AspisAs it has been for many weeks, but still the EU coughs up, as any thought of endangering the Euro is unthinkable.
On Thursday the charade should be over. Unless Merkel is crazy enough to go once more for half-way solutions. Which i doubt, because all european newspapers from Spain to Poland are shouting “time for decisive measures”.
I reckon the unthinkable will have to be thought by the end of the year.
The unthinkable will occur only if the contagion of Italy isn’t halted by the Thursday measures.
If the German Constitutional Court rules against further German support in September the project will be on very rocky ground, as it deserves to be.
The German Constitutional court will vote in favour of the support, at limit it will put a political limit of more parliament control for the future. Courts are made of people and these people do have links with the politicians although in theory they shouldn’t have… Just like the greek Constitutional Court rejected a case by the Athens’ lawyers branch that was asking to declare the bail out mk1 as not constitutional , like several constitutional professors were saying…
AspisIMF says Greece is ‘on a knife edge’:
My dear friend, Greece isn’t on a knife’s edge. It’s bankrupt since a year ago and if it wasn’t that the european banks were completely naked, Greece would have defaulted 1 year ago. The IMF, simply for “prestige” reasons, doesn’t want to admit the reality, that is, that the supposedly rescue plan didn’t work. Already after the first trimester, the inflation was off by about 3% compared to the IMF’s masterplan. Greece reduced the deficit by 5% instead of 5,5% which the plan predicted, but it was all a charade to give the time to the banks to brace themselves. For the same reason in the past year there have been 2 bank stress tests, the real purpose of which was to see how vulnerable the banks would be not taking into account a greek default (because the stress tests did not include sovereign bonds haircut, except a 15% for the greek banks).
I ‘ve been saying it for over 6 months in this forum that the debt restructuring was unavaoidable, since we started with 120% debt, but the since the IMF’s program brought so deep recession (again, more than the plan’s expectations), the debt is now at 150% and next year will be at 172%. It has long ago reached “escape velocity”. The reduction of deficit when done so abruptly, kills the economy and the debt grows. That’s why countries don’t attempt to reduce their deficits by say 10% in a year. And all this is called “on knife’s edge”. Because,, in its first attempt to save a euro-zone country, the IMF can’t say “we failed”, can it?
In Greece the people have known since last year that the debt was unsustainable. That’s also why a good part of them was protesting, with economists saying on TV “we should default now, we won’t avoid default”. One can follow this blog for example:
FINALLY, now that Italy’s pants are on fire (today the italian spreads closed at 330 bp, the highest ever since Italy joined the EU) and the banks have unloaded most of their debt on the ECB or have been paid for it, on Thursday, Merkel will allow for what should have been done when the greek debt was 120%. That is, DEBT RESTRUCTURING AKA a more gentle word of saying “DEFAULT”.
– Some bonds will be prolonged, i HOPE with a haircut.
– Some bonds will be bought back from the secondary market , where the greek bonds are traded at 50% of their value right now. I hope though that this will happen in organized fashion with the bond holders, or else they will raise their prices.
– Some bonds that are in the ECB will be bought back. ECB had bought them at around 70% of their value, so doesn’t lose anything by selling them back to Greece at 30% discount. In fact, right now the ECB is the single bank with the most greek debt, at about 55 bln.
– The EFSF will loan Greece the money to do the above.
– The ECB theoretically can’t accept anymore as warrancies bonds from a state while in SD, so it will either have to bend the rules or let 110 bln or warrancies to fall and let the Bank of Greece use the Emergency Liquidity Assistance fund to finance the greek banks for as long the SD rating holds (everyone hopes it won’t last long).
– The rating agencies will lower Greece to “SD” (selective default) scale.
Mrs Merkel is deciding (we ‘re probably the first country in the world history where we can’t decide on our own default).
All this could have happened 1 year ago, it would have costed less to everyone, but Merkel can only see a fire when it starts burning her pants (in this case, Italy).
I hope that Greece in total will write off at least 30% of its debt, which will bring it to about 120%. Any less of a write off will IMHO require a trial of the greek politicians for damaging the public interest.
Summary of what happened waiting for 1 year before making the debt restructuring:
– The banks have successfully unloaded about 2/3 of the greek debt onto states before Mrs Merkel “remembered” that “privates must also share a part of the burdon”. If Greece had defaulted abruptly, they would have have had at least 50% of the greek debt as damage (assuming 50% haircut).
– Greece reduced the deficit by 5% at the cost of 30% more debt, but at the same time avoided an abrupt default in favour of a more “velvet” one. The bad news is that by defaulting immediately Greece could have defaulted on more debt starting at 120% instead of less debt starting at 150%. The good news is also that this for the time being allowed Greece to stay in the euro, since changing currency is something that requires preparation and doing it while defaulting causes many short term problems.
– Mrs Merkel has managed to satisfy the bankers by saving them and now will also try to satisfy her voters by making the bankers lose something like 30 bln (i guess) of what are toxic bonds anyway. It’s not too bad for the bankers, if one thinks that 1 year ago, if Greece had defaulted their losses would have been far, far greater and many banks would have collapsed.
– The sistemic crisis with contagion towards Italy should stop.
– The rating agencies, that are for-profit organizations and all american, will have their chance to try activate the CDS so that hedge funds that have bet 6 bln on Greece’s default, can be paid back with a profit of 30 bln. In case someone was wondering about WHY the rating agencies have pushed so hard downgrading Ireland, Portugal and lately Greece in July, it’s because after 15 July, the first greek CDS were expiring, so there were pressure by their holders for causing greek default. And the rating agencies, whose customers are also these investors, tried to help their clients…
– Thanks to the crisis Germany took the advantage of passing a new regulation that all member states should bring their debt to 60%. *
– The greek case will be guideline for later debt restructuring for the irish and maybe portuguese.
* This may eventually lead towards higher intergration of the EU, with eurobonds in the future and central economy control, because:
1) The weaker countries joined the euro so that their banks can draw cheap money from the ECB and have low yield bonds. Now the bond yields won’t be as low as they were before.
2) In order to reduce the debt to 60%, all countries above that limit and especially the more indebted ones will have to follow long austerity plans while trying to stimulate growth at the same time. This is close to impossible. Unless one of 2 things happen:
a) eurobonds that will allow cheap lending for everyone up to the 60% of the debt.
b) an internal mechanism of recycling part of the surplus of the richer countries towards the poorer countries through investments, pretty much like the US goverment does.
Otherwise, the social unrest to the periphery will grow to a degree that the EU will disintegrate. Always IMHO. 😀
Overall, it could have been done much earlier and at less cost, but the EU is always slow in taking decisions.
AspisIMF says Greece is ‘on a knife edge’:
My dear friend, Greece isn’t on a knife’s edge. It’s bankrupt since a year ago and if it wasn’t that the european banks were completely naked, Greece would have defaulted 1 year ago. The IMF, simply for “prestige” reasons, doesn’t want to admit the reality, that is, that the supposedly rescue plan didn’t work. Already after the first trimester, the inflation was off by about 3% compared to the IMF’s masterplan. Greece reduced the deficit by 5% instead of 5,5% which the plan predicted, but it was all a charade to give the time to the banks to brace themselves. For the same reason in the past year there have been 2 bank stress tests, the real purpose of which was to see how vulnerable the banks would be not taking into account a greek default (because the stress tests did not include sovereign bonds haircut, except a 15% for the greek banks).
I ‘ve been saying it for over 6 months in this forum that the debt restructuring was unavaoidable, since we started with 120% debt, but the since the IMF’s program brought so deep recession (again, more than the plan’s expectations), the debt is now at 150% and next year will be at 172%. It has long ago reached “escape velocity”. The reduction of deficit when done so abruptly, kills the economy and the debt grows. That’s why countries don’t attempt to reduce their deficits by say 10% in a year. And all this is called “on knife’s edge”. Because,, in its first attempt to save a euro-zone country, the IMF can’t say “we failed”, can it?
In Greece the people have known since last year that the debt was unsustainable. That’s also why a good part of them was protesting, with economists saying on TV “we should default now, we won’t avoid default”. One can follow this blog for example:
FINALLY, now that Italy’s pants are on fire (today the italian spreads closed at 330 bp, the highest ever since Italy joined the EU) and the banks have unloaded most of their debt on the ECB or have been paid for it, on Thursday, Merkel will allow for what should have been done when the greek debt was 120%. That is, DEBT RESTRUCTURING AKA a more gentle word of saying “DEFAULT”.
– Some bonds will be prolonged, i HOPE with a haircut.
– Some bonds will be bought back from the secondary market , where the greek bonds are traded at 50% of their value right now. I hope though that this will happen in organized fashion with the bond holders, or else they will raise their prices.
– Some bonds that are in the ECB will be bought back. ECB had bought them at around 70% of their value, so doesn’t lose anything by selling them back to Greece at 30% discount. In fact, right now the ECB is the single bank with the most greek debt, at about 55 bln.
– The EFSF will loan Greece the money to do the above.
– The ECB theoretically can’t accept anymore as warrancies bonds from a state while in SD, so it will either have to bend the rules or let 110 bln or warrancies to fall and let the Bank of Greece use the Emergency Liquidity Assistance fund to finance the greek banks for as long the SD rating holds (everyone hopes it won’t last long).
– The rating agencies will lower Greece to “SD” (selective default) scale.
Mrs Merkel is deciding (we ‘re probably the first country in the world history where we can’t decide on our own default).
All this could have happened 1 year ago, it would have costed less to everyone, but Merkel can only see a fire when it starts burning her pants (in this case, Italy).
I hope that Greece in total will write off at least 30% of its debt, which will bring it to about 120%. Any less of a write off will IMHO require a trial of the greek politicians for damaging the public interest.
Summary of what happened waiting for 1 year before making the debt restructuring:
– The banks have successfully unloaded about 2/3 of the greek debt onto states before Mrs Merkel “remembered” that “privates must also share a part of the burdon”. If Greece had defaulted abruptly, they would have have had at least 50% of the greek debt as damage (assuming 50% haircut).
– Greece reduced the deficit by 5% at the cost of 30% more debt, but at the same time avoided an abrupt default in favour of a more “velvet” one. The bad news is that by defaulting immediately Greece could have defaulted on more debt starting at 120% instead of less debt starting at 150%. The good news is also that this for the time being allowed Greece to stay in the euro, since changing currency is something that requires preparation and doing it while defaulting causes many short term problems.
– Mrs Merkel has managed to satisfy the bankers by saving them and now will also try to satisfy her voters by making the bankers lose something like 30 bln (i guess) of what are toxic bonds anyway. It’s not too bad for the bankers, if one thinks that 1 year ago, if Greece had defaulted their losses would have been far, far greater and many banks would have collapsed.
– The sistemic crisis with contagion towards Italy should stop.
– The rating agencies, that are for-profit organizations and all american, will have their chance to try activate the CDS so that hedge funds that have bet 6 bln on Greece’s default, can be paid back with a profit of 30 bln. In case someone was wondering about WHY the rating agencies have pushed so hard downgrading Ireland, Portugal and lately Greece in July, it’s because after 15 July, the first greek CDS were expiring, so there were pressure by their holders for causing greek default. And the rating agencies, whose customers are also these investors, tried to help their clients…
– Thanks to the crisis Germany took the advantage of passing a new regulation that all member states should bring their debt to 60%. *
– The greek case will be guideline for later debt restructuring for the irish and maybe portuguese.
* This may eventually lead towards higher intergration of the EU, with eurobonds in the future and central economy control, because:
1) The weaker countries joined the euro so that their banks can draw cheap money from the ECB and have low yield bonds. Now the bond yields won’t be as low as they were before.
2) In order to reduce the debt to 60%, all countries above that limit and especially the more indebted ones will have to follow long austerity plans while trying to stimulate growth at the same time. This is close to impossible. Unless one of 2 things happen:
a) eurobonds that will allow cheap lending for everyone up to the 60% of the debt.
b) an internal mechanism of recycling part of the surplus of the richer countries towards the poorer countries through investments, pretty much like the US goverment does.
Otherwise, the social unrest to the periphery will grow to a degree that the EU will disintegrate. Always IMHO. 😀
Overall, it could have been done much earlier and at less cost, but the EU is always slow in taking decisions.
AspisThe US now owes the UK $334Billion…
Where from? Bonds they sold you? In that case i have bad news for you. The more $ the US prints (and they ‘ve print a lot in the past 2 years), the less your bonds worth. They ‘re “burning” their debt by printing paper. That’s why recently the Chinese have turned towards EU bonds and they even bought some Japanese ones recently. The Chinese want to reduce somewhat their exposure to US debt, at least as long as Uncle Sam is cutting down trees to make paper to give the Chinese. 😀 😀
AspisThe US now owes the UK $334Billion…
Where from? Bonds they sold you? In that case i have bad news for you. The more $ the US prints (and they ‘ve print a lot in the past 2 years), the less your bonds worth. They ‘re “burning” their debt by printing paper. That’s why recently the Chinese have turned towards EU bonds and they even bought some Japanese ones recently. The Chinese want to reduce somewhat their exposure to US debt, at least as long as Uncle Sam is cutting down trees to make paper to give the Chinese. 😀 😀
AspisHere’s another one, about the unknown uses of the acceleration lane. I bet in Britain they only tell you that it serves to accelerate in order to get into the traffic with appropriate speed and not disturb the traffic flow.
http://www.youtube.com/watch?v=ZYN5fa2tROE&feature=related
Maybe the lady in the first post video has lived in Greece for years? 😀
AspisHere’s another one, about the unknown uses of the acceleration lane. I bet in Britain they only tell you that it serves to accelerate in order to get into the traffic with appropriate speed and not disturb the traffic flow.
http://www.youtube.com/watch?v=ZYN5fa2tROE&feature=related
Maybe the lady in the first post video has lived in Greece for years? 😀
AspisGreek woman driver, “didn’t see” the red light:
http://www.youtube.com/watch?v=wjTUHUz4r2g&feature=related
This is how parking is done…
http://www.youtube.com/watch?v=KlMaq0P-FCw&feature=related
or
http://www.youtube.com/watch?v=FpNw64UYRPY&feature=related
And this is a TV parody, even if reality is worse than the parody:
http://www.youtube.com/watch?v=WRobsjcsUNg
And this is what you can expect in greek roads wherever they don’t have the protective median barrier:
http://www.youtube.com/watch?v=pLW9rBETpWo
You lost the correct motorway exit? No problem:
http://www.youtube.com/watch?v=EHAx7PU3zuk&feature=related
You dropped your hat inside a tunnel? You don’t like the idea of the tunnel? You want to see how fast your reverse gear is?No problem:
AspisGreek woman driver, “didn’t see” the red light:
http://www.youtube.com/watch?v=wjTUHUz4r2g&feature=related
This is how parking is done…
http://www.youtube.com/watch?v=KlMaq0P-FCw&feature=related
or
http://www.youtube.com/watch?v=FpNw64UYRPY&feature=related
And this is a TV parody, even if reality is worse than the parody:
http://www.youtube.com/watch?v=WRobsjcsUNg
And this is what you can expect in greek roads wherever they don’t have the protective median barrier:
http://www.youtube.com/watch?v=pLW9rBETpWo
You lost the correct motorway exit? No problem:
http://www.youtube.com/watch?v=EHAx7PU3zuk&feature=related
You dropped your hat inside a tunnel? You don’t like the idea of the tunnel? You want to see how fast your reverse gear is?No problem:
AspisHmm, you may be right perhaps it was the longer ranged S400 missiles that had me confused. Btw, how are these missiles guided at such insane ranges – 200-400km? Definitely not radar or do they carry a powerful seeker onboard?
These insane ranges, apparently predict two things:
1) The S300 being on top of a mountain so to have a large horizon
2) The target aircraft flying at a high altitude
Because, alas, the earth is always round. So these ranges do not apply if the enemy doesn’t collaborate (staying high) and if the S300 isn’t at a high position.
I suppose the S300/shorad radars will experience a level of degradation at lower altitudes, which might mean that only Shorads would have a chance. But then they have to detect and launch at a v.fast, low flying target in a v.short time!
Yes, i believe the main S300 radar has degradation at low altitude, that’s why it has the low altitude radar for helping out. Shorads if they have a clean horizon are very quick to reply to low flying targets. But they get saturated too…
AspisCould work and offers a good chance of survival for the launch aircraft, but is very expensive – ALCMs are costly weapons. Apart from possible SHORADS defences, mobility and flight time are a problem if the enemy is smart enough to randomly schedule relocation (or if he suspects an ALCM might be on its way) of the SAM site. While the missile takes more than 20 minutes to cover its maximum range, the S-300 battery can pack up and leave in 5 minutes. Against smaller opponents this does represent a mission kill against the SAM site, but Russia and China have ridiculous numbers of long range SAMs and can afford complementary coverage over likely approach corridors.
Cost is an issue, but India has money. 😀 The S-300 battery can pack and leave in 5 minutes, true (except for the tall low level radar, which takes more time to setup and retrieve), but a terrain following stealthy missile may not give 5 minutes of warning for its arrival.
Not possible in darkness or any kind of inclement weather and, as you say, expect debilitating losses.
LANTIRN navigation pods and the likes (Litening, Damocles), allows for low level terrain following night navigation. Losses are to be expected. We are not talking about USA vs Libya. We are talking about major war more comparable to something like the Battle of Britain. But the losses will depend on the type of terrain.
A better alternative would be to use decoys like MALD or TALD rather than real aircraft – probably the most promising approach among your suggestions.
Correct. As long as the Chinese don’t realise that such decoys were released and can’t tell from the flight pattern who is what. The negative factor of the decoys, is that they don’t have real offensive capability.
EW radars will be located deep inside enemy territory because of their long range – to destroy them you have to get past the S-300s, so that doesn’t really solve the problem 😉
This depends on the geography. Max range of both S-300 and EW radars is something relative if one can approach covered up to a point. It could be impossible as you say, it could be also possible. Being at the highest point of any direction isn’t always possible and it isn’t always desirable (you become too obvious). Mountain heights don’t care about borders. And remember, the S300 has the low level radar too for a reason.
AspisWhere will the arms race in SEA lead to twenty years from now? We need to stop exporting the leaping stones in technology. The balance of power was much more tenable when the superpowers held back their ace cards. If the US exports F-35 then I certainly hope it’s without ToT.
I will paraphrase this into this:
Where will the massive ToT towards major arms buyers everywhere lead to 40 years from now? We need to stop transfering our technology. If the US exports the F-35 ToT, the Europeans the EF and Rafale ToT, who will buy the F-55, EF2050 and Rafale 2050 when they will be able to build their own aircrafts at large numbers?
Only answer: Cold war needed.
AspisEdited: CoC Rule 15
It’s all part of a propaganda media game… Both sides do what they can. I liked the first Flotilla song better.
AspisEdited: CoC Rule 15
It’s all part of a propaganda media game… Both sides do what they can. I liked the first Flotilla song better.
AspisOh and as with Flotilla Vol. 1 , the Israelis came up with parody song, called the “Audacity of Dopes”:
http://www.youtube.com/watch?v=Y5CsGViY5JQ&feature=player_embedded
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