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  • Quick Chat #281 June 1 2015 [View instapost]
    David Jackson has retired. Eli is the new CEO of SA.
    Jul 2, 2015. 06:18 PM | 6 Likes Like |Link to Comment
  • My Bet On Seeking Alpha's Future [View article]
    Great job David. Thank you very much for all you have done for so many. My best wishes to you and your family.

    Great job on your choice of a successor. Eli knows what customer service is all about. Everyone I have spoken with on SA has a high opinion of Eli.

    It's a very tough job Eli, remember to try not to do it alone.
    Jul 2, 2015. 05:53 PM | 3 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    The Greek government could get a very nasty shock if the Greek people vote Yes.

    There are also major efforts by the EU to stop the referendum. What is it about votes that the EU so fears?

    My guess is the EU never wants to see a referendum about staying in the EU or leaving it. That is why I strongly doubt the UK referendum about staying in the EU will ever happen.
    Jun 30, 2015. 06:54 PM | 4 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    Jun 30, 2015. 06:36 PM | 3 Likes Like |Link to Comment
  • Quick Chat #281 June 1 2015 [View instapost]
    All my prayers Guns for Aiko, your wonderful wife you and your family. The loss of those closest to us is so painful. Always remember your loved ones live on in your heart and will always be with you. Bob
    Jun 30, 2015. 04:59 PM | 4 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    Here is something I found quite interesting in todays news.
    Bloomberg reports that the ECB will review the legality of Greek aid SHOULD THERE NOT BE A DEAL and the Greeks default on the IMF loan.
    So sign up, or we review the legality of Greek aid. There is a legal term for that....
    Jun 29, 2015. 02:38 PM | 5 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    The Greek financial stability council has recommended keeping automated teller machines (ATMs) shut on Monday and limiting withdrawals to 60 euros a day once they reopen on Tuesday, a source who took part in the council's meeting told Reuters.

    The recommended limit will apply to holders of Greek bank cards. Foreign card holders will be allowed to withdraw the maximum limit set by their banks, the source said on Sunday.
    Jun 28, 2015. 06:58 PM | 3 Likes Like |Link to Comment
  • Quick Chat #281 June 1 2015 [View instapost]
    I have posted some new info on the Greek situation over on the Stability of the EU news concentrator.

    In the mean time, Dow futures opened down 300.
    Jun 28, 2015. 06:20 PM | 4 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    Totally true Mark. The banks are so heavily leveraged that even a relatively small shock will take them down.
    A lot of the media has been claiming that a Greek default has been priced into the markets and the banks. I have strong doubts about that.
    Jun 28, 2015. 06:05 PM | 4 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    I agree Maya.. unfortunately I am going to be out of action on Monday and probably Tuesday…
    Jun 28, 2015. 05:50 PM | 3 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    A Greek default on that 1.5 billion euro debt due to the IMF on June 30 will trigger cross-default clauses on a 130.9 billion euros that Greece owes the euro area’s temporary rescue facility.
    Jun 28, 2015. 02:58 PM | 4 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    All hell breaking loose.

    * The ECB has suspended further increases in ELA funding for Greek banks. That is the trigger event previously identified that will start the meltdown. This was inevitable once the Greeks played the referendum card. The EU does not like referendums.

    * Greek banks Banks will remain shut until after a July 5 referendum called by Prime Minister Alexis Tsipras. Good luck to businesses.

    * The Greek stock market will not open on Monday. Not sure how long it will stay closed. You can expect slaughter when it does open in absence of stabilizing news.

    * What does the IMF, one of the lending institutions think about the referendum? "The Greek government's planned referendum on the terms of any new bailout plan will be invalid after Tuesday, when the current program expires. As a result, the Greek people would be voting on a proposal's that were no longer in place."

    * More from Lagarde: "I certainly hope that the bundled payment due to the IMF on Tuesday night, at the latest, will be paid."
    Jun 28, 2015. 01:52 PM | 4 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    Good stuff WT. Here are some more facts and what I think are interesting questions that need to be answered.

    Non-collection of taxes was exactly the reason why the IMF refused to accept the Greek proposal that amounted to mostly tax increases. Taxes that the Greek government and all parties concerned know would not be collected. Something along the line of empty promises. Empty promises with a wink and a nod that everything is ok now when in fact, nothing was solved at all. That's why the IMF rejected the 'kick the can' solutions and demanded spending cuts. Because spending cuts are under control, while tax collection are not.

    [Many of the following figures come from this summary source:

    Another reason the IMF is insisting on cutting pensions is because Greece spends more than any other country in the EU on pensions as a proportion of GDP. Greece spends 17.5 % of GDP on pensions according to Eurostat.

    Actually that number does not provide a complete assessment of the Greek pension situation. Greece also has an aging population with a very high "age dependency ratios" (the ratio of people less than 15 or older than 64 to the working-age population). According to Eurostat, Greece's age dependency ratio is around 30%, one of the highest in the EU.

    Meanwhile, unemployment in Greece is the worst in Europe, with more than 25 percent of the working-age population without a job. Additionally, Youth unemployment is even worse, with over 50 percent of young working-age people unemployed.

    I argue that an improved assessment of the pension situation in Greece would be provided by a revision of the definition of the "Age dependency ratio". I call my version the "Effective Age Dependency Ratio". The latter is computed by
    modifying the denominator of the standard age dependency ratio by subtracting the number of unemployed from the number of people in the working-age population.

    Given the massive degree of unemployment, the effective age dependency ratio in Greece has to be far in excess of 30%. This means that for a significant portion of the Greek population, the monthly state pension payment is the sole source of income for a family. Because of this, a significant source of Greek general spending (food, clothing, utilities,...) derives from the Greek pension system. I believe this is why Greek politicians are so sensitive with respect to Greek pensions.

    This is in fact the reason why the creditor institutions are going after pension and job cuts. According to the IMFs chief economist Olivier Blanvhard, Pensions and wages account for about 75 percent of Greek primary spending. "The other 25 percent have already been cut to the bone".

    On reading the first paragraph of the "deal" you can see it provides for primary surpluses of 1, 2, 3, and 3.5% of GDP in 2015, 2016, 2017, and 2108.

    The only place where increases in primary surpluses of that magnitude can come from is Pensions and Wages. Those are huge increases in primary surplus amounts (i.e., austerity cuts) which in turn are likely to cause a significant disruption in the Greek economy. The country is in recession now; the offered deal would send the country into a deep depression.

    Debt Relief:
    The IMF says they are in favor of debt relief for the Greeks (see for example: "IMF Halts Its Bailout Talks With Greece Amid Lack of Progress").

    However, Germany and other countries in favor of IMF involvement have bristled at the calls for debt relief, which would require EU governments to give up a portion of their claims against Greece. You can bet that politicians in the EU are highly sensitive to telling their voters that they are going to have to eat debt bought by those respective EU governments.

    What makes the IMFs call for debt reduction so duplicitous is that they are not offering debt relief from the amount owed to it. The reason for that is because the IMF's charter forbids debt forgiveness. The same goes for the ECB. The IMF knows this, yet they prefer to "politically posture".

    Kicking the Can Solutions?
    The 'solutions' of the past have been of the 'kick the can' variety. Kicking the can solutions raise several questions. Here are a few of them:

    Why do the lending institutions send funds into Greece only to have them send the same funds back to the lending institutions? Why does the money have to go through the Greek banks at all? Most of the borrowed money is used to repay the debtors.

    Who ends up paying those unpaid loans and who was responsible for making them in the first place? Exactly what did those loans buy for the citizens of the EU governments that made the loans and are now on the hook for those loans?

    Why did the lending institutions that had a fiduciary responsibility lend more and more money to Greece, a country where tax evasion is a national pastime and political corruption and graft are considered as normal ways of conducting business?

    What is the nature of bank involvement? Are transaction fees extracted? You bet... how much and to who?

    I will have more to say in future posts, but right now, the "deal" has blown up.
    Jun 28, 2015. 01:21 PM | 4 Likes Like |Link to Comment
  • Stability Of The European Union June 1, 2015 To ??? [View instapost]
    This is the Bailout Deal Greeks Will Vote On. From Greek Reporter by Anastasios Papapostolou - Jun 26, 2015

    Now I understand the call for a Referendum. All by themselves, the primary surplus targets are impossible.
    Jun 26, 2015. 08:38 PM | 3 Likes Like |Link to Comment
  • Quick Chat #281 June 1 2015 [View instapost]
    The Greeks Just Played the Referendum Card. Here is a link that describes the situation more fully.
    Jun 26, 2015. 08:28 PM | 6 Likes Like |Link to Comment