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Perhaps what's really roiling markets today are weekend elections in France and Greece. Greece...
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Friday, May 4, 2012, 11:03 AM ETPerhaps what's really roiling markets today are weekend elections in France and Greece. Greece looks particularly ugly, with true economic collapse in Athens potentially paving the way for the neo-Nazi Golden Dawn party to take 5-6% of the vote (2009 election: 0.23%). The communists are polling at about the same. "Be very worried," says Credit Suisse.
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But, that's why, in reference to your coment to Stone Fox above, it makes no difference what Greece does, now. LTRO was to buttress the banks, not rescue Greece, which can only be rescued through its own actions, if any.
And btw, Greece's Nazi wing isn't connected to Germany's. They believe the True Aryan Race is the Greeks. If you've ever been to Greece it's a complete melting pot of all racial types -- except maybe Chinese. These people are certifiably nuts.
It matters not what the source of Greece's funds are or whether they receive them, except to the Greeks. The banks have been backstopped.
And, it really matters not much, except as a curiosity, what sort of goofballs Greeks may decide to enfranchise within their own country. Many European countries have fringe parties that always get press, but rarely amount to any threat to world peace.
Generally speaking, I find it somewhat humorous that any volatile day always brings forth the plethora of theories and scare pieces to explain the occasional big-mover day. Heck, a few months back, we moved 1-2% nearly every day; now, it's an earth-shaking event.
"The 'troika' of IMF, EU and ECB lenders have said the election is a big risk to the fiscal steps and reforms Greece needs to deliver to get cash and turn its ailing economy around, including 11 billion euros worth of new measures in June."
Source: http://reut.rs/KkFlxR
You still haven't recognized that the risk has been transferred from the banks to the ECB. If Greece defaults, it's the ECB, which accepted Greek bonds as collateral, that will be on the hook. If that occurs, the ECB will just manufacture more euros, just as the fed has created dollars here. It's changed the entire dynamic and eliminated the risk of cascading bank failures.
Sure, any Greek default will occasion the usual handwringing and temporary market weakness, but as a critical lynchpin to Europe's future, it's already been eliminated.
"ZARROLI: Iscaro points that the bailout requires Greece to meet certain budget-cutting targets. And it's already been tough to sell them to the Greek people. If political support for the bailout erodes any further, the government will have trouble meeting those targets and the whole bailout plan could unravel.
"ISCARO: ... We may have avoided hard default now [Feb 2012], but we may actually encounter Greece in the same situations in a couple of months' time.
:ZARROLI: In fact, Greece has more bond payments coming due in June. And European leaders could once again be back at the negotiating table this spring...."
Source:
http://n.pr/IRDHHl