European Union

Greeks Break the Bailout Dish

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Brother, can you spare a drachma?

Greek Prime Minister George Papandreou, in an emergency accouncement, has officially called on the European Union to bail out his wastrel, spendthrift, socialist failed state. From Los Tiempos de Nueva York:

"The time has come for us to ask our partners in the E.U. to activate the mechanism we formulated together."

He was referring to an emergency aid package arranged two weeks ago in Brussels. The plan foresees up to €30 billion, or $40 billion, in loans from Greece's euro-zone partners, and up to €15 billion from the International Monetary Fund.

The activation of the E.U.-I.M.F. rescue plan, Mr. Papandreou said, "will send a strong message to the markets that the E.U. is not playing their game and will not leave its currency at risk."

Whole article. If by "game," Panandreou means "making rational decisions based on past behavior and future prospects," then he is certainly right: Greece is not playing that game. The case against bailing out Greece is so strong even Old Europe has gotten the message. German Chancellor Angela Merkel, one of the few marginally responsible players in the Great Recession, is still talking tough on the bailout, and as noted here, German voters are hopping mad about the possibility of dumping more money into the Aegean. Why would Germans be acting like such misers? From the Times again:

Other countries like Germany, the Netherlands and Austria have kept deficits down while retaining an edge in global markets, in part of by restraining domestic wage increases. France lies somewhere between the two camps.

Greek bonds have shot up to yields above 8.7 percent, but here's a curiosity: While Portugal, widely considered to be the next of the PIIGS countries in line to default, has also seen its price of debt service climb, it is still running a yield of just 4.8 percent on 10-year bonds. That's less than 1 percent above the current yield on 10-year U.S. Treasury bonds. Now the United States is not exactly setting a shining example of fiscal responsibility, but it appears to be some way from default, and unlike Portugal it has the ability to inflate away its debt. So why isn't the land of Fado, Fatima, and Futbol getting rougher justice in the debt markets?

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  1. “The plan foresees up to ?30 billion, or $40 billion, in loans from Greece’s euro-zone partners, and up to ?15 billion from the International Monetary Fund.”

    I think somebody should pipe up that the largest contributor of funds to the IMF is the United States of America.

    Yes, that means the Greek government is being bailed out with your future earnings.

    Have a nice day.

  2. $40 billion in loans…and up to ?15 billion from the International Monetary Fund.

    Chump change!

  3. Deutsche Mark reissued in 3…2…1…

  4. Why would Germans be acting like such misers?

    German Jews? Neva!

  5. Bailing out Greece is electoral suicide for European politicians. Why is this even being considered?

    1. Epi
      They have this thing called the EU. Its unaccountable, and mostly unelected (the Toy parliament is just that – toy). Sure some national politicians might be thrown out. But then what? Same ol’ horse-and-pony show of Social Democrats and Christian Democrats.

    2. “Bailing out Greece is electoral suicide for European politicians. Why is this even being considered?”

      I’m just throwin’ this out for consideration, but moral hazard is a contagious thing…

      If you’re running a bloated government in the red too, maybe you think contributing means the rest of the EU (especially Germany) will need to show up to bail you out one day too?

  6. My ex-wife is from Athens. So I hope that shithole burns to the ground. Persia should have had nukes.

    1. She cheated on you cause you were a dick. Get over it.

    2. Now that’s rage that Darius could appreciate.

  7. “So why isn’t the land of Fado, Fatima, and Futbol getting rougher justice in the debt markets?”

    I’m gonna guess that the market is discounting the possibility of failure, in that Greece will be bailed to some degree, leaving Portugal a better bet after the Euro finance-folk have ‘learned their lesson’.
    If Merkel et al stand by their guns, it’s time to short Portugal.

  8. Come now, let’s not be so hard on our fellow American. Just a little tidbit, little Papendreou was born in Minnesota! He is just exporting the newest American innovation, the bailout.

    Regards,
    TDL

  9. Greek Prime Minister George Papandreou, in an emergency accouncement

    Gucking freat!

  10. (From AP)
    “Italian Finance Minister Giulio Tremonti urged Germany to show its leadership on the Greek crisis, saying helping Greece is in the interest of the common European good.
    “If the house of your neighbor gets set on fire, even if it is a small house, and even if the fault is your neighbor’s, it’s not a good idea to pretend nothing is happening,”…

    Unless the fire is such you need a fire-break.
    Mr. Tremonti should be familiar with the term “triage”.

    1. If the house of your neighbor gets set on fire, even if it is a small house, and even if the fault is your neighbor’s, it’s not a good idea to pretend nothing is happening

      So stand on your property line with a hose and wish your neighbor all the best.

      1. This is Greek fire we’re talking about. Water doesn’t put it out.

    2. Or unless your neighbor is a pyromaniac which, metaphorically, Greece is.

  11. So, will the EU be bailing us out?

    1. Who bails out the outbailers?

  12. Talk about moral hazard, this would be a prime example. If Greece gets bailed out they will have little incentive to change their ways. Same with California in our country.

    1. Greece is already a moral hazard.

      1. As is California.

  13. I love Greek food – just not (modern) Greek politics.

    I could say the same thing about French food and (modern) French politics.

    1. Ancient Greek politics was the best!

      1. Ancient Greek politics was the best!

        Sure it was. Right up to the time that the mob voted for you to die.

        1. Marshall,

          I think that person was trying to be ironic.

        2. Sure it was. Right up to the time that the mob voted for you to die.

          Actually, such thing happened only to those defying ostracism.

          Unlike Roman proscriptions, Greek (or rather Athenian) ostracism did not involve confiscation of property or anything. It might be harsh to exile one for ten years, but in most cases it was probably the best thing to do. By the way, it was common to exile one (or both) of conflicting politicians.

  14. Wow, I guess everyone is feeling the pinch!

    Lou
    http://www.anon-vpn.se.tc

  15. It’s futebol in Portugese.

    1. Falou, rapaz.

  16. It may never happen, because it was meant to never happen and “no bailout” clauses were put into the Maastricht Treaty to make sure that it would never happen. They’re still there, carried over as Articles 123, 124 and 125 of the Treaty on the Functioning of the European Union, and German lawyers are planning to challenge the legality of the proposed bail out at the German Federal Constitutional Court.

    http://dealbook.blogs.nytimes……?src=busln

    1. So does the EU follow its treaty better than the US government follows its Constitution?

      1. Not as I recall.
        There’s a GDP/debt limit, with penalties, put there to keep ‘those guys’ from just inflating the Euro through borrowing.
        Seems both Germany and France (definitely *not* ‘those guys’, sniff!) have exceeded it and blew off the penalties.

  17. We don’t pay our taxes! Be free like us!

  18. “(04-24) 11:50 PDT WASHINGTON, (AP) —
    Financial leaders are pledging to address the risks posed to the global recovery from high government debt.”
    ( http://www.sfgate.com/cgi-bin/…..742D85.DTL )

    Now, *there’s* a courageous stance! I’d say they’re going to do stuff. Maybe. Sometime, sorta.

  19. So why isn’t the land of Fado, Fatima, and Futbol getting rougher justice in the debt markets?

    The other part of the issue is that Greece was fudging the books so they now keep having to issue new numbers that make the situation keep getting worse. Portugal may be in a bad situation, but at least we seem to have a good handle on exactly HOW bad that situation is.

    1. I think that is largely correct. Also, Portugal’s public debt to GDP ration is under 80% whereas Greece’s is almost 120%. So interest payments on debt may be manageable through economic growth (their economy only shrank by about 2% last year).

      1. OMG|4.24.10 @ 7:21PM|#
        “Portugal’s ….(their economy only shrank by about 2% last year).”

        So they’ll make it up in volume…

  20. “…will send a strong message to the markets that the E.U. is not playing their game”

    Wow, the E.U. countries aren’t going to borrow any more money? That’s great news!!!

  21. I think we can all agree there’s only one logical systematic solution to this and many of the EU’s (particularly its Balkan members’) fiscal quandaries: rape camps.

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