Greece increasingly likely to default.

[DCBob]

ATHENS/LONDON (Reuters) - Greece's private sector creditors warned on Monday that the Athens government must urgently break a deadlock in debt swap talks triggered by "unreasonable" demands from international lenders if is to avoid a disorderly default.
-snip-

Cash-strapped Athens needs a deal with the private sector within days to avoid going bankrupt when 14.5 billion euros of bond redemptions fall due in late March.
-snip-

Underscoring the stakes involved, a senior S&P official told Bloomberg Television that Greece would default "very shortly."
-snip-

"There is a lot of brinksmanship on and a disorderly default will have ramifications on other countries but I believe policymakers will want to avoid that...The game is still on."

more: http://finance.yahoo.com/news/greece-dispatches-officials-u-default-161722585.html

===========

Looks like its do or die this week. I suspect there is going to be some sort of deal that allows the Greeks to default but in more orderly way to avoid panic.

[xchrom]

1. they've increased the trauma a greek default would cause by having let it go on so long.

if they had been allowed to default from get go -- would have been tough -- but it's gonna be a lot tougher now.

[DCBob]

2. I disagree.

I think dragging it out is allowing economic instituitions and political leaders to get more prepared for the eventuallity. Also, if this happened a couple of years ago the effects on the global economy would have been much worse since the situation was more fragile back then.

[girl gone mad]

3. No, xchrom is correct.

If they had defaulted in the beginning it would have been much simpler.

The situation is no less fragile now. If anything, it's more dire. Now they've flushed tens of billions into the bankster black hole with nothing to show for it but an economy in absolute ruins.

[DCBob]

4. We shall see.

Check back in a couple of weeks and lets see how it plays out.

[girl gone mad]

6. Default was always inevitable.

Keynes understood this nearly 100 years ago. Debts that can't be paid won't be paid.

Greece has been put in a horrible situation, with two years wasted so that German, French and American banks could milk as much out of the European taxpayer as possible. Two years spent throwing good money after bad.

There is never a good time for a default. You and others argued that Greece would not default. Now your argument seems to be that default next week is better than default a year ago? You are wrong again. Portugal, Ireland, Spain and Italy are all in worse fiscal condition today. Even Germany is starting to weaken. The worry was a default would cause contagion? Contagion is here now.

[DCBob]

7. There are two kinds of default.

an ugly disorderly panic kind of default or a controlled orderly less panic type. I believe the second is what will happen and thats better for all involved.

[girl gone mad]

9. Greece could have had an orderly default at any time over the last few years.

As I recall, you argued that they would never default because any default would mean certain disaster. Even as recently as a month ago, you claimed Germany would bail out Greece indefinitely.

Your position here is inconsistent because you lack a solid foundational understanding of economics.

[DCBob]

10. I never said indefinitely.. please keep it factual

There will be a deal.. and Germany will be involved.

[girl gone mad]

14. How is this for facts?

From May 2010:

Had Greece simply defaulted a year ago, the cost may have been haircuts of $50 billion or so. Now $282 billion (and counting) has been invested to “save Greece”.

Does Greece look or feel saved?

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=114&topic_id=88408

It has only gotten worse since then. More money down the rat hole, more forced austerity, more deprivation, now Greeks must beg just for aspirin!

This all could have been avoided but real leadership is nonexistent in Europe and America. Obama continued to push for the bailout and austerity regime, even as it drove more and more people into poverty and desperation. Anything to save the TBTF banks, right? Anything to keep up the facade.

I won't hold my breath waiting for you neoliberals to admit to this failure which is so clear to everyone else.

[banned from Kos]

15. Who will pay for the Greek social programs when they default?

Us "neo-libs" are right on target again.

Watch Greece crumble for their bad government sins.

[Katashi_itto]

36. The Real Game is to eventually Tap the U.S. for another 100 trillion or so. The Dominio effect

cause our Banksters and EU to scream to be recapitalized. Due to this default. Every default coming they will tap us again and again in a fantastic Ponzi Scheme to end all Ponzi Schemes... Till we collapse..

.....Hopefully a few nations will wake up and start assassinating key players...

If it comes expect it to come from someplace weird.... Does Iceland have a secret service?

[Harmony Blue]

40. Neo libs

fail to understand how much power and support there is for the communists in Greece. They already had a bloody civil war, and this time around they will take the wealth from the rich who robbed the country and conspired with Goldman Sachs. They already jailed a priest (Father Ephraim) for his greed.

[SoCalMusicLover]

18. Kick The Can...

Kick it again, but harder this time.

Feels good, doesn't it?

There are no solutions, and THEY are 120% aware of that. The longer they can forestall the inevitable and fool people into thinking there is a way out, the more time they have to save their own asses.

[DCBob]

20. This argument reminds me of the auto bailouts.

Many claimed it was waste throwing good money after bad... Just let them fail!

Of course we now see how dumb that was.. the auto industry is now thriving and paying back the loans.

[girl gone mad]

32. The auto bailouts weren't just throwing good money after bad.

Unlike the banks, the auto companies were actually forced to restructure and bondholders had to take actual haircuts. Shareholders took losses. The government lost money in the end, but jobs were saved.

The bank bailouts.. ugh.. that was throwing good money after bad, trying to paper over structural problems and force the productive sector to take all of the bloodletting while the parasites get fatter. Just like what's happened in Greece. There's your analogy.

[DCBob]

26. The guy who wrote this is a Ron Paulian libertarian type.

Mike "Mish" Shedlock is an American investment advisor and financial commentator. He operates the blog MISH'S Global Economic Trend Analysis and believes in the Austrian School of economics. Shedlock is an avid supporter of Ron Paul and other libertarian-leaning political candidates.

http://wiki.mises.org/wiki/Mike_Shedlock

[girl gone mad]

27. I posted it to DU because his information was 100% accurate.

You should attack me, since I fully endorse his post.

I disagree with Mish on many, many things, but he is one of the few who has been consistently right about Greece and he has been right in calling out the inflationistas. Welcome to the financial blogosphere, where reputation for making accurate calls counts more than blind partisanship.

It's sad to me when libertarians have more heart and brains than the so called progressives, who would carve Greece up and hand it over to the fascists in order to protect a few wealthy bondholders from bearing losses.

[DCBob]

29. Maybe..

it makes more sense to post stuff like that here:

http://www.ronpaulforums.com/

[girl gone mad]

30. Can you address the content of the post?

I always find these ad hominem insults to be an act of desperation... an indication that one has lost the high ground and is grasping.

[DCBob]

31. I already have.

Im done with this thread. Watching the idiots debate. Ciao.

[Harmony Blue]

41. When Greece defaults

I will gladly translate the news from Greek to English!

[banned from Kos]

11. You do know that when Greece defaults their social spending will get whacked?

about 40%, IIRC.

[originalpckelly]

35. It's a little bit of both.

There is undoubtedly pricing in of risk, but you are also correct in that the entanglements of other eurozone countries in the matter, even more so than before, means almost certain doom for the world economy eventually.

[xchrom]

5. and you don't think it's fragile now?

the exposure has gotten worse -- not better -- more debt involved -- not less.

china slowing means no help from there -- japan has had a rethink on euro debt.

and of course the whole thing has pipelines right to wall street.

oh and the cherry on top -- the bail out fund itself has been downgraded.

[DCBob]

8. The US is much more stable now.

That is the most important factor.

[FarCenter]

16. The most important factor is the derivatives market

Ideally, the past several months have allowed the systemically important financial institutions to balance out their CDS exposure, and the major losses will accrue to speculators on the wrong side of the default.

[banned from Kos]

21. Link? That sounds like total bullshit. The CDS market is tiny.

Prove me wrong if you can.

No ZeroHead or Naked Cap crazy bullshit please.

[FarCenter]

39. If CDS exposure is small, why all the emphasis on making the haicuts "voluntary"?

Certainly the reported notional exposure is small, but CDS on sovreign debt is not required to be registered. Some entities could have significant OTC exposure.

[pampango]

12. I've read that too. That the machinations in Berlin and Paris over that last couple of months

has been more focused on how to isolate the damage caused by a Greek default and probable exit from the euro than with preventing it from happening. We shall see if those preparations end up being effective or whether they should have hung Greece out to dry right at the beginning in order to save the rest of the eurozone.

[roguevalley]

13. there was a story about a five year old girl found on the streets with a note

saying "I can't keep her anymore'. They are abandoning their babies. This is beyond grief making.

[customerserviceguy]

19. I agree with you

The world's financial institutions have had some lead time to figure out what to do in what has surely been seen as an inevitable default. It's always better to have time to plan for what's going to likely happen than to get taken by surprise.

[DCBob]

22. Yeah, that seems like common sense to most of us..

The global panic resulting from an abrupt uncontrolled default would be bad for everyone. Not sure why some on this board dont see that.

[customerserviceguy]

24. I've had a number of discussions with people here about the looming defaults

I find a lot of denial on the subject. First, there's the folks who think that earlier is always better, but more often, I find those who think that Greeks simply lifting their middle fingers at the Eurobanks will just free them from 'slavery'.

The truth is that it's going to be very hard on the Greek people, but the rest of the world will be able to insulate themselves from the pain to various degrees.

[DCBob]

25. For sure the bottom line is its going to be hard on the Greek people no matter what.

I just think managing it to a soft landing is the best approach.

[girl gone mad]

28. The denial has consistently come from the camp which pushed bailouts at all costs..

and staunchly denied the inevitable, including the one to which you reply who told me for years that a default was impossible.

Greece would have been much better off defaulting 2 or 3 years ago. The Greek people have now paid a very high price for the foolish and irresponsible actions of the politicians and the troika. In no way is Europe and the rest of the world more insulated now than they were at the start. Your assertion is complete nonsense.

[MNBrewer]

23. Greece should have defaulted months ago, before the unelected government was put in place.

[riderinthestorm]

38. I have to admit, my first thoughts went to the unelected guys newly installed at the Greek helm

just in time for the default....




If it's true the European banksters have been working under the assumption Greece's default was inevitable, and they've simply been structuring a 'soft landing", then George Papandreou would have been just as good a proxy for the transition. Instead the banksters have their guys in place... very fishy.

[Harmony Blue]

34. I agree 100%

Now, they are moving the goal posts given a Greek default is highly likely now. Why do some progressives on this site become snookered in by predatory capitalists?

[xchrom]

37. Because they aren't progressives? Nt

[SoCalMusicLover]

17. In Other News....

It's supposed to be cold in the northeast, and there's reports of snow in Canada.

[Harmony Blue]

33. Any sensible progressive predicted this long ago

The DLC types who tuck themselves in with their blankies to watch Kudlow 7PM every night were in denial and buying up what the supply siders were selling.

Face it, a default would have been easier from the start, now it will be worse, way worse.