeeze rally on Wall Street, much as it has a dozen times before.  Be that as it may, a potentially important target at 1353.00 that I’d flagged here for the E-Mini S&Ps has held thus far, the futures having spiked in the opening hour yesterday to…1352.75.  In other trading notes, a rally target for Bank of America shares was bullishly exceeded, although two more important ones remain: 13085 for the Dow — a longstanding objective of ours;  and 119.91 for Goldman Sachs. Taken together, the prospect of simultaneous tops in so many bellwethers suggests that an important trend change could be imminent.  Click here for a free trial subscription to Rick’s Picks if you’d like to keep abreast of further developments in real time. RA]

The financial world is on pins and needles as “investors” await Europe’s latest, quasi-momentous decision on the fate of Greece. The Greeks themselves, no fools, were a step ahead of the politicians and bankers, rioting in the streets.  Many of them have probably imbibed enough austerity to last a lifetime. Keep tightening one’s belt a notch at a time and eventually you’re left with two bloody torso halves. Not that the bankers would mind the mess as long as they get paid. So what, actually is at stake in this latest chapter of the eurobailoutpalooza? The rescue package under discussion amounts to a piddling €130 billion, and we can’t see how it’s going to make much of a difference. Even if it’s only intended to buy a little time, a sum as meager as that may not see the Eurocrisis through the weekend, much less through 2012.  For perspective, Flint, Michigan’s unfunded retirement and health benefits total about three times as much. Is Flint in worse shape than Greece? Hard to say, although the close proximity of such charming resorts as Corfu and Rhodos, as opposed to beautiful downtown Detroit, would seem to tip the quality-of-life numbers in favor of the Greeks, even the down-and-out day-trippers.

As we went to press, Europe’s workout team, consisting of the ECB, the IMF and Greece’s leadership, was supposedly  €300 shy of a deal. Their goal is a €3 billion package of spending cuts that would ostensibly keep this year’s budget on-track. Again, a comparison to Flint is instructive, since the bombed-out Michigan city’s annual budget shortfall is about $14 million.That might not sound like much in comparison to a long-term structural problem that tallies into the hundreds of billions of dollars, just as Greece’s adds up to trillions, but isn’t ignoring reality the point of these round-the-clock talks?  As long as they continue to focus on 2012’s operating deficit, the long-term disaster that surely looms is out of sight, though perhaps not wholly out of mind.

And on Wall Street…

Meanwhile, U.S. stocks dithered on Wednesday whilst eurozone officials hashed out the final details. With any luck an agreement will be announced just before Thursday’s opening bell on Wall Street. Will it send stocks into a short-squeeze spasm that demolishes some major rally targets we alluded to here yesterday?  It’s impossible to say, although we’ll be ready for Them no matter how They come at us.  Perhaps Greece’s success in postponing a day of reckoning will inspire the denizens of Flint to focus on small details, lest the big ones overwhelm all hope of muddling along…forever.

***

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  • Paul February 13, 2012, 9:58 am

    Cam … here is an interesting tid bit … the CME just lowered margin requirements for precious metal trading … and it comes right after Goldman Sachs makes a big bet in Royal Gold … suspicious indeed … that’s why we monopoly players must take our “nickels worth” when the time seems right.

    • Cam Fitzgerald February 14, 2012, 8:36 pm

      I noticed that. I am not jumping in quite yet though. Check the dollar chart for today. I am getting confirmation of my .82 retest with the buck up sharpy today along with bonds and gold in decline. The next few days should clear up the direction we are heading in.

      Those Greeks really hate austerity don’t they. I read that more than a 100,000 of them showed up to lob rocks and petrol bombs at the seat of government. One thing that gets overlooked in all this fiasco is that the people themselves seem to be rejecting it.

      Does it even matter what the legislators vote for when the people turn it down? Mob democracy is the most worrisome kind. It knows what it does not want but rarely has solutions to fix what is not working.

  • Cam Fitzgerald February 13, 2012, 9:07 am

    Interesting. You and I do see the dollar playing out in a very similar way. I agree another round of devaluation is coming. But not yet.

    Like you, I also expect a longer multi month trend down although I am not willing to bet yet where it will end. Too many variables. This interim movement is just taking us steps along the path to the real trend change but when that comes we will see real movement in commodity markets again.

    Oddly, I expect these to be somewhat artificial if China is really slowing as much as some are speculating and its demand for resources waning. This presents us with two alternate outcomes that are each at odds with each other. Commodities rising as the dollar declines and fresh easing is introduced versus commodity prices under pressure as China’s property bubble does a US style face-plant.

    No doubt a war will settle which way the balance tips. Does Iran, incidentally, seem to be doing even too much sabre rattling lately? I could laugh out loud because it all seems so scripted. Probably is and it is meant to be keeping oil prices afloat.

    One thing we monopoly players will agree on is that the game must be played on and I am sensing that any big drop in oil prices will definitely shift some Western economies from their marginal growth positions into outright deflation. That cannot happen right now. Keeping oil prices afloat (it is the best source for driving inflation we have) is therefore essential. So it shall be done.

    Thanks for the great response by the way. Could not have said it better myself.

  • Paul February 13, 2012, 7:48 am

    Cam … my personal view on the US dollar index is that it keeps falling from here to about .77 in a few weeks time … then as you say it will rise to about .82 – .83 in a few months …

    Then from there the US dollar index will begin a longer decent downward and reach the .74 area again … about 9 months to a year down the road … it is during this longer dollar decent down that real money (gold and silver) will likely make new highs …

    Because we monopoly players know the banksters well and that fiat is being produced at ever increasing rates worldwide to keep the game going … any dollar rise is simply a smoke screen “artificially produced” by the banksters use of “fear tactics” … so I simply use any strength in the dollar to buy myself more precious metals.

    It’s interesting that the banksters (Goldman Sachs) just took a big position in Royal Gold at $69 … not sure if they did it for a short term trade to $85 or if they they are looking for over $100 a year out … but I jumped in with them … guess I’m still a bankster at heart …

    Hey buying gold and other commodities is never a wrong move in my book … and if the banksters are doing it now … it may even mean something much deeper we don’t know about is in play.

  • Paul February 12, 2012, 8:53 pm

    Mario … I know exactly what Bernanke is up to … because I was a bankster too “when playing Monopoly” … I would make sure no default was declared by any player … notice how the International Swaps and Derivative Association won’t declare Greece to be in default … the way I did it as a kid was to illegally slip a $500 dollar bill in fiat Monopoly money to any player I thought was on the verge of bankruptcy …

    Of course the other players got wind of it and wanted free handouts also … so I went to the closet and got all the Monopoly money out from some another older Monopoly sets I had laying around … instantly the money supply more then doubled … just like Bernanke’s QE2 and now QE3 … before I knew it everyone owned 4 houses and were putting up hotels (without the necessity of lier loans) … the only problem I had was with everyone owning 4 houses and hotels on their properties the cost to the players landing on such properties became exorbitant (many became so close to bankruptcy that the game could have ended quickly … I didn’t want the game to end so soon …

    Since I was the bankster of last resort … I had all the power to keep the game going … all I had to do was make up a few new rules … I decreed that every time a player passed GO they would now collect a $500 dollar bill instead of $200 dollars (no one objected) … I also decreed that anyone who got snake-eyes would automatically get a free $500 dollar bill (again no one objected) … I also decreed that graduated income taxes would now be collected by me from all players when someone landed on their property (some objected to this but I convinced them with an under the table bribe) … I stated that 20% in income taxes would be collected from the wealthier players who owned Park Place and Boardwalk … 15% from Pacific, etc. down to a 2% rate from the Baltic property owners … this had the effect of making the game last a lot longer because it generated the money I needed to help bail out any players that were in economic trouble … in this way I rigged the game so we could all have fun and the game just went on and on until everyone became physically exhausted …

    Getting back to Bernanke … in his more crooked game the rich pay “No Taxes” … so wealth is accumulating in very few hands … he is not a very good bankster and hence the future for the current Ponzi scheme is very bleak indeed … Bernanke as the lender of last resort for the entire Western financial world just made another “illegal deal” in December granting in excess of $500 billion in US dollar swaps to the European Central Bank … the ECB in turn lent those funds to its member banks to buy European debt thus preventing member bankruptcies … and some of that money was likely pledged to buy US Treasuries and strengthen the US dollar.

    It is clearly visible to all of us (that ever played Monopoly) that the US dollar is toast and should be falling in value … but … the banksters can’t let the US dollar go down non-stop to zero … as that would end the game … to keep the game going they must have a “strong dollar policy” at the same time they are devaluing it … think about it … if the Fed can just create money out of thin air and hand it Greece’s banksters to keep them in the game … what is all the fuss about over there in Europe? … the fuss has to do with the need to create fear … “fear of a Greek default” is necessary as it will scare the public into buying US dollars at the same time Bernanke is printing up a trillion more of them … and what of the talk of war with Iran? … the same logic applies … Bernanke and his buddies need to create “fear of war” in the minds of the public so as to boost the value of the US dollar at the same time it is being debased … in this way the banksters (who know that the US fiat Monopoly money is actually falling in value) can use its unnaturally high value relative to other currencies to buy gold and gold stocks (i.e. Goldman Saks recently bought a boatload of Royal Gold).

    • Cam Fitzgerald February 13, 2012, 4:43 am

      That’s not bad Paul. Not bad at all. I think you are right too that a strong dollar policy can exist during a devaluation and this in fact is my own thesis.

      We have seen that as the Euro rises and falls against the dollar that in effect both are devaluing together. You and I would have been great Monopoly combatants in an endless game. I swear, I used to do the same thing you are talking about. I gave money to broke players so they stayed solvent long enough for me to get complete control of everything (but not so much that everyone quit in disgust). People need hope you know; even 8 year olds on game boards.

      By the way, my contention is the dollar is on its way back to a retest of .82 before starting a larger trend down against the Euro. Any thoughts on that?

  • Paul February 12, 2012, 10:45 am

    Cam … remember how excited everyone was to buy land, and build more and more houses and hotels to collect even more “fiat” Monopoly money … when the game finally ended all those deed cards, houses and hotels got thrown in the closet right along with the worthless fiat Monopoly money.

    Just look at the housing market today … seems the end game is upon us … Bernanke is now printing hand written and electronic IOU’s because there is “a shortage” of actual Monopoly money that came in the original game box.

    Some players think they should hold fiat Monopoly money when the game ends because there is “a shortage of it” compared to Bernanke’s electronic IOU’s …

    We will soon see just how much candy they can buy with the Monopoly fiat they are hoarding when the game ends!! … look at history … how many rare Continentals does it take to buy a Cracker Jack box today? …

    Remember that TAX CARD on ASSETS we always dreaded getting? … it was brutal … but a good lesson learned … “Taxable” land, houses, hotels and cash in any Monopoly Ponzi Scheme will always be a poor choice when compared to “real money”.

  • Cam Fitzgerald February 11, 2012, 4:42 pm

    Damn. What a great memory. I did exactly the same thing Paul. I can remember it well too. Maybe Monopoly just had passion when we were kids but if you played your cards right you really could swap real cash for the paper off the board game and everyone still seemed happy enough. Like taking candy from babies. Some of us really were born capitalists. It came so natural that I suspect it might even be genetic.

  • Paul February 11, 2012, 4:02 pm

    The Fed who is the banker in this “globle game of Monopoly” is now playing fast and loose … providing under-the-table cash to all the bankrupt players to keep the game going. This always happens in the last stages before the game ends.

    When the game ends … all the players go back to reality … they put the Monopoly money away in the closet and return to a real money world.

    When I was a kid playing Monopoly (and not being the banker) I would trade some of my $500 dollar bills of Monopoly money to other players on the verge of bankruptcy for a “real” nickel.

    When the faudulent game finally ended I was the only one who could go to the candy store and buy some Craker Jacks for my time and energy invested.

    • mario cavolo February 12, 2012, 1:18 pm

      And it popped into my head that knowing what that “real nickel” to trade for in today’s world is a piece of knowledge that will make the difference between being broke or ok when some type of financial disaster hits….I’ve quipped a few times before, I don’t care if its peanuts, olive oil, crude, gold, dividend paying telecom stocks, USD, ag commodities, on a relative basis, I want to to know which assets are that real nickel to have in hand! Tough stuff…Cheers, Mario

  • Mark Uzick February 11, 2012, 2:26 pm

    Here’s a pro-Facebook essay, although it may not address some of the concerns brought up here to everyone’s satisfaction and it doesn’t do full justice to the concept of democracy, it’s interesting anyway:

    http://whiskeyandgunpowder.com/why-facebook-works-and-democracy-does-not/

  • Mark Uzick February 11, 2012, 1:12 pm

    Cam Fitzgerald: “Picture the total debt of the entire globe based on those images. How big a pile is that? Compare it to all known gold. We would be shopping with flakes of the stuff, would we not. Who even has scales that small to measure it?
    So the real value of an ounce of gold is maybe $100K?”

    Gold is not debt; it’s money! If debts end up denominated in gold, they’re still only as good as the ability of the borrowers to earn the gold or to liquidate collateral to pay them back.

    Don’t worry about the quantity of gold; the market will solve any issues concerning the quantity of money. ‘You’re putting the cart before the horse’; gold can’t be worth $100K/oz in terms of what that buys today; it’s gold’s real value that makes it ideal for use as money; it’s not gold’s role as money that, in the long run, gives gold its value.

    If there’s a shortage of gold to transact business, then the buying power of gold will start to rise above its intrinsic worth to the extent needed to dislodge gold savings as investments become bargains in terms of gold, thereby increasing the velocity of gold-money.

    If the economy grows so large that that there’s still not enough money to circulate, even with gold fully mobilized, then gold’s buying power will, once again, start to rise beyond its true value to the extent needed to motivate entrepreneurs to market alternative forms of money to supplement gold’s role; e.g., silver, platinum or even bearer mini ETFs representing a stock index, a commodity or bond index.

    The market will determine which forms of money will become accepted and which will fail.

    • Cam Fitzgerald February 11, 2012, 4:47 pm

      That was a great argument Mark and you might be surprised to know I agree with much of it. I had to chuckle when I got to the part about entrepreneurs inventing alternative forms of money though. You just know its going to be paper again. Come on, its irresistible. I mean, how cheap can you get with the company budget and yet still claim your product has the power to buy gold and farmland?

    • Mark Uzick February 11, 2012, 5:56 pm

      Cam Fitzgerald,

      Thank you. There’s nothing wrong with paper money, as long as it’s legitimate, but it’s even more likely to be e-money.

      ” I mean, how cheap can you get with the company budget and yet still claim your product has the power to buy gold and farmland?”

      Are you suggesting some kind of fraud or is it a Ponzi scheme or pyramid where the participants knowingly participate, deluding themselves that it can really work? Either way, that’s not what I meant by ‘entrepreneur’.

  • Cam Fitzgerald February 11, 2012, 7:32 am

    And this just in from CNN. And article entitled “Google knows too much about you” by Frida Ghitis. In this piece she clearly outlines the depth of “knowledge” contained in the crypts of the corporate servers nationwide. Facebook is mentioned of course. By knowledge, I am referring to the raw data that has been collected on you and is stored for perpetuity. It is an eye-opener so hopefully everyone will take a moment to have a look. Your life is as public as the corporations choose to make it…….just so you know.

    http://www.cnn.com/2012/02/09/opinion/ghitis-google-privacy/index.html?iref=allsearch
    Could Rita be a Ricks reader by any chance?

    • Cam Fitzgerald February 11, 2012, 10:35 am

      And then there is this beauty. If you hate Facebook then this Dad’s frustration will appeal to you. The clip is priceless. Just Eight minutes long. Worth the time. Dad ends his monologue by laying down the house rules and then plugs his kids laptop with 8 rounds of hollow points just in case nobody understood his frustration.

      http://news.sympatico.ca/oped/coffee-talk/man_records_laptop_execution_by_firing_squad_after_discovering_daughters_facebook_musings/a0233c5e

      OK, enough about Facebook. But I won’t be buying their IPO, that’s for sure. Given time, this is one company that will go down in infamy, an object of public derision and revulsion.

      Just as soon as word gets out that all your data was compromised, sold, handed over to government without consent or swapped between all sorts of public and private agencies ostensibly in the war on cyber terror.

      I don’t even know what that means but there is a bill before Congress about it now and even after reading it I have no idea what they are talking about.

      It is supposed to protect us.

  • SD1 February 11, 2012, 1:34 am

    Beware the Q’s. There is a very straight forward pattern that leads to 66.57 using a one-off A from 2009 on a weekly chart.

  • gary leibowitz February 11, 2012, 1:01 am

    I find it interesting that the people that “see” the trend and future just can’t seem to wait for the “others” to get it. I suspect most on this board are naturally suspicious and tend to view things as half-empty. That would explain the adamant one-sided opinions. It would also explain why “we” can spot the problem as it develops.

    Don’t get me wrong, I am not criticizing just stating an observation. Truth be told I too am in the same camp. The difference being that I struggle between my suspicious nature and my strong analytical skills. With this being an election year, and our economic numbers trending in the right direction, I can’t see an immediate reversal. I still expect some peaks and valleys this year, and even a possible top being made. I just can’t see the devastation on the downside develop, or gain momentum till next year at the earliest.

    As for the indebted nations I am looking more closely at Ireland. They have run out of money multiple times with extension loans. I see them as the next to go after Greece.

    Slow developing, with a world effort to patch this up, but the amount of debt and unrecoverable loans is too staggering. If the world hadn’t already replaced cash with credit, some 30 years ago, we would have survived.

  • Chris February 10, 2012, 4:09 pm

    I feel compelled to chime in after reading Benjamin’s response to j.r.. I am a 49 year old factory worker for one of the biggest Corporations. I have been working at this job for 26 years (12hr shiftwork). It can be quite physically demanding at times, but at least there are jobs within the plant that I move into as I age that are less physically taxing. Or I should say, there used to be. There is no Union in our plant, and management has been systematically outsourcing every low-skilled job available – such as warehousing, shipping/receiving and stores. So now we have an aging workforce trapped in jobs better suited to a younger generation. And of course, every year we are asked for “more”. This has been the case since I started. “More” was available initially through better training, technology upgrades, ergonomic investments, and streamlining of production. R&D also kept us one step ahead of the Tollers and kept us profitable for years. Approximately 8 years ago R&D was slashed from approx. 40 staff to 5. There hasn’t been a major investment in any of our plants in 10 years. Through attrition and layoffs, our workforce has been slashed to the bare bone, creating umpteen problems with vacation and illness coverage. All new hires are required to have a college or university diploma. This has created a huge problem with both job suitability and staff retention. Our division hasn’t made a profit in the last 4 years. And, we have zero offshore competition – although it is inevitable that at some point a company will be established in the East to take advantage of that wage and regulatory environment. The writing is on the wall for us, and it has been written with a fine gold pen.

    • Mark Uzick February 10, 2012, 5:46 pm

      What’s the cause?
      1. Domestic competition?
      2. Bad management? or high debt levels?
      3. Products becoming obsolete? and market shrinking faster than the company can scale down its facilities?
      4. Regulatory controls or restrictions?
      5. Other?

    • Benjamin February 10, 2012, 6:40 pm

      Thanks for that, Chris. I must admit that when I posted my response, it was out of a knee-jerk reaction. But the thing is, with labor union membership having been in a 30+ year downtrend in the U.S., one would think that the anti-unionites would be quite happy by now. And would have something more to show than a 20%+ unemployment rate. But they aren’t happy and the shoots have yet to sprout from the death of the much-maligned behemoth. Here in Indiana, for example, the new right to work law has many dancing on the graves of a big labor. Yet, the target of the law had to already have been dead in order for that law to pass.

  • jacques redou February 9, 2012, 9:15 pm

    In my 20’s I was a pipefitter. I was on a Refinery, non-union job – but the refinery paid union scale to keep the union out.

    Management sent me a new welder. He was white, about 40, with fresh creases (ironed) in his shirt and jeans.

    I took one look at him and said – Union?
    He said yes.
    I said go on back to the bullpen and send
    me a non-union welder.
    He got mad, wanted to know why.

    Because I need a man who will weld three
    eight inch diameter pipe joints in a twelve
    hour shift. You are going to want to weld
    only one. He didn’t argue. He turned around and walked away.

    They sent me a black guy from St Lucia
    in the Caribbean, beautiful British accent. He handled three welds in 12 hours – easily.

    • Benjamin February 10, 2012, 8:25 am

      Thanks for the second day, Rick, as I wanted to address this post which I’m responding to.

      Former trucker here. The longest, non-stop (other than fuel and restroom breaks) haul I ever did was out of El Paso, TX to Atlanta, GA. That be 1,300 miles and definitely outside of DOT regs. I imagine a union driver would be equally appalled. Then, one time I got a dispatch out of Chicago, from Milwaukee to Detroit, which is about 250 miles. I had 24 hours to get there, but I turned it down anyway. Too tired after the many weeks of bustin’ my hump. And it was snowing that night.

      That’s why I’m not going to say that union rules are bad or that union workers are lazy. Not especially when I know that my own non-unionized capabilities and limitations fluctuate. I would first look at the entire set of policies before deciding that something in general is a free market evil. For example, anti age discrimination, as was the case with your pipefitter guy. Did they send you a man in his 40s to do a tough job on a tight schedule because age (supposedly) doesn’t matter? If so, is this, at root, a union rule or a government rule?

      I don’t know, but my guess is that union rules came to reflect government orders. I mean, if seniority means a higher pay scale, but fewer hours worked and/or less risky jobs, then situations where older workers are threatened by younger ones would be remote enough to not warrant a “discrimination” law.

      Ah, but here’s the thing… Fewer incoming young workers could easily upset that balance. Government, not knowing what else to do (supposedly), creates and enforces a strict age discrimination law. Question is, where are all the younger workers? Well, aside from the wonderful solution of outsourcing, government has in recent decades kicked up the amount of college student loans.

      I think we see where the problem is, and how messy things can get from there. Anyway, I would thank you to lay off that forty year old you seem to want us to view as a no-good lazy-@ss. The forces at work there stretched well and beyond his own personal ability to do anything about it. And if I were that guy you did give the job to? Let me put it like this…

      When I did that TX to GA run, I did have a co-driver. But he was in his late forties and his back was bothering him something awful, so I covered the whole thing (but split the money anyway). I was only 23 at the time, so no problem-o (and no drugs, in case you were wondering).

      Moral of the story? Well, we all get older and, shall we say, less energetic and/or more marginal. There were times when he covered me, when I wasn’t up to the task. His overtime was far from even with all I did for him, though. But even back then, at the heartless and vicious age of 23, I knew that some day I could and probably would be in the same position as my older co-worker. In other words, though we were not union workers, it worked out exactly the same way. Many employers are well aware of this reality as well, and act accordingly. It goes a long way back, into the caveman days. We humans seem to like taking care of our ageing. Some more than others, but it is generally true.

      So you can slam union workers all you want. And government can continue to do its level best in making them into sour deals. But they will never go away. It is a pity, though, that many union workers think they can be done away with, which in turn sees them clinging to the government for solutions that government caused in the first place. Naive, yes. But lazy and worthless? I doubt that very much.

  • Rich February 9, 2012, 7:34 pm

    Good points Rick that more debt (and taxes) does not solve problems created by too much debt and taxes.

    Factcheck: Michigan State study last year found unfunded pensions and benefits 995.5 Million:

    http://slg.anr.msu.edu/Portals/0/MSUE_FlintCaseStudy-2011.pdf

  • John Jay February 9, 2012, 6:13 pm

    There is no problem, economic, moral, or social that cannot be remedied by a Press Release from the Ministry of Truth! Note: BLS is a wholly owned subsidiary of the Ministry of Truth!
    It’s all closing in on us, isn’t it?

  • Goodsport February 9, 2012, 5:20 pm

    Check out Detroit:

    http://www.google.com/search?q=detroit+decay+photos&hl=en&prmd=imvns&tbm=isch&tbo=u&source=univ&sa=X&ei=vz4lT4imIMn10gGqo63iCA&ved=0CCMQsAQ&biw=1138&bih=565#q=detroit+decay+photos&hl=en&sa=X&tbm=isch&sei=g-QzT52yJcS80AH0yciv

    • John Jay February 9, 2012, 7:11 pm

      Goodsport,
      Those 1958 Chevrolets on page 3 are worth a
      lot of money restored. For sitting out in that weather the paint and chrome look pretty good. I’ll have to check out Detroit and Flint local online newspaper classifieds. I also see a Mercedes convertible to the left of the black Chevy.

  • ajob February 9, 2012, 4:33 pm

    A bit of perspective on the “Greek drama”:

    When you graphically see the debts that now and in the next few years the PIIGS will have to roll-over, you get the creeps.

    On the other side, nobody is showing in the same format the slightly smaller debts that already in the past years have been rolled over without much ado.

    So, why all the fuss now? Because it was reasonably decided not to let a good crisis go waste — and all the European drama is now centered on austerity, actually meaning that the five course free lunch paid by most European states shrinks not to a pizza but at least to a three course standard meal.

    Granted, the 10+% shrinkage in Greek GNP is a big deal and many people are suffering — but remember that the Greek as individuals have very little personal debt outstanding — when enough noise will have been generated, an agreement will be found and then the perks will silently creep upwards again.

    At that time another crisis will catch everybody’s attention and life will go on, barring some lunatic development such as going to war with Iran.

    • Rick Ackerman February 10, 2012, 7:56 pm

      Greeks “as individuals” collectively owe themselves vastly more than they will ever be able to repay. Under the circumstances, it is not mere shrinkage of GNP that they face, but rather the collapse of the illusion that they could all retire at age 52 on full pensions. Under the circumstances, deflation is about to shrink their twelve-course meal to a stale saltine. They face full-blown Depression for at least a generation, as does all of Europe. And the U.S.

      You need to click on the the link posted by Seawolf for perspective.

    • Cam Fitzgerald February 11, 2012, 8:11 am

      Those were pretty good graphics. We are seeing more and more of them all the time. The focus is always on debt though and so the piles of money with a stick figure in front of it seem overwhelming to the viewer. Maybe one day we will see the same graphics showing retail sales, farm incomes or (god forbid) tax revenues. Same stick man, smaller piles of money but you see my point.

      Anyway, the images are only representative of Greece. Why not make a picture with truck loads of Euros for all the debt of the whole world to make it even more interesting!

      And by the way, with reference to the pictures of semi-loads of Euro-cash, can anyone see how improbable it is that Gold will ever be a currency again? Picture the total debt of the entire globe based on those images. How big a pile is that? Compare it to all known gold. We would be shopping with flakes of the stuff, would we not. Who even has scales that small to measure it?

      So the real value of an ounce of gold is maybe $100K?

    • Robert February 13, 2012, 11:09 pm

      Yes…

      One Hundreed Thousand Dollars per Troy Ounce.

  • Seawolf February 9, 2012, 3:41 pm

    Here is a graphic view of the Greek debt and who loaned it to them.

    http://demonocracy.info/infographics/eu/debt_greek/debt_greek.html

    • Rick Ackerman February 10, 2012, 7:45 pm

      Fascinating, Seawolf. Thanks for the great link.

  • Darren February 9, 2012, 2:52 pm

    Did you hear about the little Greek boy that ran away from home?

    He went to Flint. Or was it the little boy from Flint that went to Greece?

    Following in the North American Union’s footsteps the European Union will use the crisis to consolidate power. They’re already trying to destroy Greek sovereignty:

    Germany’s Role in Europe and the European Debt Crisis
    By George Friedman

    The German government proposed last week that a European commissioner be appointed to supplant the Greek government. While phrasing the German proposal this way might seem extreme, it is not unreasonable. Under the German proposal, this commissioner would hold power over the Greek national budget and taxation. Since the European Central Bank already controls the Greek currency, the euro, this would effectively transfer control of the Greek government to the European Union, since whoever controls a country’s government expenditures, tax rates and monetary policy effectively controls that country. The German proposal therefore would suspend Greek sovereignty and the democratic process as the price of financial aid to Greece.
    http://www.stratfor.com/weekly/germanys-role-europe-and-european-debt-crisis

    One nation, under Zeus.

    • gary leibowitz February 9, 2012, 4:19 pm

      Perhaps you like to ignore history and a glaring statistic that shows Union membership got decimated from 1920’s thru the great depression. At the same time productivity surged and wealth went straight to the top. What would you call that type of system?

      In fact the old paradigm can be superimposed onto todays economy and you would think they were talking about current events.

      Power and the ability to corrupt are not a trait that the masses know anything about. If you ever question why we are in this predicament look at it in a purely technical fashion, as if you were betting using gold trends. The forensic evidence is very clear. All economic collapses are a direct result of wealth imbalance, not this silly notion that socialism was the cause. In fact it’s the combination of allowing corruption to take hold and at the same time trying to appease the masses. A formula for disaster. Perhaps if we had the industrial titans gain full control of this country we would never have a national debt. Never have a thriving populace either but heck thats a small price to pay for a govenment’s financial freedom.

    • Benjamin February 9, 2012, 6:11 pm

      “The forensic evidence is very clear. All economic collapses are a direct result of wealth imbalance, not this silly notion that socialism was the cause.”

      Shouldn’t that read “the direct result”, instead of “a direct result”? Or do you mean to imply that wealth imbalance can result in other things?

      Anyway, the idea that socialism was ever for the Average Joe is the silly notion. Socialism redistributes the wealth to the hands of the few. It collapses because the producers of real wealth are robbed to the point that the redistributionist parasites must borrow the money-from-air into their own pockets, from those who have no money to begin with. Of course, it would not collapse if either we non-blue-blooded mortals were an endless source of real wealth, or if the lenders of last resort were.

    • Benjamin February 9, 2012, 6:15 pm

      Put more simply…

      Sane world: Parasite is hungry. Host has all the food, but won’t surrender it.

      Transitional world: Redistribute the wealth!

      Crazy world: Parasite is ravenous. Host is out of food and demanding it.

    • Robert February 9, 2012, 7:04 pm

      Remember when Margaret Thatcher said, “The only problem with Socialism is that eventually you run out of other peoples’ money”…?

      There is a very basic lesson that underlies this: ALL productive work is the product of personal/individual ambition and motivation. Regardless of whether the source of motivation is duress, greed, or starvation; without motivation in some form, there will be no productivity.

      Socialism (doing your work so that your output can be stripped from you to benefit those who prefer to tax you rather than to do work themselves) ALWAYS results in the more productive willfully CHOOSING not to work while the less productive apply ever more oppressive and coercive force to try and FORCE the productive to keep carrying their water.

      You see: You can not morally or ethically COMPEL me to function/operate/produce/work at my highest potential without calling me a slave and using abusive, domineering power- Something that would never work with me because I would prefer being whipped to death over resorting to calling ANY other human being Master…

      You can INSPIRE me to work, and you can ENCOURAGE me to work, and you can INCENTIVIZE me to work. You may even try to BRIBE me to work.

      I am not a doctor. I have no moral duty to share my skills/knowledge/productivity/economic output with ANY of you without a form of reciprocity that I determine to be of adequate value in trade.

      It’s so basic that I can’t believe people don’t get it.

      If the Greeks don’t WANT to work, then let them not work… Let them starve, Let them eat each other, and let them work out their own tribal issues…

    • Benjamin February 10, 2012, 8:42 am

      “It’s so basic that I can’t believe people don’t get it. If the Greeks don’t WANT to work, then let them not work… Let them starve, Let them eat each other, and let them work out their own tribal issues…”

      I won’t claim to have a full picture concerning modern (?) European culture, but suppose the Greeks, at root, are just unwilling to be like (the less equal than some other equals) Boxer the hard-working glue, er… horse? A better question: How can a murderer best hide his weapon? Pass it around, let everyone touch it, maybe encourage some to use it themselves… Who can ever trace it back to me, especially when there are now so many other murderers afoot?

      But do not take these as pointed criticisms of your words, Robert. I’m just lamenting what a mess this has become.

      “I am not a doctor. I have no moral duty to share my skills/knowledge/productivity/economic output with ANY of you without a form of reciprocity that I determine to be of adequate value in trade.”

      Now, this I give some pointed remarks towards, but it’s such a long subject! Suffice to say, I am at odds with the idea that doctors always have a duty to act… even in cases where the patient is (or seems) able to pay.

    • mario cavolo February 12, 2012, 1:03 pm

      Indeed, by virtue of digital money and strategic position in the global economy and financial system, China, America and Germany will rise and shift into the megapower sovereigns of the future….whatever the hell that landscape may end up looking like over the coming years is another story….Cheers, Mario

    • Robert February 13, 2012, 11:06 pm

      ” Suffice to say, I am at odds with the idea that doctors always have a duty to act… even in cases where the patient is (or seems) able to pay.”

      I agree with you Benjamin about the efficacy of the hypocratic oath.

      Is the Doctor beholden to saving the life of the man who kills his wife, then jumps out the window and just happens to survive the fall? I have moral dilemna with that as well.

      However, an oath, once taken, is a contract between the oath-taker and society.

      I believe humanity would be better served by the abolition of the hypocratic oath.

  • Cam Fitzgerald February 9, 2012, 10:16 am

    As usual, it looks like you may have to wait until after hours Friday to get that short squeeze deal Rick. That means locking in trades Friday before close, saying a prayer and hoping it goes your way. Nothing really changes when you are up against the machine.

  • Benjamin February 9, 2012, 9:48 am

    “As long as they continue to focus on 2012’s operating deficit, the long-term disaster that surely looms is out of sight, though perhaps not wholly out of mind.”

    I disagree about it being not entirely out of mind. More like out of their minds.

    These contant talks are just a shameful and laughable effort to assert the notion that the emperor, having always had clothing, will not in fact be naked tomorrow. Or the day after tomorrow. Or the day after that. Or the next day. Or the next… But the problem isn’t even that of tomorrow never getting here. It’s that yesterday never existed either.

  • mava February 9, 2012, 5:03 am

    Oh man, how much I enjoy the Greek theater. What a tragedy for the banks, having to come up with such a mountain of money. Of course, this is only a theater.

    In reality, bankers can come up with 300 trillions in no time at all. Takes a button press and a mouse click. But, do it as if it was no sweat (which is the reality), and the people on the streets my understand that they have been working for only a play money, and that this play money is in no shortage.

    The perception must be kept, however, that one must work hard to earn some (unless he is a banker, of course).

    All is rosy, if one to believe that once the perception is managed, so is the reality. Not so. Since the size of the problem with the banks far outweighs the capacity of the economy to produce that extra which needs to be “mopped up”, there will have to be an effect.

    So, I just keep enjoying this pathetic drama of austerity measures, and it reminds me the one Baron Munhgauzen, who did attempt this exact number by pulling himself out of the bog that he stuck in.

    • Mark Uzick February 9, 2012, 2:46 pm

      mava: “The perception must be kept, however, that one must work hard to earn some (unless he is a banker, of course).”

      But then it’s only a perception: The government workers and union pensioners pretended to do work to earn their salaries and ‘entitlements’ so they deserve to receive all the pretend money they were promised.

      They allowed – actually demanded – that their ‘government’ borrow this phony money from the banks and the bankers were happy to oblige them believing the ‘government’ of Greece and any other states would get bailed out.

      It’s all very fair and just; the ‘workers’ get what they deserve – actually what they asked for; – if not what they stupidly expected – and if the bailouts fail to be agreed to, so much the better; the game of pretend money would end; and then even the bankers would get their just deserts.

      The only important question is: Will people will learn a lesson from their folly or will they simply turn to savagery?


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