Disorderly Greek Default To Cost Over €1 Trillion

IIF's Doomsday Memorandum Revealed

By Tyler Durden

While everyone was busy ruminating on how little impact a Greek default would have on the global economy, the IIF - the syndicate of banks dedicated to the perpetuation of the status quo - was busy doing precisely the opposite. In a Confidential Staff Note that was making the rounds in the past 2 weeks titled "Implications of a Disorderly Greek Default and Euro Exit" the IIF was doing its best Hank Paulson imitation in an attempt to scare the Bejeezus out of potential hold outs everywhere, by "quantifying" the impact form a Greek failure. The end result: 

"It is difficult to add all these contingent liabilities up with any degree of precision, although it is hard to see how they would not exceed €1 trillion."  

A grim & bleak beauty

On architecture and art in Coventry

by Anthony Daniels

I pray you, let us satisfy our eyes With the memorials and the things of fame That do renown this city.                                 —William Shakespeare, Twelfth Night

On the night of November 14, 1940, the ancient city of Coventry was firebombed and one of the finest assemblages of medieval buildings in Europe vanished. The following morning, the Provost of the Cathedral, the Very Reverend Richard Howard, traced the words “Father forgive” on the charred surface of the ruined walls of the fifteenth-century cathedral, and vowed that there would be no revenge or retaliation. He counted neither on Bomber Harris nor on post-war British architects.

Deus Ex Machina

There is no means of avoiding a final collapse of a boom brought about by credit expansion

With most of the world’s major economies as well as the financial system bankrupt, there is only one solution that can save the world economy. Like in the Greek tragedies, Deus ex Machina is now the only way that the world can avoid a total economic collapse. This would involve God being lowered down onto the world stage and miraculously saving the plot.

by Egon von Greyerz

For those few who believe in this, may God bless them. But since this is a very unlikely solution most people will instead rely on governments and central banks to save us. But how can anyone possibly believe that totally incompetent and clueless politicians and central bankers could solve anything. They created the problem in the first place and are therefore totally unsuitable to play the role of Deus. The main objective of governments is to stay in power and thus to buy votes. Therefore they are incapable of taking the right decisions. And the opposition, aspiring to power is even less suitable since they will lie through their teeth and promise the earth in order to be elected. (We know that there are exceptions like Ron Paul, but the voters will most probably find his medicine too strong to swallow.)

What about central bankers, can’t they save us? Unfortunately any sensible person who becomes a central banker loses all his senses and becomes a prisoner of the political system.

Solution?

The Laffer Curve And Austrian School Economics

In the bust phase, any change in the tax rate drives a big change at the margin of economic activity

A parody 'Neo-Laffer curve'. Critics argue that the assumption that the curve should be a simple, smooth and empirically identifiable one is not borne out by real world evidence.

by Keith Weiner

Jude Wanniski, a writer for the Wall Street Journal, coined the term “Laffer Curve” after a concept promoted by economist Art Laffer. Laffer himself says the idea goes back to the 14th century

Tocqueville Would Be Proud

Americans still support private land stewardship

By G. Tracy Mehan

Proud members of the Loyal Order
of Water Buffalos Lodge

The growth of the private land trust movement in the United States has often been cited as a premier example of Alexis de Tocqueville's insight regarding the American genius for forming voluntary associations to achieve common goals, avoiding both the perils of hyper-individualism and an intrusive government. When done properly, these trusts or conservancies typify the best of what is sometimes called "free market' environmentalism.

Land trusts engage in entirely free-market transactions with willing landowners who are able to sell or donate the development rights on all or part of their land in return for compensation or favorable tax treatment. They grant a conservation easement to the land trust which is responsible for protecting the easement for generations to come.

Such easements can be for purposes of soil and water conservation, aesthetics, wildlife corridors or preservation of rural and agricultural life-or all of the above.

The first land trust was established in 1891 in Massachusetts, by the landscape architect Charles Eliot, to preserve 20 acres of woodland. By 1950 there were still only 53 such trusts in 26 states. Today, there are similar trusts or conservancies in all 50 states, the District of Columbia, and Puerto Rico.

Everything you wanted to know about the Greek Restructuring and you were afraid to ask

Greek Restructuring - The Week Ahead

By From Peter Tchir

The situation in Greece should create some big headlines this week.  The bond exchange “invitation” is set to expire at 3pm EST on Thursday March 8th.  This is the so-called Private Sector Involvement or PSI.  Greece has other steps to take during the week, and ultimately the Troika will determine how to proceed with the bailout, but not until the results of the PSI are known.

It could be a week of confusing, misleading, and market moving headlines.   Figuring out the “proper” reaction to each bit of news will require understanding the terms, and hoping the headlines are accurate – which given how confusing the situation is, cannot be fully counted on.  Remember, the original “invitation” from the Greek government was for an amortizing bond, which was then changed to a series of 20 “bullet” bonds, so the level of confusion remains high.

Types of Greek Debt

Total Hellenic Republic Debt according to Bloomberg is €354 billion (all debt outstanding amounts are based on data from Bloomberg).

Oops !!!

ECB Says Greece May Not Get Enough PSI Participation, Der Spiegel Reports

By Brian Parkin

Greece may fail to garner enough investors to participate in a voluntary writedown of its debt, Der Spiegel magazine reported, citing unnamed officials at the European Central Bank.

A second Greek bailout is partly tied to investors’ agreeing to the writedown by a March 8 deadline.

The changing dynamics of Greece's Crisis

Shifting from Financial to Political

By Stratfor

Summary

The European financial crisis centered for several years on the idea of preventing Greece from defaulting on its national debt. However, the rest of Europe has had time to prepare itself for any potential fallout from a Greek default. This is changing the dynamic between Greece and Europe even as emerging societal trends within Greece are illustrating changes in the relationship between Greece's political elite and its people. These trends will continue as the crisis transforms from a financial one to a political one.

Analysis

Since the beginning of the financial crisis in 2008, European leaders' actions have been dictated by a presumed need to keep Greece from defaulting on its massive national debt at all costs. Even at the cost of losing domestic popularity for supporting a Greek bailout, and even if Greece seemed unwilling or unable to repay the money Europe poured into it, European politicians prioritized the prevention of a Greek default in order to prevent the euro -- and possibly the European Union -- from collapsing. However, that could now be changing, along with the relationships between Greece and the rest of Europe and between Greece's political elite and the Greek people.

Unintended Consequences

A Rule of Thumb approach to the European Crisis

"Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead. We must therefore accept it without complaint when they sometimes collide with a bit of reality against which they are dashed to pieces."  Sigmund Freud

By John Mauldin

Let me introduce Mauldin's Rule of Thumb Concerning Unintended Consequences:


"For every government law hurriedly passed in response to a current or recent crisis, there will be two or more unintended consequences, which will have equal or greater negative effects then the problem it was designed to fix. A corollary is that unelected institutions are at least as bad and possibly worse than elected governments. A further corollary is that laws passed to appease a particular group, whether voters or a particular industry, will have at least three unintended consequences, most of which will eventually have the opposite effect than the intended outcomes and transfer costs to innocent bystanders.

Death By A Thousand Cuts

Whatever the name for today’s failed system is, “capitalism” is not that name

By Keith Weiner

Capitalism died when they decided to subsidize railroads for the sake of national prestige in the mid 19th century.

Capitalism died when, to compensate for the consequences of subsidized railroads, they passed anti-trust laws in 1890, under which it is illegal to have lower prices, the same prices, and higher prices than one’s competitors.

The Myth of Margaret Thatcher

A great and noble failure

Conservatives must come to grips with the noble failure of the Iron Lady

By Peter Hitchens

“The Iron Lady,” the cruel motion picture about Margaret Thatcher, makes much of her decline into bemused old age. It arouses sympathy for her among the undecided, and passionate sympathy among those who already revere her. No wonder. I cannot think of any other living person who could have been treated in this fashion. In a way it is a compliment to her that, even in the lonely, desolate weakness of her final years, her enemies—the unintelligent, intolerant left—continue to hate her.

With such people attacking her, it is hard not to rally to her side. But what about those of us who have an uncomfortable and growing suspicion that she was not as good as she is made out to have been? I am one of them. I still cannot resist the feeling that her reputation is not just inflated but damaging to the conservative cause.

I last saw her some years ago at a London publisher’s party, terribly diminished, surrounded by fawning persons who did not seem to see that she was unhappy, lonely, and puzzled. I felt almost ashamed to be there.

The Fallacy of the Santa Claus principle

It's Not Really about the Debt

by Frank Shostak

In his Outside the Box e-letter, February 13, 2012, respected economic commentator John Mauldin presents an interview with Dr. Lacy Hunt, a highly regarded US financial economist. According to Hunt the key factor behind the current world economic crisis — in Europe and the United States in particular — is a very high level of debt relative to gross domestic product (GDP). For instance in the United States, as a percentage of GDP, both public- and private-sector debt is currently at around 400 percent, while in the eurozone it is 450 percent.

The eternal curse of Monetary Illusions

Inflation: an Expansion of Counterfeit Credit

by Keith Weiner

The Keynesians and Monetarists have fooled people with a clever sleight of hand.  They have convinced people to look at prices (especially consumer prices) to understand what’s happening in the monetary system.

Anyone who has ever been at a magic act performance is familiar with how sleight of hand often works.  With a huge flourish of the cape, often accompanied by a loud sound, the right hand attracts all eyes in the audience.  The left hand of the illusionist then quickly and subtly takes a rabbit out of a hat, or a dove out of someone’s pocket.

Watching a performer is just harmless entertainment, and everyone knows that it’s just a series of clever tricks.  In contrast, the monetary illusions created by central banks, and the evil acts they conceal, can cause serious pain and suffering.  This is a topic that needs more exposure.

How the West wrecked Libya

"Saving" Libya

Far from being a model for future interventions, Libya shows that meddling strangles the democratic impulse.

by Patrick Hayes

‘People in Libya today have an even greater chance after this news of building themselves a strong and democratic future. I am proud of the role that Britain has played in helping them to bring that about.’

So declared UK prime minister David Cameron last year following the announcement that former tyrant Muammar Gaddafi had met his end at the hands of Libyan rebels just outside Gaddafi’s hometown of Sirte. Cameron’s response typified the self-congratulatory backslapping of Western leaders. Western intervention, in their eyes, had saved the Libyan people in their hour of need and dislodged the great ogre Gaddafi and his rotten regime. Now the Libyan people could begin to build a ‘strong, democratic future’.

Euro Collapse Explained in 3 Minutes

Reflections on Europes financial woes 

Greeks are Doomed for 1.250.000 reasons

Excessive Bureaucracy Choking Greece's Economy

Greece has more economic problems than just excessive government debt and a 21% unemployment rate, it's got an excessive government bureaucracy that is choking off private enterprise and small businesses.  Or maybe it's more accurate to say that it's because of the excessive government bureaucracy that Greece has excessive debt and 21% unemployment.

Here are two anecdotes of excessive bureaucracy in Greece that "get at the very heart of how Greece landed up in its current condition and why rapid change is unlikely":

Anecdote 1: "It took 10 months, a fat bundle of paperwork, countless certificates, long hours of haggling with bureaucrats and overcoming myriad other inconceivable obstacles for one group of young entrepreneurs to open an online store.

The broken-window fallacy in action

Matt Ridley on How Expensive Green Energy Destroys Jobs, While Cheap Shale Gas Creates Jobs

Matt Ridley masterfully applies Bastiat's "broken-window fallacy" to green energy jobs, writing last December in City AM, a UK financial newspaper:

"When is a job not a job? Answer: when it is a green job. Jobs in an industry that raises the price of energy effectively destroy jobs elsewhere; jobs in an industry that cuts the cost of energy create extra jobs elsewhere.

The entire argument for green jobs is a version of Frederic Bastiat’s broken-window fallacy. The great nineteenth century French economist pointed out that breaking a window may provide work for the glazier, but takes work from the tailor, because the window owner has to postpone ordering a new suit because he has to pay for the window.

The Degeneration of Bureaucracy

Charges dropped against Cyprus gambling grannies

By e-kathimerini

Cyprus authorities say they will drop charges against dozens of elderly women for gambling after reports of their prosecution triggered disbelief among the public.

Some 42 women aged between 60 and 98 had received a summons to appear in court this month after police nabbed them playing a local version of gin rummy at a private residence in 2009.

Gambling for even the smallest amounts -- in the women's case, police netted a total figure of about 100 euros ($130) -- is banned on the east Mediterranean island.

By contrast, online gambling, an industry which has an estimated turnover exceeding 1 billion euros per year, is unregulated although lawmakers plan to introduce legislation on the matter next month.

"I asked for the file on the case and I immediately gave instructions for prosecution to be suspended,» Attorney-General Petros Clerides told state television.

The women, dubbed «Supergrans» by one newspaper, say their hobby helps keep their minds alert and allows them to socialise.

"What would they have expected us to do when we are 96,» said Eftychia Yiasemidou. Now 98, the former schoolteacher says she still indulges in her favourite hobby. «I only stopped about 20 days ago, temporarily, because of the cold weather,» she told the Politis daily. [Reuters]

Why there’s a crisis of compassion

The missing practice of everyday virtue

When society doesn’t respect wisdom and experience, is it any wonder carers don't respect the elderly?

by Alka Sehgal Cuthbert 

The UK government’s Commission on Improving Dignity in Care for Older People, tasked with looking at ways care is delivered in hospitals and care homes, published its draft report on Wednesday. The commission leader and chair of the NHS conferderation, Sir Keith Pearson, said the report was ‘a call to arms to the whole health and social care system’.

Jamaica Seeks Greek-Style Bailout

Lord have mercy on our souls 

By Eric Sabo

Jamaican Prime Minister Portia Simpson Miller said the Caribbean island would benefit from a Greek-style bailout as it negotiates a new loan agreement with the International Monetary Fund.

“If we could get a bailout like Greece, lord have mercy, you would see Jamaica grow and flourish,” Simpson Miller, 66, said in an interview yesterday in Montego Bay. “The European countries got together and gave some serious aid to Greece. We know we would never be able to get the same level as Greece, but if we could get some consideration from countries or the IMF, we would be on our way.”