This will not end well

[AllentownJake]

Europe

Europe is caught in a Catch 22. If they don't bail out Greece, they risk an increase on interest rate on the other PIIG nations as investors demand compensation for their risk. If they do bailout Greece, the other PIIG nations will want their bailout too.

Long term, it is better not to bailout Greece, short term it is better to bailout Greece. Europe will kick the can and bailout Greece. The quickness they have folded on this is probably due to the decline in the markets over the possibility of a Greek default.

Markets love bailouts in the short term.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5TbbQ6DkcGk&pos=1

However, going forward, appealing to the other PIIG nations for austerity measures is not going to go well. Human nature dictates that. When one party gets away with bad behavior, other parties notice. One of the aspects of the human species intelligence that has enabled us to become at the top of the food chain is our ability to recognize patterns and respond to them.

Spain, Portugal, Italy, and Ireland will follow the Greek example, because it worked for Greece.

This is a no-win situation. The EU never enforced it's leverage rules when times were good. Since the economies are linked in a loose confederation and trade alliance you don't really want to cut up your customer's credit card. Greece will be bailed out, the other PIIGs will notice, speculators will target the next nation on the list. This is very similar to the sub-prime crisis of 2008. Not in all the details, but in the details of human behavior as each big Investment bank was targeted till an overall bailout was done.

Yesterday's market activity can be summed up simply. Dollar falls, stocks go up. However, the EU will be having more crisis in their futures, as speculation moves from the tiny Greek economy (in comparison) to the large economies of Portugal, Italy, Ireland, and Spain. Of the economies Ireland is leveraged at levels slightly lower than Iceland was and Spain in is the biggest portion of the Eurozone GDP in the PIIGS.

I'm a pull the band-aid quick type of guy, not someone who pulls it slowly off. Regardless the band-aid is coming off the European economies.

Asia

China appears to be wishing to flex their new found muscles. That in addition to they need to explain the economic crisis and difficult times to their populace. They may be a brutal communist dictatorship (more brutal than Russia ever was) but at the end of the day there are more serfs than their are politburo members and China needs a boogeyman. That boogeyman is the United States and propaganda over the past year has been particularly anti-American. They usually reach for Japan due to the historic nature of the two countries, however Japan's new government has taken a friendlier tone to their neighbor in the region and American banks did cause this crisis.

http://www.businessinsider.com/the-dumping-begins-chinese-reserve-managers-notified-that-any-non-usg-guaranteed-securities-must-be-divested-2010-2

China is firing economic shots at America which could be the start of a new cold war. The recent bluster (we'll see if it is followed with action) is over US weapon sales to Taiwan.

This will be interesting as it pits two groups that usually move together and are allies. The Military Industrial Complex against Wall Street.

Wall Street wants free trade with China. It provides cheap slave labor to boost profits. The Military Industrial Complex wants to sell weapons to China's neighbors which jeopardizes US/China relations.

Wall Street has gained an enormous amount of influence over the past 30 years, however if you asked me to make a bet, I would never bet against the Military Industrial Complex. I can't recall a time since WWII they have ever lost a battle for what they wanted to do and this is really not a compromise position.

Economic down times will always breed nationalist sentiment and protectionism. It is inevitable.

On the positive side, Europe and Asia troubles are good for the American worker and the North America region as a whole. If China becomes hostile and Europe bankrupt we have to become more self sustaining, which should take a bite out of the trade deficit.

[Mari333]

1. MIC against Wall Street...who will win

they both run the shows here now...and are married to each other...wall street , yes, needs its slave labour and the MIC needs its soldiers , which come from people signing up in the military due to the fact that there are no jobs BECAUSE OF THE SLAVE LABOUR..

I always assumed they worked together in all this like partners.

with actual jobs in the USA, who would sign up for the military?

and isnt wall street loaded with people who benefit from military contracts ..

well, this should get interesting as our overlords fight amongst themselves.

[AllentownJake]

2. The MIC is licking its chops at a new Cold War

Wall Street will eventually see the profit potential and adjust accordingly.

The terrorism thing can only work so long.

[Mari333]

5. yes, they need new propaganda. the commies coming back?

the old red scare worked well on my parents generation...but people arent buying the terraist meme anymore..
maybe aliens is the new meme...aliens from another planet who are pod people in china. who knows..

as my dad said..you can sell shit in a box to people if you package it right.

[AllentownJake]

7. I don't think you would have any trouble

Stoking anti-Chinese sentiment in the United States. Jobless recovery, they took our jobs, and now they are declaring economic war on us.

Easy to sell to the Evangelicals. They persecute Christians.

[Mari333]

11. but didnt we already use the chinese as 'commies' to push the cold war

oh wait, that was when they were tied to the russkies..

I guess a new generation will buy the bullshit if its packaged well.

[AllentownJake]

12. I have no problem isolating the Chinese Government

They are a much more brutal repressive and dangerous regime than Cuba, Venezuela, and Iran.

The only country worse to its own people than China, is North Korea.

I have no clue how they got favored nation trade status to begin with. They make the Russians look nice.

[TexasObserver]

3. China is big on chest thumping.

They're a paper tiger. They'll talk big, maybe arrest some US citizen for some bogus charge, but in the end, they won't do diddly.

They hold a trillion in US debt instruments. What are they going to do? Dump them? Great. Others will buy it up. It's a small percentage of US debt obligations.

I welcome some protectionism for US manufacturers. I don't give a damn about the thoroughly bogus "free market" meme. It really means other countries are free to protect their exporters but we aren't free to protect ours.

We are long overdue to require China and Japan to be more fair with US imports. And if China keeps shooting its mouth off about sales of military hardware to Taiwan, we'll park the fleet in the Taiwan Straits and flip China the bird.

[AllentownJake]

6. China has some serious domestic problems right now

As their politburo members have pocketed the wealth increase, polluted their environement, and have developed no middle class for domestic consumption.

It is in their interest to have a scape goat as well.

At the end of the day, they need to keep the populace in fear and not thinking about what the Politburo is up to.

[TexasObserver]

9. There's no doubt they're playing to the home crowd.

And Uncle Sam is reprising his role as THE BOGEYMAN.

China had an economic growth spurt, but it's a poorly run country. I think they thought their annual growth would continue, and certainly not retract terribly. They can't believe they're having to eat the losses on their US holdings as the dollar continues to devalue against other currencies.

I don't think there will hostilities of any kind, not even by proxy. There will be some stern words from China, some threats about not shipping any more cheap crap to sell at Walmart. Oh, noes!

[AllentownJake]

10. You have two situations that are developing in parallel

You have a recovery in the United States from a banking caused crisis that will result in it being 4 years before we recover the jobs we had at constant economic growth in the 4% range, not factoring the kids who are 16-21 right now who will need jobs as this is unfolding. I doubt anyone is anticipating constant 4% growth.

China fired the first shot back over the summer when they reduced their Treasury purchases. America fired a shot back by meeting with the Dali Lama China at the White House (an event that was suspended while we were in negotiations) even purchased less Treasuries during the next auction America's response was dumping a whole bunch of Military technology on Taiwan.

America has a 16.5% U6 number with about 4% hiding out in the discouraged worker category, China has taken a hit in the reduction of Chinese demand while this has occurred.

Meanwhile, China's second largest customer for export is experiencing an expanding sovereign debt crisis.

At the end of the day, America has a pressure valve, we have elections. We can throw the puppets out for new puppets and feel satisfied.

China has no such pressure valve, which will require some extraordinary actions by their government to continue to justify their existence.

[TexasObserver]

13. Yes, the facial the US gave China with the Dalai Lama was sweet.

The Dalai Lama, himself. Twelfth son of the Lama. The flowing robes, the grace, bald... striking. So, I'm on the first tee with him. I give him the driver. He hauls off and whacks one - big hitter, the Lama - long, into a ten-thousand foot crevasse, right at the base of this glacier. Do you know what the Lama says? Gunga galunga... gunga, gunga-lagunga. So we finish the eighteenth and he's gonna stiff me. And I say, "Hey, Lama, hey, how about a little something, you know, for the effort, you know." And he says, "Oh, uh, there won't be any money, but when you die, on your deathbed, you will receive total consciousness." So I got that goin' for me, which is nice.

[AllentownJake]

14. The Chinese overplayed their poker hand

Back in March

US: Float your currency and reduce your taxes on our imports so we can recover and buy your worthless shit

China: No

July

US: Buy our Treasury bonds at the 10, 15, and 30 year terms so we can recover and continue to buy your worthless shit

China: No

US: Bring in the Dali Lama for a visit to the White House with complete press coverage and issue a human rights report on China.

December

US: We need you to buy our bonds

China: No

US: Dump a shit load of missiles on Taiwan.

China: Gives support to Iran on something

All through this there has been an ever increasing trade war with both parties adding tariffs to each others goods.

Next step, US Tariff on Chinese imports if they don't float their currency and reduce tariffs on imports.

China better wake-up pretty quickly. For all the talk about how precarious the US financial position is, they didn't take a look at their number 2 trade partner's balance sheet which does make ours AAA.

The other thing to consider is, some people just made a shit load of money on the Greece fiasco. Human Nature, on to Portugal, or Ireland, or Spain, or Italy.

[TexasObserver]

15. You've done a great job of hitting the high spots, Jake.

Both sides are playing to their home crowds, and why not? It's free. It's effective.

For China to use the US instead of Japan as the object of directed disdain is pretty big. China is still rightfully pissed about Nanking and the failure of Japan to properly apologize. But Japan isn't pissing them off right now.

[AllentownJake]

16. This isn't one sided, nothing would please the President more than

a trade war with China.

Congress won't act on anything to create jobs this year, the banks are taking their money out of the country to invest overseas in exporting American jobs the Federal Reserve is giving them by buying MBS and a 0 fed funds rate, and the Chinese are playing hardball on trade and servicing our debt.

The reason you are seeing an end to quantitative easing and the backdoor bank bailout this year through the Fed.

Easiest way to create jobs, provoke the Chinese. It is also why you are seeing no action on the Military Budget.

Europe blowing up with a sovereign debt crisis pretty much guarantees this is the course of action because we aren't going to be increasing our exports with a falling Euro.

He has 3 years, this is the first glimmer of hope I've had in a while.

[Odin2005]

49. +1

[aquart]

4. I never thought I'd root for the military-industrial complex.

BUT the industrial part is also compromised by our off-shored factories. Which of those weapons is built wholly here?

That said, I WANT China busy with its neighbors. In fact, I want to stop doing their dirty work in Afghanistan and Pakistan and let them take up the slack. They so don't want to do that.

China industrialized very fast and they are going to spend decades dealing with their dying children because of it...and possibly blaming us for their willing greed.

[AllentownJake]

8. Weapons is one of the commodities we still manufacture

and export quite a bit of.

[Statistical]

21. Not only are weapons built here it is one of our major exports.

The US is still #1 is making, marketing, and selling weapons world wide.
Long time ago we passed the Soviets/Russians in that market.

GO USA!

[DCBob]

17. I think "kicking the can down the road" is the best thing to do now..

In time some of the problems may begin to work themselves out as people begin to feel more optimistic and spend more and travel more and companies hire more, etc. If Greece is allowed to collapse there could be a very ugly economic "domino" effect.

[AllentownJake]

18. Yes because the can kicking has been so effective the past 30 years

Spain, Portugal, Ireland, and Italy will take on more debt till they are targeted by speculation. Politically, they are facing worse employment situations than the United States and the populace wants government action. Government action requires money to finance it.

Greece is in better fiscal position than California and AAA compared to Nevada, the problem is, that once there are rumors you can't pay your debts, you get your line of credit cut.

People see a budget deficit and fail to realize that in addition to the budget deficit, the entity must roll over the financing of previous budget deficit as principle payments come due.

There will be no growing out of this problem. Something bad is going to happen. Might as well happen quickly and cheaply and than react.

[DCBob]

19. I agree something bad is going to happen but...

I think its a choice between something bad and something disastrous.

[AllentownJake]

20. You have your choice

and it is an Inflationary crisis tomorrow or a deflationary crisis today.

Which one do you want no soft landing here.

I'll sum it up real easily, Europe is leveraged as a whole to an extent that will be impossible to finance in a few years. China is artificially keeping their currency value low to ensure that their manufacturing sector is built up and engaging in protectionist trade practices domestically while demanding no protectionism internationally. The United States is sitting at 1998-1999 levels of employment with an increase of 29 million workers due to the housing bubble/exportation of production jobs to China/India/ and Mexico and an ever expanding budget crisis of their own at all levels of government.

China needs Europe and the United States to buy their products, Europe and the United States need China to lend the money back to them in order for them to be able to continue to buy Chinese products. Eventually that cycle has to stop.

There is one way out of Europe's problem, print Euros, devaluing their currency over the long term, and destroying the one advantage they have over the United States. At their current debt levels, a strong Euro is not good for them long term.

Something has got to give and the sooner it gives the smaller the Earth quake when it does.

[DCBob]

26. It also makes you wonder what is going to happen to the Euro...

So many have been predicting the Euro might replace the dollar as the international currency of choice. I guess that talk has stopped.

I generally agree with most of what you are saying and you seem to know more about than I do... I'm just a bit more of an optimist thinking some of these problems might work themselves out over time if they just keep a lid on it for now.

[AllentownJake]

29. Everyone is pissed at the US right now

because our banks did cause this mess, and the failure of our regulatory agencies, central bank, and government did cause this mess.

All the bluster that was going on over the past year, including some on my own part, forgot to take a look at the balance sheets of the people blustering and also the fact that our banks might have gone nuts here, there banks were going just as crazy over there.

[Statistical]

40. Very good point. This was a wakeup call for Euro.

Euro is likely decades (if ever) from replacing the dollar as reserve currency.

Everyone speculating on a dollar decline were emotional and not rational.

What would replace the dollar?

The Euro? When EU bank has monetary authority but no political authority?
The Yuan? You want your reserve currency to be one artificially controlled by Chinese Govt (rather than floated on exchange markets)
The Yen? The lost decade in Japan anyone? Japan financial house is not in order.

A combination of the above? Yeah lets combine all these risks into one super risky currency.

The truth is (at least to date) the US had managed to keep inflation under control and never missed a single interest payment in history of US debt. No other country has that record. There is a reason the US has been and likely will be the worlds reserve currency.

Now 20, 30, 40 years from now if the EU evolves into a more centralized authority (resembling US federal govt and countries like US states) and has a track record of controlled growth, moderate inflation, and no defaults then maybe it will but not anytime soon.

[AllentownJake]

47. Nobody was looking at the balance sheets

of everyone else, and the simple fact, the US is the only nation in the world to be able to back up its currency with force projection and has no competitors politically, economically, or militarily on any of its borders.

Everyone was pissed at US Financial Institutions, the Federal Reserve, and the Regulatory Agencies. Reality of the worlds state is settling in.

At the end of the day, you are correct. The EU central bank has no ability to enforce any policy on Greece other than to not give them money and not giving them money isn't a win for them situation they take a smaller hit, but a hit none the less in that policy.

[Statistical]

52. This is why I have been long the dollar since November.

Took it on the chin as everyone chanted "dollar is dying", blah, blah, blah but things turned around since the New Year.

IMHO (for the $0.02 it is worth) I think the Euro could easily fall to $1.20 or less in near term and give it a 25% chance that Euro falls to parity with the dollar (1E : $1).

[AllentownJake]

54. There will be a rally on the euro on bailout news

Than there will be shock when we are talking about Ireland, Italy, Spain, or Portugal in 4 weeks. The same thing happened with Dubai. At the end of every article I read about Dubai there was about a 2 sentence blurb on Greece.

That is if California, Nevada, or New Jersey don't overshadow them.

I throw New Jersey in there, because it will be interesting to see how the state reacts to the budget fight between Christie and the legislature. Politically speaking neither party has any interest to play nice with the other and New Jersey is rapidly accelerating off of a cliff. I think the only thing that might save Jersey is it is in the banks back yard and a significant number of their execs have large houses there, they'd rather see not lose more property value.

California is already there.

[Statistical]

24. Greece isn't even accepting they are bankrupt.

The govt comes out with vague statement about constraining spending and their are riots in the street.

Govt workers (who's wages have gone up by 3x the rate of inflation in last decade) are threatening to strike and bring down the whole country unless they get their annual raise. Greece has been in some for of default in over 100 of it's 200 year history.

It is a county that is utterly and completely living in a fantasy world where you can spend unlimited amounts of money that you never had.

EU should allow Greece to default. Bailouts rarely ever work. Did the banks learn anything from their bailout?

[AllentownJake]

27. They weren't bankrupt yet

They were going to be. Someone pointed it out, speculation started, credit agencies took a closer look, their debt became more difficult to refinance.

This will repeat in Italy, Spain, Ireland, and Portugal.

As far as chastising the Greeks, I think we've spent beyond our means for 30 years now?

[Statistical]

32. 100% agreed we have but Greece is like an even more insane version of our spending.

Furthermore Greece can't print its way out of this problem (EU Central bank has sole power to issue currency) like the US Fed can. :)

(Not that I think Fed inflationary policies are good).

[AllentownJake]

34. The EU certainly has a serious problem

and if you look at what is going on in most of the states in the country, so do we.

California and Nevada were more likely to default this year than Greece is. In fact, if there isn't action in California by April, the State Comptroller has stated they will run out of money.

I knew they were in serious trouble when they started to take a loan from payroll because they don't have the ability to raise taxes.

Politically speaking, getting a state bailout through the United States Senate would make getting HCR look easy.

[Statistical]

39. US Federal govt should never ever bailout a state.

California could seek assistance from the IMF if necessary.

California enjoyed the benefit of the deficit spending. Other states shouldn't be forced to "pick up the tab".

The moral hazard it would create would be insane.

Say VA wants a highspeed rail but can't afford it. No problem just issue some bonds, default on them and let taxpayers in MI and NY pickup the tab.

It would make earmarks and pork barrel politics look like child's play.

No CA got into the mess and CA needs to get out. If they are forced to accept assistance from IMF the IMF would put substantial restrictions on deficit spending forcing CA to finally accept reality and likely raise taxes AND cut spending.

[AllentownJake]

42. The US Senate and House ensure there will be no State Bailouts

Besides they got one bailout and that was the stimulus bill, there is no way they are getting a second.

I assure you, no US Senator from another state politically could vote to bail out another state. It would be even less popular than the bank bailout if that is imaginable.

California needs a state constitutional convention. Their legislature can be overruled on spending cuts by referendum and taxes. That is a mixture that will always result in collapse in a republic.

The entire reason we have professional legislators is they are supposed to be more educated than the rest of us. Otherwise you have mob rule.

[Statistical]

44. I agree. However it looks like CA is unwilling to see reason.

I just hope the Federal govt (Congress) doesn't blink when CA reaches the cliff. I don't want a hastily passed bill and Congress critters talking doom and gloom about worldwide economic collapse if they dont' do it (aka Bank Bailout 2.0).

The IMF would put real constraints on CA spending and revenue.

[AllentownJake]

46. The US will not be letting the IMF into a US State

One rule for others, one rule for us, it is always the case.

They aren't going to blink. There aren't the votes for it and there never will be.

Trust me, Bob Casey doesn't want to be explaining in 2012 why he voted to bailout California to voters in Allentown, who don't have that high opinion of California. Particularly when our state reps and state senators increased our taxes and cut spending on things we like in 2009 and 2010.

California may be taken over temporarily in a crisis by the federal government, a constitutional convention held, and than be placed back into the hands of the people of California.

[dmallind]

22. Some facts on the China/US import comparison

US China
GDP $14,250,000,000.00 $8,760,000,000.00
Imports $1,450,000,000.00 $921,500,000.00
Imports/GDP 10% 11%
Imports from each other 16.50% 7.20%
$$ Value of above $239,250,000.00 $66,348,000.00
As % of GDP 1.68% 0.76%


Those protectionist Chinese! (who spend more on imports as% of GDP than we do)

They never buy US goods! And BTW those figures do not (nor should they) include the huge economic impact of WFOEs in China, led by US companies, who produce in China for China/Asia/Export and have been the majority of Chinese economic growth.

[AllentownJake]

23. link and date and source

[dmallind]

25. CIA World Factbook. Do your own parsing. I did. NT

[AllentownJake]

28. Link?

:-)

I didn't accuse you of anything, I asked for the ability to look at your information.

[dmallind]

31. C'mon it's one of THE main sources for global economic and political data? OK Here.....

https://www.cia.gov/library/publications/the-world-factbook/

You select a country and then open the "economy" subtab for this particular discussion. The source is however useful for many others.

[Statistical]

30. Exactly. The idea US doesn't making anything is silly on face value.

We only import $1.4 trillion dollars.

That works out to about $4600 per person in the US.

So unless every American is only spending <=$4600 a year on goods WE MUST BE MAKING STUFF.

The US is the 3rd largest exporter in the world.
The US is the 1st largest industrial power in the world.

The idea the US "doesn't manufacture anything" is utterly silly.

Productivity has increased FASTER than demand for manufactured goods.
Thus while total output has risen the NUMBER OF PEOPLE required to produce that output has shrunk.


#1 thing US could reasonably do would be to force China to float the Yuan. China has kept Yuan artificially low (and hurts Chinese workers as a result). US needs to get global agreement that China needs to float Yuan for face across the board tariffs in every WTO port on 200% of the difference between "fake low Yuan" value and the market value.

[dmallind]

33. All correct, except I doubt the WTO goes along. NT

[Statistical]

36. It will be a difficult fight however many other countries are facing the same pressure.

There is growing global sentiment that China needs to revalue the Yuan.

It actually would be good also for China in helping them transition to greater internal demand (higher valued Yuan means Chinese workers can purchase more goods & services especially imports).

The G8 really needs to lean on China to get them to revalue the Yuan.

In a democratic country internal populist pressure would have forced any other country to float their currency a long time ago however that is never going to happen in Communist China.

Chinese have Yuan pegged at 6.8 Yuan per dollar. Based on purchasing power, economic health, high interest rates etc a market floated Yuan would likely be worth 1.2 Yuan per dollar. That would increase labor cost of Chinese exports by 400% and more than any tariff in the world help US (and other developed nation) companies. It would also result in trillions of dollars of personal wealth for Chinese citizens.

China artificially low currency and economy based on exports is not sustainable. China needs to be forced to "be a big boy" and act like any other nation in the WTO.

[AllentownJake]

37. They have no interest in doing that

Why would a politburo want a wealthy middle class, that is the first step to no more politburo.

[Statistical]

41. Exactly. Which is why WTO needs to force China to change.

Yuan is worth about 1.2 Yuan : $1. It currently is pegged at an utterly insane 6.8 Yuan : $1.

A tariff based on 200% of difference between market value of Yuan and current peg would force China to accept reality.

No other country in the WTO is allowed to have a centrally controlled fixed currency exchange rate (and shouldn't be).

China is a currency manipulator. Everyone gets all worked up about oil manipulators like Goldman Sachs. China currency manipulation is trillions of dollars worth of stolen wealth (stolen from US exporters, and stolen from Chinese citizens). It makes Goldman look like a 2 bit scam artist.

[AllentownJake]

43. The WTO is controlled by people who like cheap labor

Any action will be taken by Sovereign Nations, not world trade bodies that are not elected and should be abolished.

[AllentownJake]

35. I think the number being bandied about is 30% import tax

and it would simply require an act of Congress.

We are exporting are labor there because it is cheaper to manufacture there. The Yuan is one factor. The fact they have little to no environmental regulation and slave labor is the other.

The US exports higher tech big items to China and food.

Fuck this globalist shit. End the WTO and World Bank.

[Blue_Tires]

38. what exactly is piig?

and how did things in greece get to this point in the first place?

[AllentownJake]

45. PIIG

Portugal, Italy, Ireland, and Spain. It is an acronym for the developing economies of what would be classified as the developing non-communist bloc nations of Europe.

Greece got into this problem by believing ridiculous optimistic economic growth predictions and borrowing in line with them.

Someone was foolish enough to believe the predictions, and lent them the money.

[Statistical]

50. Greece spent more money than it collected in revenue.

Kinda like the United States does.

However Greece hit crisis because of 4 differences:
1) Greece credit rating is nowhere as good as US
2) Greece amount of overspending is greater
3) Greece govt employees seem utterly unwilling to accept they are insolvent and even agree to wage freezes
4) Greece is part of EU so it can't set monetary policy (interest rates, size of currency supply, etc)

[AllentownJake]

51. You left out tax evasion

those high paid government tax collectors and custom officials are the worst in the world at collecting the revenue.

[Statistical]

53. Well I am not sure how much tax evasion we have here. Sadly.

[AllentownJake]

55. The articles I read

show that Greece is notorious and that people generally don't fear their version of the IRS that much.

I guarantee you if an IRS agent goes to the neighborhood of people with the 3 million dollar houses in your region, there is much shitting of pants. The guilty to proven innocent thing as far as property freezing will do that.

[AllentownJake]

56. I'll add that the wealthy pulled as many assets out as possible this past

month.

Simply because they figure that one of the things that will happen is past tax collections will be looked at, and as such, they had no desire to leave anything liquid that could be confiscated in Greek banks, which has added to the crisis.

That money went to Delaware or Switzerland based institutions, which by the way the Swiss are throwing a hissy-fit over the UBS issue, because Delaware is as much a haven as Switzerland is for tax cheats.

[Odin2005]

48. K&R

[DCBob]

57. Yes, they are indeed "kicking the can down the road"..

BRUSSELS (Reuters) - European leaders have reached a deal to provide aid to Greece, EU president Herman Van Rompuy said on Thursday, in an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro. "There is an agreement on the Greek situation. We will communicate now the agreement to the other leaders," van Rompuy told reporters gathered at an EU leaders' summit.

The agreement was forged in talks between Van Rompuy, European Commission President Jose Manuel Barroso, French President Nicolas Sarkozy, German Chancellor Angela Merkel, European Central Bank President Jean-Claude Trichet and Greek Prime Minister George Papandreou.

Polish Prime Minister Donald Tusk told reporters earlier that the aid, which would amount to the first bailout of a euro zone members since the currency was created 11 years ago, was likely to come in the form of loans. "It could be voluntary loans from member states. That seems to be the best option," Tusk said.

A Spanish source told Reuters that details of the aid would be worked out at the latest by Tuesday, when EU finance ministers are due to hold a meeting.

more: http://finance.yahoo.com/news/EU-leaders-reach-deal-to-rb-4068581329.html?x=0&sec=topStories&pos=main&asset=&ccode=