Alexis Tsipras' "open letter" to German citizens

[volpunter]

I have made my stance towards Greece crystal clear and backed it up with numbers and facts. Greece will either get kicked out of the union which will destroy them or they will have to reprogram their genes. Germany and Northern Europe will do relatively well, regardless of whether Greece will default on its debt entirely or whether a portion will be forgiven. We are talking about a nation that has always risen from the ashes and via hard work and innovation and smarts captured the top three spots in virtually every aspect (Germany), and we have a country of savages that has in over 2000 years learned nothing from its mistakes other than excelling at perfecting its skills of lies and deception. Let's see which one will prevail, I have no doubt who will come out of this mess as clear winner.

I leave you to your friends, looks like you have an ax to grind with pretty much anyone on this site. Interestingly, you seem to only delight in flaming and polit discussions. Does not float my boat.

http://www.elitetrader.com/et/index...ould-he-think-tsing-tao-is-an-asshole.289852/

http://www.elitetrader.com/et/index...g-governmental-overreach.289860/#post-4091195

http://www.elitetrader.com/et/index.php?threads/is-this-what-you-voted-for.289857/page-2

http://www.elitetrader.com/et/index.php?threads/nra-hijinks.286153/page-74#post-4091116

Cheers

Yes, we heard you the first 200 times. Nothing of what you say is ever incorrect, insulting, a lie and in bad taste. All of those crude and profane insults are just fine when they come from you. It's just those who don't agree with you who are guilty of all that. We get it.

Good job on yet another double post.

 

[Tsing Tao]

I have made my stance towards Greece crystal clear and backed it up with numbers and facts. Greece will either get kicked out of the union which will destroy them or they will have to reprogram their genes. Germany and Northern Europe will do relatively well, regardless of whether Greece will default on its debt entirely or whether a portion will be forgiven. We are talking about a nation that has always risen from the ashes and via hard work and innovation and smarts captured the top three spots in virtually every aspect (Germany), and we have a country of savages that has in over 2000 years learned nothing from its mistakes other than excelling at perfecting its skills of lies and deception. Let's see which one will prevail, I have no doubt who will come out of this mess as clear winner.

I leave you to your friends, looks like you have an ax to grind with pretty much anyone on this site. Interestingly, you seem to only delight in flaming and polit discussions. Does not float my boat.

http://www.elitetrader.com/et/index...ould-he-think-tsing-tao-is-an-asshole.289852/

http://www.elitetrader.com/et/index...g-governmental-overreach.289860/#post-4091195

http://www.elitetrader.com/et/index.php?threads/is-this-what-you-voted-for.289857/page-2

http://www.elitetrader.com/et/index.php?threads/nra-hijinks.286153/page-74#post-4091116

Cheers

You wouldn't last 2 days in the Politics and Religion folder with your thin skinned, go crazy at everyone mentality. So quoting threads from there is irrelevant as everyone who participates in that forum gets into a battle depending on political alignment. I guess I could go link to the threads where you've gone off the deep end like this one - or the Japan one with Piezoe.

But I do see that you keep following me around like a puppy

Any time you want to side with those who support banning all guns, growing government, Obama, climate change and higher taxation, etc., you can join up the fight against those of us who think otherwise.

What am I saying, you're European - of course you're a liberal!


Regarding Greece, however, it's good to see we agree finally!

 

[Martinghoul]

Well, you would agree that the capitalization of the ECB is spelled out in much detail, no? That indirectly already defines the risk sharing of anything on ECB's balance sheet as well should ECB ever face such risk. You could say the same applies to the Fed as well. Which US state will be sharing how much risk? Nobody really knows nor is it set out in any terms. But why would it be necessary to even consider if the whole US economic survival hinges on the trust and faith in the solvency and liquidity of the Fed. Same with the ECB. And why do you think ECB pulled their lines 2 weeks ago and why do you think ECB reserved the right to reject Greek bonds as collateral a while ago.

Well, yes, capital contributions to the ECB are spelled out here and now, in "fair weather", so to speak. However, I completely disagree that risk sharing is adequately defined in various contingencies that may arise. In fact, if the ECB's very own legal counsel (Phoebus Athanassiou), expressing an official opinion, doesn't know what happens in the case of actual EMU exit or expulsion, I daresay that's pretty conclusive. He's not alone either. If you read speeches by ECB officials (e.g. Cœuré), you'll see similar sentiments expressed (let me know if you want links).

As to the parallel with the Fed, I just don't see any justifiable basis for it. Firstly, what is the comparable contingency in the US? Secondly, the Fed's ownership structure has nothing to do with individual states. The risk is shared among the community of commercial banks (contributors of fixed amounts of "equity-like" capital to the regional FRBs) and the US Treasury Dept. Since the US Treasury is a single entity, there are no uncertainties.

Again, my point is that, given the loose integration of the EMU/EU, it's emphatically not the "same with the ECB". If anything, the ad hoc nature of the decisions around Greece (e.g. the suspension of the waiver, the whole ELA malarkey, etc), demonstrates this rather conclusively. If you don't wanna take my word for it, you should listen to the various officials.

 

[volpunter]

I did not say it was "adequately defined", I said that " indirectly already defines the risk sharing of anything on ECB's balance sheet as well should ECB ever face such risk.". I thought it was clear that I agree that risk sharing is not directly defined but indirectly derived from the relative contributions of member states. Like most of such contingencies are hammered out in detail when they actually occur. Not the best way to prepare for a taifun but that is how they go about doing things anyway.

I disagree, I think the Fed makes for a pretty suitable example. Fed is even more levered than ECB, in that sense it is exposed to more risk than ECB. Talking numbers, as of mid 2014 the Fed was levered up77:1. A mere 1.3% change in value of its assets would completely wipe out its equity capital. It is nonsense for some to claim that this will never happen because Fed can hold all their assets to maturity. Because of its policy mandate Fed never holds all its assets to maturity, it actively manages its portfolio to target specific duration buckets. It also has to actively manage its dual mandate, price stability and maximum employment. So, an exposure to such change in value of its holdings is anything but farfetched. What will happen if such situation materialized? The Treasury would have to recapitalize. And then? In the end the same applies as in Europe. The indirect contributors will be US taxpayers. Which taxpayers? Well each state will indirectly contribute via the payments by each state into the national tax bucket, via national income tax and other national tax payments. So, indirectly it can very much be determined how much California vs Louisiana would contribute to a Fed recapitalization. So, I am not sure where the comparison does not stand. Its not perfect but its still a reasonable comparison.

But yes, I agree the integration is much looser in the EMU, it was intentionally designed to be that way. And shall I remind those, interested, that it was by the wish of mostly Southern European countries that any sort of fiscal integration was left out of the picture. The fear of loss of cultural identity and national decision making power was the chief reason for this loose integration.

In summary, I guess my main point was that in the event of serious asset devaluations on ECB's balance sheet it is pretty straight forward to arrive at reasonable numbers which member state would contribute how much.

Well, yes, capital contributions to the ECB are spelled out here and now, in "fair weather", so to speak. However, I completely disagree that risk sharing is adequately defined in various contingencies that may arise. In fact, if the ECB's very own legal counsel (Phoebus Athanassiou), expressing an official opinion, doesn't know what happens in the case of actual EMU exit or expulsion, I daresay that's pretty conclusive. He's not alone either. If you read speeches by ECB officials (e.g. Cœuré), you'll see similar sentiments expressed (let me know if you want links).

As to the parallel with the Fed, I just don't see any justifiable basis for it. Firstly, what is the comparable contingency in the US? Secondly, the Fed's ownership structure has nothing to do with individual states. The risk is shared among the community of commercial banks (contributors of fixed amounts of "equity-like" capital to the regional FRBs) and the US Treasury Dept. Since the US Treasury is a single entity, there are no uncertainties.

Again, my point is that, given the loose integration of the EMU/EU, it's emphatically not the "same with the ECB". If anything, the ad hoc nature of the decisions around Greece (e.g. the suspension of the waiver, the whole ELA malarkey, etc), demonstrates this rather conclusively. If you don't wanna take my word for it, you should listen to the various officials.

 

[Banjo]

This is the real reason Greece has a massive tax-evasion problem

http://www.businessinsider.com/this...eece-has-a-massive-tax-evasion-problem-2015-2

An anecdotal experience. I'd finished an around the world sailing trip, sold the sailboat in Panama thru a broker and was asked if I was interested in a powerboat. It was docked in Italy and owned by a Greek. Wasn't really hot for a new boat yet so made an absurd cash offer 400k under mkt value, he accepted. I thought there had to be something wrong with the boat so had two surveyors look at it. It was pristine. I discovered later that the seller was a Greek Dr. shitting his pants re: the govt seizing property of tax cheats., prolly why it was hidden in Italy. He took an easy 400K hit if he bought it new. I had to wire to his personal account at a Panamanian bank. Conclusion, some of those boys been riding a gravy train for a long time.

 

[Tsing Tao]

Good for Schauble! Perhaps he realizes that throwing good money after bad won't be a solution.

Schauble: "Germans Doubt Greek Promises", No More Money For Athens Until All Commitments Met

After the new Greek government fought valiantly a la David vs Goliath for several weeks, only to cave in the last minute and admit that the best it can do is continue the much hated policies of the predecessor Samaras government by extending the Greek bailout program, it now has a bigger problem: assuring its European "partners" that, having flipflopped, it is as trustworthy as the Samaras government. And none other than the German FinMin Wolfgang Schaeuble made that point early on Wednesday when in a radio interview with SWR2 radio, he said that it had not been an easy decision for euro zone finance ministers to extend the Greek rescue plan by four months and "much doubt remained about how credible Athens' latest reform commitments really were."

Reuters quotes Schauble who said that: "It wasn't easy an easy decision for us but neither was it easy for the Greek government because (they) had told the people something completely different in the campaign and afterwards."

"The question now is whether one can believe the Greek government's assurances or not. There's a lot of doubt in Germany, that has to be understood," said Schaeuble who despite his misgivings, he has urged German lawmakers to approve the Greek extension in a vote in parliament expected on Friday.

The finance minister made one thing very clear: No payments will be made to Athens unless Greek govt meets its commitments in full.

In other words, Greece may have bought itself a 4 month bailout extension on paper, but in practice unless it succeeds in boosting its tax collections in the coming days, its state coffers - already on the verge of being completely empty - will run out of cash, and Greece will then really have no choice but to declare full insolvency. The only question is how much longer will the Troika continue its "pass-thru" funding operations, where it gives Greece aid so that Greece can paid interest and maturities on Troika debt?

Something tells us that if the government runs out of all cash to pay government workers, it is all over anyway.

And then there is the issue of whether the proposed Greek bailout extension will even pass a Bundestag vote: according to Rheinische Post, up to 60 government members will rebel on Friday when the vote on the bailout extension is due, following reports that Greece now expects a third bailout in the summer amounting to at least €20 billion.

 

[Tsing Tao]

http://www.rp-online.de/politik/eu/griechenland-drittes-rettungspaket-im-sommer-aid-1.4902183

Article in German, so if your German isn't up to speed, run it through Google. A large number of German MPs determined to vote against the Greek extension.

Koalition rechnet mit drittem Hilfsprogramm im Sommer

Die wichtigsten Versprechen im Sparplan der Griechen
Exklusiv | Berlin. Die Koalition will am Freitag der Verlängerung des Hilfsprogramms zustimmen. Doch das ist nur der Auftakt: Ein drittes Rettungspaket folgt in vier Monaten. Die Union erwartet bis zu 60 Abweichler. Von Jan Drebes, Birgit Marschall, Gregor Mayntz und Eva Quadbeck
Nach der Verlängerung des laufenden zweiten Hilfsprogramms wird Griechenland nach Einschätzung führender Koalitionspolitiker ab Juli ein drittes Rettungsprogramm in zweistelliger Milliardenhöhe benötigen. "Es ist völlig klar, dass es im Sommer ein drittes Programm geben wird", hieß es aus Koalitionskreisen.

Im Gespräch sei ab Juli ein drittes Hilfsprogramm in Höhe von mindestens 20 Milliarden Euro. Auf die Frage, ob im Sommer ein weiteres Hilfspaket nötig werde, sagte Bundesfinanzminister Wolfgang Schäuble (CDU) in der Unionsfraktionssitzung am Dienstag nach Teilnehmerangaben: "Man soll nie nie sagen."

Für die Verlängerung des laufenden, zweiten Programms zeichnete sich trotz etlicher Unmutsäußerungen aus der Union eine Mehrheit ab. Der Bundestag soll am Freitag entscheiden. Zuvor wollen die Fraktionen von Union und SPD morgen zu Sondersitzungen mit Probeabstimmungen zusammenkommen.

Porträt: Varoufakis – Medienexperte und Finanzminister FOTO: dpa, el ase
In der Union wird mit deutlich mehr Abweichlern als bei der letzten Griechenland-Entscheidung Ende 2012 gerechnet. Es könnten bis zu 60 Nein-Stimmen werden. Insbesondere die neuen Abgeordneten und die CSU-Landesgruppe meldeten Bedenken an. Die CSU will sich heute mit Schäuble treffen, um offene Fragen zu klären. In der SPD-Fraktion deutete nur Klaus Barthel ein Nein an. Die Grünen wollen geschlossen zustimmen. Die Linke wird die Programmverlängerung voraussichtlich ablehnen, weil sie die Auflagen der Geldgeber für zu streng hält.

Die griechische Regierung hatte gestern mit acht Stunden Verspätung die erforderliche "Reformliste" an die Euro-Gruppe gesandt. Darin bekennt sich Athen dazu, den Reformprozess fortzusetzen, Sparziele einzuhalten und Korruption zu bekämpfen. Allerdings will die Regierung Privatisierungsvorhaben überprüfen und verstärkt gegen die soziale Not im Land vorgehen. Die EU-Finanzminister akzeptierten die Liste gestern in einer Telefonkonferenz. Am Vortag hatten sie einen ersten Entwurf zurückgewiesen und Athen aufgefordert nachzubessern. Christine Lagarde, Chefin des Internationalen Währungsfonds, erklärte, die Liste reiche aus, um das Hilfsprogramm fortzusetzen.

Der CDU-Politiker Wolfgang Bosbach, der über einen Rückzug aus der Politik nachdenkt, glaubt nicht, dass die Griechen in vier Monaten schaffen, was sie in vier Jahren nicht hinbekommen haben.

Schäuble: "Grexit" ist keine Option

Griechenland-Einigung: Pressestimmen: "Die Wahlversprechen werden eingefroren"
In den kommenden vier Monaten will Athen mit den Geldgebern über ein Anschlussprogramm beraten. Dabei wird die nur mühsam unterdrückte grundsätzliche Richtungsdebatte mit der Syriza-Regierung fortgesetzt. Athen ist der Meinung, die bisherige Spar- und Reformpolitik sei gescheitert. Es wird dabei unterstützt von Frankreich, den USA und der deutschen Opposition.

Schäuble warb gestern in der Fraktion eindringlich für die Verlängerung der Griechenland-Hilfen. Ein "Grexit", der unfreiwillige Abschied Griechenlands aus dem Euro, sei keine Option. Die Kanzlerin ließ die Debatte in der Fraktion laufen, ohne sich inhaltlich einzumischen. Sie sagte nur, die Aufgaben der Griechen seien "mitnichten erledigt".

 

[Martinghoul]

I did not say it was "adequately defined", I said that " indirectly already defines the risk sharing of anything on ECB's balance sheet as well should ECB ever face such risk.". I thought it was clear that I agree that risk sharing is not directly defined but indirectly derived from the relative contributions of member states. Like most of such contingencies are hammered out in detail when they actually occur. Not the best way to prepare for a taifun but that is how they go about doing things anyway.

Yes, my point is precisely that, for Europe, it's an unfortunate combination of: a) not being prepared for the sh1tstorm properly when/if it happens; and b) the sh1tstorm being more likely because of loose integration. And yes, that's how the Europeans go about doing things, but I think it's now been rather conclusively demonstrated that the way things have been done is - to put it mildly - not exactly optimal. And we all know Einstein's famous saying about what constitutes insanity.

I disagree, I think the Fed makes for a pretty suitable example. Fed is even more levered than ECB, in that sense it is exposed to more risk than ECB. Talking numbers, as of mid 2014 the Fed was levered up77:1. A mere 1.3% change in value of its assets would completely wipe out its equity capital. It is nonsense for some to claim that this will never happen because Fed can hold all their assets to maturity. Because of its policy mandate Fed never holds all its assets to maturity, it actively manages its portfolio to target specific duration buckets. It also has to actively manage its dual mandate, price stability and maximum employment. So, an exposure to such change in value of its holdings is anything but farfetched. What will happen if such situation materialized? The Treasury would have to recapitalize. And then? In the end the same applies as in Europe. The indirect contributors will be US taxpayers. Which taxpayers? Well each state will indirectly contribute via the payments by each state into the national tax bucket, via national income tax and other national tax payments. So, indirectly it can very much be determined how much California vs Louisiana would contribute to a Fed recapitalization. So, I am not sure where the comparison does not stand. Its not perfect but its still a reasonable comparison.

We can agree to disagree. IMHO, the Fed's leverage is irrelevant. Firstly, the Fed, unlike the ECB, is explicitly and unconditionally backed by a single entity, the United States government. Secondly, yes, you can always doubt the ability of the US government to collect taxes from its residents, but are you seriously suggesting that these concerns are more likely to arise in the US than they are in the Eurozone?

In summary, I guess my main point was that in the event of serious asset devaluations on ECB's balance sheet it is pretty straight forward to arrive at reasonable numbers which member state would contribute how much.

If it were that straightforward, why are the European officials constantly talking about this issue, in the context of the ECB, the EFSF, etc etc? Why is this a question that people have been discussing so much especially recently, with the decision to start sovereign QE?

 

[Tsing Tao]

Greece faces problem repaying IMF, ECB: finance minister Varoufakis
(Reuters) - Greece has no immediate problem with government liquidity, but faces trouble in making debt payments to the IMF and European Central Bank in the spring and summer, Finance Minister Yanis Varoufakis said on Wednesday.

"We will not have liquidity problems for the public sector. But we will definitely have a problem in repaying installments to the IMF now and to the ECB in July," he told Alpha Radio.

A finance ministry official said on Tuesday that Greece expected to start discussions immediately with its EU/IMF partners on filling the state's funding gap.

Euro zone finance ministers have agreed to a four-month extension of Greece's EU/IMF bailout program but funding will be released only after the new leftist-led government's economic plans have been approved in detail.

Following interest payments this month of about 2 billion euros to private bondholders and official lenders, Greece must repay an International Monetary Fund loan of around 1.6 billion that matures in March.

Then it needs 0.8 billion euros for interest payments in April and about 7.5 billion in July and August for maturing bonds held by the ECB and for more interest payments.

Varoufakis also played down suggestions he had difficult relations with German Finance Minister Wolfgang Schaeuble. “I continue to say that of all my colleagues at the Eurogroup, I have the greatest respect for Wolfgang Schaeuble,” he said. "When he speaks, I enjoy listening to him and disagreeing with him."

 

[volpunter]

Yes, my point is precisely that, for Europe, it's an unfortunate combination of: a) not being prepared for the sh1tstorm properly when/if it happens; and b) the sh1tstorm being more likely because of loose integration. And yes, that's how the Europeans go about doing things, but I think it's now been rather conclusively demonstrated that the way things have been done is - to put it mildly - not exactly optimal. And we all know Einstein's famous saying about what constitutes insanity.
Well, I am not sure Greece leaving the EMU is bigger a shitstorm than several countries at the brink of complete inability to finance themselves as we had with Spain, Ireland, Portugal, Italy, Greece, and several smaller nations in Europe. It took one single sentence by Draghi. In fact he never followed through with actions because actions were not necessary. 2-3 months later, multi ten-billion dollar hedge funds had their backbone broken and Eur traded at 1.399x levels. So, with all due respect I believe Greece leaving the EMU is a way smaller issue than what ECB dealt with before.

We can agree to disagree. IMHO, the Fed's leverage is irrelevant. Firstly, the Fed, unlike the ECB, is explicitly and unconditionally backed by a single entity, the United States government. Secondly, yes, you can always doubt the ability of the US government to collect taxes from its residents, but are you seriously suggesting that these concerns are more likely to arise in the US than they are in the Eurozone?

But both central banks are equally held responsible, one by its country's treasury, the other by its "shareholders", the national central banks and European law. I do not see a huge difference between the two when it comes to the ability to fulfil their mandates and keep functioning. Of course can Fed print and so can ECB. ECB is equally backed and its capital stock is directly owned by the national central banks. The allocation of the ownership of the capital stock is clearly defined.

If it were that straightforward, why are the European officials constantly talking about this issue, in the context of the ECB, the EFSF, etc etc? Why is this a question that people have been discussing so much especially recently, with the decision to start sovereign QE?

Can you please provide some links in reference to your claim? I would need to properly understand in detail what those individuals are worried about to comment.

Lastly, I think the experiment the Fed has undertaken in 2008 was way riskier than anything ECB has ever embarked on. Fed in effect took over several multi billion corporations, loaded its balance sheets with toxic equity ownership (toxic because it represented nearly bankrupt corporations). Again, I respect your opinion but I believe you hardly find a single academician or market professional who did not consider Fed's undertakings in 2008 necessary but a huge gamble with very unclear outcome. We have to see what the first trances of ECB's QE will bring to see how ECB's balance sheet will perform going forward.