Central Banks Prepare for Greek Election Aftermath


Central banks, policy makers, and investors are preparing for the outcome of this weekend's election in Greece. Today the Bank of England officially announced the launch of two new stimulus packages, prompting a rise in bank shares. Mario Draghi, president of the European Central Bank, has said that the ECB is ready to "act where needed". Ben Bernanke has endorsed more activism by the Fed saying that, "The Federal Reserve remains prepared to take action as needed to protect the US economy in the event that financial stresses escalate,"

G20 leaders are meeting this coming Monday and Tuesday and Sunday's Greek election will almost certainly dominate the discussions. If the Greeks are unable to form a workable coalition their membership of the eurozone will be put at risk, prompting a possible run on the banks similar to the withdraws earlier this week. A Greek exit from the eurozone would put added pressure on Italy and Spain where borrowing costs are at record highs, and would have a significant impact on the U.S. economy.

The eurozone crisis has prompted something of a rise in national defensiveness as Europeans look around for someone else to blame for their situation. Germany has been the target of unfair criticism, and the German government's recent decision to block a plan that would pool European debt will almost certainly be criticized in the coming days and weeks.

The eurozone is economically diverse and European politicians have often (and sometimes not very subtly) made sure to emphasize that their countries are of greater significance or fiscal soundness than their neighbors. The following has been showing up in many people's inboxes, and though hard to follow reflects the attitudes of many Europeans:

1. "Spain is not Greece."
Elena Salgado, Spanish Finance minister, Feb. 2010

2. "Portugal is not Greece."
The Economist, 22nd April 2010.

3. "Ireland is not in 'Greek Territory.'"
Irish Finance Minister Brian Lenihan.

4. "Greece is not Ireland."
George Papaconstantinou, Greek Finance minister, 8th November, 2010.

5. "Spain is neither Ireland nor Portugal."
Elena Salgado, Spanish Finance minister, 16 November 2010.

6. "Neither Spain nor Portugal is Ireland."
Angel Gurria, Secretary-general OECD, 18th November, 2010.

7. "Spain is not Uganda"
Rajoy to Guindos… Last weekend!

8. "Italy is not Spain"
Ed Parker, Fitch MD, 12 June 2012

Once the results of the Greek election are known, and the central banks and the politicians react, it will be interesting to see which of these statements (if any) turn out to be true. Whatever the outcome, the monetary actvism the central banks engage in will not be of much reassurance. 

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  1. If the Germans decide to conquer Europe again, I say let them do it.

    1. yes...They are all Greece. In many ways, so are US. But we'll hear how we aren't until it's too late.

    2. Will Hugo Boss get the uniform contract again?

      1. I think things will be much less brutal if Europe (and the U.S.) simply accepts the German annexation of Europe. Look at all the trouble that resisting German influence has caused!

        1. I'll bet they are smart enough not to invade Russia in the winter this time.

          1. Why bother? They can get cheap labor, cheap oil, and attractive women from Russia. It's better left alone.

            1. Remember, these are the geniuses who came up with the EU, we're talking about.

              1. If the Germans were running the EU without (1) other Europeans interfering and (2) feeling the need to be all soft and gentle to make up for that ugly business last century, such odd institutions wouldn't arise. See, the Germans offer the world order!

                1. Aw, fuckit. Let it burn (or succeed) for all I care. I've ended up dodging more Germans than locals on the beaches I like in Europe anyways. As long as I don't have to sit down to piss on the playa del sol, its nothing to me.

                  Speaking of which, I should start looking for a house in Spain. I'll bet there are gonna be some sweet deals here soon.

                2. They're all highly accepting of authoritarianism. Russia was the miracle that wasn't.

                  Communism goes boom. Russian Federation born. Chance to eviscerate statism and unleash a virulent blend of civil rights and free markets. Chance missed. Authoritarian dicks take over government. Modern Russian government is born.

                  Why don't good things happen when there's a chance for them to happen? Why must bad shit always emerge victorious in the struggle with good shit? What's the fucking deal with this majorly screwed up world?

                  1. Evil will always triumph over good, because good is dumb.

                    1. Evil will always triumph over good, because good is dumb too trusting.

                  2. Why don't good things happen when there's a chance for them to happen?

                    Because what you and I perceive as "a good thing happening" is often what authoritarians percieve as "an opportunity".

                    1. By the way, check out the data on how many Russians vote for the CPRF. When I first researched it about five years ago, I nearly blew an artery. It's Retarded -- with a huge, fat, capital 'R'.

            2. Exactly. Let Russia empty itself instead and voila, instant lebensraum.

        2. Lets see, Germany has to pay ever increasing amounts of money, with ever decreasing control over that money to countries that openly insult its leaders and that will in some instances have their workers retire 10 years before the German workers.

          How exactly is Germany the winner here ????

          1. They simply foreclose on the rest of Europe. That's how they win.

            1. They tried foreclosing on Europe in 1939... look how that worked out. Well, that was more eminent domain, but still...

              1. Again, it's resisting Germany's will that creates the problem, not Germany's desire to provide guidance to Europe.

                1. Don't worry, dude. The People's Republic of China, Marx bless its righteous fury, shall conquer the world and provide the feeble nation-states of the capitalist horde with high-speed rail, forced abortions, and murder on a civilizational scale.

                  The Germans ain't got shit on the PRC.

                  1. To think there are people who believe that.

                    1. I think we're overplaying how nice living under German rule will be. Do we really want a world in which we get nothing but fetish poop porn?

                    2. To be clear, I'm only advocating European submission to Germany, not American submission to Germany. We'll be the final enclave of good, wholesome porn.

                    3. And hairy armpits. On chicks.

                    4. I think we're overplaying how nice living under German rule will be. Do we really want a world in which we get nothing but fetish poop porn?

                      Nothing like fat men in leather shorts.

                    5. I think we're overplaying how nice living under German rule will be. Do we really want a world in which we get nothing but fetish poop porn?

                      Nothing like fat men in leather shorts.

                2. Again, it's resisting Germany's will that creates the problem, not Germany's desire to provide guidance to Europe

                  You know who else had a desire to provide guidance to Europe?

                  1. Exactly. If Europe had submitted quietly in the first place, no Hitler. Or rather, Hitler, but only as a male prostitute in Vienna going by the name Dieter.

    3. I think the Germans have learned their lesson.

      It is going to be really, really hard to persuade them to take over Europe.

      "Mein Gott. You vants us to haf to take care uf de Greeks and Italians.

      Besides, ve had the Italians on our side in de last War. Your turn again."

      1. See, if the rest of Europe would obey the Germans and become efficient like the Germans, then greater Germania would be the preeminent country in the world. It's quite simple, really.

        1. The Germans have finally figured out that the rest of Europe just wants the Germans to be efficient and work hard while the RoE takes extended vacations and takes early retirement.

          Now they're thinking: "Maybe we should join China, instead."

          1. That's why they need to control the rest of the continent.

  2. And yet no one sees a problem with more centralized authority over everything. If only the proles had followed the mandates of TOP MEN more closely.

  3. Man, won't there be egg on our face when that Golden Shower party takes power, kicks out/kills all the immigrants, non-Orthodox, and other undesirables, and then the Greek economy roars back to life and everything works out perfectly for them.

    1. Fascist trainz(!) run on time.

      1. But are they high-speed, serve only non-HFCS infused meals, and run on green energy?!

  4. While the Eurotrolls burn, I can't help chanting "Ron Paul 2012" hoping for a miracle. Obamney's going to fuck us over.

    1. the (new) Fall of the Roman Empire?

      1. Thing is, we were once so much fucking better than the Eurotrolls, it was as if they were developmentally retarded ferrets. Look at us now. We're not far from them. Give it a decade or two, and we'll have achieved the same kind of level of depravity. Unless something changes.

        1. Not even that long ago. I had a friend who spent a year in Italy in the late 80s. He came home and told me that, when he got off the plane, it was like Star Trek here. The difference was that stark.

          1. 1980s? Try the 1990s, too. You'll know exactly what I mean if you ever traveled around Portugal or Spain, for instance, around that time. Just as the major advancements were occurring, the Europeans started pushing themselves again towards active, destructive authoritarianism.

            I honestly fear that with politicians like Obama and Romney, it won't take more than a few decades for us, too, to drop too far for a return to be possible. How do we fix ourselves now?

  5. Oh, and in regards to the subject of the post: "Greece is the word."

  6. I just enjoyed a delightful Greek lunch from Trieste. I bet if they turned their entire country into a giant Greek restaurant, they would be in the black in no time. That is some damn tasty cuisine.

    1. I've long wondered why they didn't license the country to Disney or someone like that and make the whole place a theme park. Like Epcot, but all about Greece. History, food, sun. Greece World!

      1. Greece World!

        They already tried that already. It didn't work out so well.

        1. No, that's Grease World.

      2. Hookers too, ProL. Prostitution in brothels is legal there and there.

        1. Definitely Disney, then, as they have the most experience with providing prostitutes to their guests.

          1. I don't know about that, but nobody knows more about fucking their customers.

            1. Oh, you thought those characters were for the children? A common misconception.

              1. "You want fucky fucky Snow White? She virgin."

  7. I remember reading in the Rogoff book "This time is different" how Greece has been in default half the time the last 100 years. Had Greece not been in the EU, even better had there been no EU, the problems in Greece would not have been as dangerous to the world economy as it is now. Yet the same idiots who wished for ever more centralisation of financial authority still preach the benefits of the euro and the EU and ever more centralisation.

  8. So, what's a good investment these days for those of us who don't want to keep all our money tied up in money?

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