JPMorgan’s Kasman Sees Greek Depression Coming That Will Damage All Europe

[dkf]

JPMorgan Chase & Co. (JPM) chief Economist Bruce Kasman said Greece is insolvent and headed toward a depression that will cause catastrophic damage across Europe.

“We have a social contract that’s been broken between Greece and the rest of the region,” Kasman said today during a panel discussion at the Institute of International Finance annual meeting in Washington. “Greece is insolvent and the European Union needs to deal with that. It hasn’t yet come to terms with that.”

Kasman said the uncoordinated and sporadic response from the region’s political leaders has “fed fears” in the markets that they don’t have the wherewithal to deal with the region’s fiscal problems. The lack of clarity in solving Greece’s credit problems has exacerbated the problem.

“Damage is done,” Kasman said. “Europe in our mind is entering recession.” Greece is heading toward a depression, he said.

http://www.bloomberg.com/news/2011-09-24/jpmorgan-s-kasman-sees-greek-depression-coming-that-will-damage-all-europe.html

[DCBob]

1. Why would the collapse of a tiny economy like Greece cause "catastrophic damage across Europe"?

Seems to me if they can come up with an orderly structured default that would isolate the effects then the rest of the EU economies would have minimal collateral damage.

[dkf]

3. There are so many implications from this...

1) They would have to recapitalize the European banking system which owns too much Greek debt.
2). The Euro is at risk as a common currency
3) The other pigs may suffer as creditors decline to loan funds.
4). Liquidity issues as we had with Lehman

[DCBob]

4. I think the "plan" is an attempt to deal with all that..

however it remains to be seen if they can actually implement it effectively.

[stillwaiting]

7. Because they WANT it to.

The only way TPTB can gut the many quality social programs and policies in Europe that benefit the masses is to impose austerity measures. They need excuses. Any excuse will do, and they will use multiple. It will be "shared sacrifice" for all (except the top 1% of course - they will have more and more direct access to our tax dollars as those tax dollars benefit the masses less and less).

They are coming for the European social safety net as well. You better believe it.

[dixiegrrrrl]

10. It is also about destroying a country's autonomy, rights of sovereignty.

IMF has done this all over the globe, in So. American and Africa, some parts of Asia.
Now that IMF is attacking Europe, people are paying attention.
Italy and Ireland are already mostly goners, Portugal/Spain next.
And Goldman Sachs is one of the insiders who made this all happen.
We are very in line of the dominoes, of course.

[Yo_Mama]

9. There are a bunch of other countries with similar problems.

So it is not really Greece.

It's mostly Italy, but Spain, Ireland and Portugal have significant problems as well. Note that Kasman thinks that the inability to deal with Greece, which really is a small problem, is raising fears about the "region's fiscal problems".

[Bucky]

2. Greeks created Western Civilization. I say it's theirs to destroy if that's what they wanna do.

It's a choice, not a life.

[banned from Kos]

5. There will be a European TARP from the Euro finance ministers

to backstop the French, German and Dutch banks.

They will just have to write down their losses like the US banks did.

[snagglepuss]

6. A banker as the nerve to talk about a social contract. Since when does capitalism

have social contracts?

[banned from Kos]

8. When a nation borrows its taxpayers must repay later

that is a social contract.

That is also why I despise George W. Bush so much. Clinton 2000 surplus = $236 billion and Bush left a $1.3 trillion deficit.

[snagglepuss]

11. You are way off base. The term has nothing to do with the financial markets.

The idea of the social contract "is the belief that the state only exists to serve the will of the people, and they are the source of all political power enjoyed by the state. They can choose to give or withhold this power."



http://americanhistory.about.com/od/usconstitution/g/social_contract.htm

[JCMach1]

12. The world... just one example, Dubai has 50Billion it must re-finance this year

or face default. Banks are already balking given the situation in Europe.

Abu Dhabi can come to the rescue again. However, it is very like the position Germany is in.