(RTTNews) - Though the victory of the pro-bailout New Democracy in Sunday's elections eases concerns of Greece's imminent exit from the euro-zone, the country still faces the risk of leaving the single-currency bloc at the end of this year, Capital Economics European Economist Ben May said in a note Monday.
According to the firm, policymakers will need to take much greater action, perhaps including significant steps towards full fiscal and banking union, to prevent a bigger, more damaging form of break-up.
Capital Economics assessed that the existing bail-out conditions that allow fiscal tightening measures to be delayed in the event of a deeper-than-anticipated recession have already been met, with business and consumer sentiment still close to record lows and the unemployment rate rising sharply. The coalition government led by New Democracy, despite its pro-bail-out stance, is likely to seek to renegotiate some crucial elements of the rescue deal, and the troika may agree to some changes, it said.
However, Greece is unlikely to gain all the concessions that New Democracy is demanding, especially those pertaining to relaxation of the austerity package. Also, some policymakers' apparent preference would be to give Greece emergency assistance as part of a managed exit, rather than sanction wholesale changes to the existing bail-out deal.
Even if both sides agree modifications to the bail-out package, the deal could still collapse as it is yet to be seen whether all the coalition partners would agree a common line on what fiscal measures to implement and the exact form that structural reforms should take.
Capital Economics expects the Greek economy to remain in recession for much longer than the troika currently expects. So, the country is likely to struggle to meet its fiscal targets even if all the three parties agree on a common line, the firm said.
looks like the market wants to go higher despite everything, but my short term guesses are usually wrong so I am prepared to go either way on Wed. Tomorrow will be day 2 above 80 on market club slow stochastics which is just overbought, but if it stays above 80 on day 3, it could lock in for a move higher until the slow stochastics become unembedded. If they become unembedded on day 3,Wed, this could result in a pullback to the 18 day average of closes, or all the way back down to at least the lower Bollinger Band, depending. Be careful, a turnaround Tuesday or a Wed sell off on Fed disappointment could result in a move down to recent lows, but it could go the other way big time. In either event, it looks like Wed-Thurs is the critical time.
I agree Dennis, this week is like a line in the sand.
The can is tired and the road is short.
This is like a poker game where the players only bring IOU's. They keep passing them around, until someone tries to cash out...game over.
the only winner is the house who accumulates the rake
"We predict that [a] perilous period is coming to the European Union soon.... The size and duration of this bear market in mood will, in all likelihood, produce the greatest threat to European peace and solidarity since World War II."
- Brian Whitmer, December 15, 2009
JP
Please note the date of the above quote. The Greek financial debacle had been in the news, but Whitmer's comment published well before the numerous "bailouts," "rescues" and "austerity packages" -- each of which came with claims that Europe's debt crisis had been "resolved."
Yet those efforts did not live up to that claim. Some made matters worse. All the while, Whitmer's forecast grows more accurate by the day
EWI
In thinking about history with regards to what works and doesn't work with US Government and as I was thinking about my trade last week where I went long on FB and why I did it. My thoughts were if LNKD which is nothing but a glorified business rolodex can go from $27.00 a share to $106.00 a share. Why can't FB whom has millions more members and a lot more information about someone you may want to do business with be worth as much a share. So far so good on the trade. I am just following the triangles because they really helped me follow through with my entry with confidence. It is a little hard to pull the trigger sometime.
Greece has ,for years, a tradition of being fiscally and economically irresponsible. It started under The Turkocracy, when they were part of the Ottoman Empire. Hide your wealth from the oppressors. Well if that is a 400 tradition, you just continue it with the rest of the outside world, unfortunately.
I told a number of Greeks in Greece when they were going to jump on the Euro bandwagon that they were going to jump on the German economic standard of prices and wages for which they had no money to pay. When they were on the drachma, a 500 gram of German coffee from West germany then cost them quite a bit in the thousands of drachmas. Those who had the money paid it, those who didn't drank good Greek coffee. But it didn't affect their standard of living. Well they joined the the Euro, no every single Greek is the same price for all coffee in Euros at German prices, no allowance made for different standard of living. It was just translated into Euros for everything no just imported coffee: tomatoes, bread, milk, all of which were dirt cheap with the drachma are now sold in Euros at german prices.
Now, when you get prices nailed to the German standard and pay in Euros where are you going to get that extra money. Not from Greek salaries. No, you borrow it and then have to it back with interest, not at Greek rates, but a German rates. That's in nutshell what fiscal irresponsibility is.
No, the perfect mix of socialism and capitalism is Norway, the richest country in the world. They just didn't let capitalistic greed go to their heads like we did here in the US. Take a good look at the Nordmenn over there.
Hummm, trickle down economics. You mean like the trickle donwn economics that JFK, Ragan, and G W Bush were so successful with in pulling the economy out of a recession. The same trickle down economics that drastically increased revenues to the government every single time it is done. The so called trickle down theory is not a theory it is economics 101 and is essential to a free and capitalistic country like the US. History is a fine teacher if you are willing to accept facts and not revised history. I have found that just because someone is suposed to be smart and of a certain degree of education that they really know what they are talking about or know how to lead the country. I will leave it up to history to judge because who am I but one little spec of We The People.
"A wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned. This is the sum of good government." TJ
You can have your own opinions; however you can not have your own facts.
Despite your simple minded statement that Trickle Down is not a “theory”, it was a theory until, it was thoroughly discredited by real world experience. Anyone who has studied economics, and recent history by the way, will recognize a neo-con job when they see it.
The truth is that America’s three-decade experiment with low tax rates on the rich, lax regulation of corporations and “free trade” has been a catastrophic failure, creating massive federal debt, devastating the middle class and off-shoring millions of American jobs,
or as Mitt Romney calls it “The American Dream”.
Among serious economists it is broadly recognized that;
Cutting the top tax rate does not lead to economic growth.
Cutting the top tax rate does not lead to income growth.
Cutting the top tax rate does not lead to wage growth.
Cutting the top tax rate does not lead to job creation.
Cutting the top tax rate will not cause any growth -- unless, of course, if you're talking about the size of the deficit.
LMAO! 25 years in Mortgage Banking and studying the economic numbers and your going to try and tell me about free market and capitalism economics! LMAO! Funny how socialist always try to revise history to suit thier idiology or agenda. Kinda like the meaning of is is. Nice try anyway Dom. You get a big fat "F" in economics. LOL.
So much for your facts. I guess it would be 50 plus years of a experiment. JFK who knew economics and not only lowered the capital gains tax to "Zero" but also cut actual spending and within a year created huge revenues coming into the government and a nice little bull market of the 60's. Go back in history and read his speech Mr. History Buff. After him the socialist took over the democrat party and so they left me I did not leave them.
wow, I guess you told us!!! I thought I was using conventional wisdom. Is this an example of the tolerant progressive, liberal, 'more superior than you', attitude?
Except for the original statement, I'm amazed at how the other 3 people know so much more than the people running our government. I can only wonder with their dire, direct and all knowing pronouncements, why someone hasn't hired them. This is the infrequently mentioned downside of freedom of speech, lots of BS flying around that look like informed statements. Warren Buffet, Ray Dalio, George Soros, F. Zakaria to name a few, think our government has done a good job from stopping us from falling into the deep chasm created by irresponsible regulation, unfettered greed and remnants of a trickle down philosophy that threatens the very existence of the middle class. But you throw stones and sound like an expert and maybe can even convince someone your loose words are valuable. Care to back up your judgments with any facts or will conventional wisdom suffice?
Hi my friend,
I see a little bit of bitterness in your posting. However, it was Samaras who wasted all the monies on his very wealthy friends; Greece has 500 B of debts accumulating interests and only 350 B in income. Explain to me how Greece can manage to get out of debts. All the billionaires in Greece with their huge yachts never paid a dime of taxes. 1 Million state employees for a population of 10 Million, having salaries and benefits which no one in whole Europe gets. 37 years living on monies from Brussels, guess who paid for? I agree that the EURO setup was flawed from the beginning on and Greece was able to join by cooking the books.
I agree with the Greek people to get out of the Euro and handle their own matters. This is just not personal and be not offended as they are the facts. Also I understand Democracy, but disagree with Greek democracy which in its current state-system is a cover for dictatorship. Greece needs to get rid of its old elite politicians which used and are using democracy for
nepotism in its ugliest form. The Euro will only survive in its current form if Europe gets rid of the Southern states. Before they could print their own money and eyewash everybody else and that today is just not possible anymore. Now they have to find out the hard way what work is about.
Here are some facts for you.
Obama has increased the national debt by approximately 4 Trillion dollars. American wages are increasing at approximately 250 Billion annually adjusted for inflation while the Fed is 'borrowing' 1.3 Trillion annually by printing money, most of which goes toward decreasing the debt on interest on the national debt so that we are, in effect, actually in a money depression leading to deflation. Liquidity is not the problem here or in Europe, but solvency is. Borrowing money to pay down debt compounds the problem. What is needed is new money through growth which is hamstrung by regulations, Obama Care, and taxes among other things.
Anyway, that is how I am looking at it, and I will be glad for the Obama administration to hire me into a position of sufficient responsibility and authority such that the problem will be solved, but I promise you, it won't be painless.
Maybe the solution for Europe is for Germany to get out of the Euro and re – make the Deutschmark as their currency. All the weaker countries could devalue the Euro until they were completive with the world and start to grow their economies, and create Jobs.
Germany can keeps it’s good fiscal planning and suffer less loss than throwing trillions of Euros down the drain trying to lend to countries that can’t pay back
I have also heard this outcome mentioned as the 'practical solution' to the problem. I do believe the Germans are practical and persevering, and quite able to withstand external pressure whether it be from the rest of Europe, or from Obama and Geithner who are making the US fiscal condition worse than Europe's.
Dennis unfortunately no one is listening to reason these days theyre all drunk on the coolaid.Hold on because the Obamaclypse is commin and Bernanke and Geitner are pulling the cart.
Greece is the perfect example of what you get when you mixed Socialism and Capitalism. The USA will find this out also if we Continue on the path that we are headed. Learn from Greece. "History, in general, only informs us what bad government is" TJ
Rumor is it's not a mater of if but when.