Rogering the News

Especially when they expect others to pay for them. For a variety of reasons the Greek economy is in one hell of a mess.

Not least is seemingly uncontrolled government largesse to the population in the expectation that the other Eurozone countries would rally round and underwrite the Greek governments generosity in an attempt to buy popularity, and more than a little speculation by Greek banks and other financial institutions who saw an opportunity to ride the wave.

One particularly dodgy activity, even in a buoyant and safe economy is the so called ‘Repo’ Market* that the banks have increasingly been playing in. That’s what’s going to sink ‘em without government intervention, and government intervention won’t be allowed to happen.

The response to this potential catastrophe has been serious concern within the Euro Powerhouse nations, and a growing determination to let the Greek banks fail, and on top of that to insist that the Greek government curtail spending on social services even to the extent of parachuting in people to force the Greek government to make these much needed cuts.

In fact Greece is facing what Britain faced some time ago, but unlike Britain being able to pass on the debt to future generations in order for Blubberer Brown not to be shown up as the incompetent cretin he is, the Greek government are to be brought to book by the European Central Bank.

The people who will suffer are of course the Greek public, but as they have been living ‘high on the hog’ as a result of their lousy government and delusional state as a result of their government refusing to admit the true situation, it seems only fair that those who ate the meal should pay the waiter.

Unlike in Britain and the US where the people who have eaten the meal are passing the waiter’s bill to their kids, grandkids, and even further down the line as a result of the dishonesty of their governments.

But it’s not just Greece. The EU PIGS group (Portugal, Italy, Greece, and Spain) are all in the same mess created by governments spending what they don’t have and their populations being encouraged to do the same.

The effect has been to see the Euro fall against the standard Basket of Currencies because of this weakness in the PIGS states. (forget the US$, that’s based on vapour-wealth)

Now it might be expected that a fall in the Euro would see a rise in Sterling against it, but actually because it’s the expectation amongst the Money Men is that the UK will soon be joining the Eurozone, and that option provides the safety net for Sterling, (nothing else does) a fall in the Euro is also a fall for Sterling.

The Dollar?

Dead man walking. China will soon see to that.

And there’s no Bretton Woods town in China, nor any Mount Washington Hotel in China, nor any desire to establish either in the near future.

(Google ‘Bretton Woods’ to see how things were sorted out last time a situation of this magnitude was taking place)

* The Repo Market

• The ‘Repo’ Market. It works like this. I own a bond, an IOU issued by a third party. I want money. I ‘sell’ this bond to another person with the promise to buy it back after a short period plus interest.

• With the cash I get I ‘buy’ a bond from someone else for a short time on the basis HE will buy it back from me with interest.

• End of time he buys his bond back with interest, I buy MY bond back paying interest but I’ve charged MORE interest than I’ve paid for mine – unless the economy is on the up and up it will eventually fall like a house of cards. It’s one reason why a growth economy is so vital to banks and bankers.

As for ‘hedge funds’, so popular in the UK in the past, were being dealt with in a way that was let us simply say cavalier. Recent changes in the international law as well as European law will see their ability to provide a significant income to the UK treasury disappear as will many of the loop holes and nefarious activities that London were allowed (encouraged) to engage in. So there’s another source of income that was being used to enable the export market of real exports to be ignored and with it the UK real manufacturing sector under NuLabour and Brown’s dreadful mismanagement.

Just look out for recession Mk.2.

It’s now well on its way and it will make recession Mk.1 look like a hiccup.

Rog

This entry was posted on Tuesday, February 9th, 2010 at 12:04 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.