PM End of Week Market Commentary - 10/20/2017

davefairtex
By davefairtex on Sun, Oct 22, 2017 - 3:23am

 

On Friday gold fell -10.10 [-0.78%] to 1281.80 on heavy volume, and silver dropped -0.23 [-1.33%] to 17.05 on heavy volume also. A strong move in the buck [+0.49%] caused problems for PM all day long.

Market-moving news this week involved the first steps in the passage of tax reform by the Senate and the House, the upcoming elections in Japan where Abe may not win a super majority (which is needed by him to revise the constitution), and in Catalonia where Spain is preparing to impose direct rule on the province. The Yen was hit hard, the buck rallied, and the Euro was flat.

Last week, the miners were quite weak; it appears as though this was the tell. This week, most of the metals tipped over and sank, with junior miners leading the seniors, and silver leading gold. Only copper managed to stay in the green. Most items have dropped back through their 9 MA lines, and half are below all 3 moving averages. From the metals sector map, it sure looks like PM is re-entering its downtrend.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Copper $COPPER 1.16% 51.31% rising rising rising rising ma50 on 2017-10-05 2017-10-20
Palladium $PALL -1.62% 53.52% rising rising rising rising ema9 on 2017-10-20 2017-10-20
Gold $GOLD -1.86% 1.22% falling falling rising falling ema9 on 2017-10-20 2017-10-20
Silver $SILVER -2.29% -2.74% falling falling rising falling ema9 on 2017-10-20 2017-10-20
Platinum $PLAT -2.47% -1.15% falling falling falling falling ema9 on 2017-10-18 2017-10-20
Senior Miners GDX -2.56% -6.37% falling rising rising rising ema9 on 2017-10-16 2017-10-20
Silver Miners SIL -3.00% -20.24% falling falling falling rising ema9 on 2017-10-16 2017-10-20
Junior Miners GDXJ -3.90% -20.29% falling falling falling rising ema9 on 2017-10-16 2017-10-20

Gold fell -24.30 [-1.86%], dropping 4 days out of 5. The first part of the week saw some fairly brisk selling, while gold ended up chopping sideways from Wednesday through Friday. While gold did print a bearish engulfing pattern on Friday, the code didn't feel it was particularly bearish. Forecaster ended the week at -0.23, which is a downtrend, but not a very severe one.

On the weekly chart, we can see that gold unwound almost all of its gains from last week; the weekly forecaster has dropped back into downtrend territory.

The December rate-increase chances rose to 92%.

COMEX GC open interest rose +2,261 contracts this week.

Silver fell -0.40 [-2.29%] this week. While silver fell more than gold, it still managed to keep some of the gains from last week. Candle print was a long black, which the code had no comment on, and the forecaster ended the week at +0.09, just barely in uptrend territory. Silver's chart is a bit of a mess right now – it seems to be chopping sideways, moving back and forth across its 3 moving averages. Silver seems to have a fairly strong bid at round number 17.

The gold/silver ratio rose +0.33 to 75.20, which is bearish.

COMEX SI open interest rose by +1,104 contracts.

Miners sold off hard on Monday, and then spent the rest of the week meandering lower. On Friday, both ETFs printed candles that were bearish continuations. Forecasters: GDX -0.24, GDXJ -0.32. The charts bear this out – GDXJ made a new multi-month low to end the week, while GDX did not, and remains above its 200 MA. It looks like senior miners are preferred right now to the juniors. That's generally bearish.

The GDX:$GOLD ratio fell -0.79% on the week, and the GDXJ:GDX ratio lost -1.38%. That's bearish.

USD

The buck printed a swing low on Monday, a disagreeable-looking shooting star on Wednesday, but then it rallied strongly on Friday making a new high. Buck ended the week in an uptrend, with the forecaster closing at +0.14. That's not a very strong uptrend, but the buck does remain above both the 9 and 50 MA lines. The weekly chart shows that the buck moved into an uptrend 4 weeks ago, and has since mostly chopped sideways. Progress in the Congress towards passing that tax reform bill has helped the buck this week, as has the issues in Catalonia. JPY was hit hardest this week, dropping -1.43%. Most of that loss came on Friday, the day before the election this weekend in Japan.

Martin Armstrong reports that capital flight out of Europe into the US has intensified as the result of the crisis in Catalonia. Confidence in the EU project is having problems because – according to his EU clients – they wonder how the EU government can be so caring about human rights with respect to the migrants & refugees, but seem to care very little about their own citizens in Spain. That's dollar positive over the longer term.

If Trump gets his tax reform, and there is every indication that it will happen as the Republicans in Congress see this as a do-or-die issue for 2018, and the Catalonia situation worsens, we could see a significant dollar rally. Where does the capital go when it moves into the US? Treasury bonds, and equities. Especially equities.

ECB meets next week, and the market expects Draghi to explain just when the taper will start.  If he decides not to taper after all, that would probably be quite dollar positive.

US Equities/SPX

SPX rose 22.04 [+0.86%] on the week, making a new all time high on Friday's medium-sized rally. Friday's white marubozu candle has a relatively poor chance of being a reversal (34%). While SPX seems as though its relentlessly making new highs, viewed in Euros it has yet to return to the high made in February. Armstrong makes the case that its the Europeans who are doing most of the buying, using equities as a place to park their money outside the continent.

Sector map shows homebuilders and financials in the lead, while staples and REITs did worst. I'm not sure if there is any sort of future-prognostication in this collection of tea leaves this week. I don't see an obvious pattern.

VIX rose +0.36 to 9.97.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Homebuilders XHB 2.21% 26.19% rising rising rising rising ema9 on 2017-09-25 2017-10-20
Financials XLF 1.95% 35.50% rising rising rising rising ema9 on 2017-10-18 2017-10-20
Healthcare XLV 1.77% 19.33% rising rising rising rising ema9 on 2017-10-17 2017-10-20
Utilities XLU 1.31% 13.63% rising rising rising falling ma50 on 2017-10-19 2017-10-20
Industrials XLI 1.25% 27.84% rising rising rising rising ma50 on 2017-09-11 2017-10-20
Technology XLK 0.99% 28.90% rising rising rising rising ema9 on 2017-09-27 2017-10-20
Materials XLB 0.67% 24.77% rising rising rising rising ema9 on 2017-09-28 2017-10-20
Cons Discretionary XLY 0.15% 15.70% rising rising rising falling ema9 on 2017-10-20 2017-10-20
Telecom XTL -0.50% 9.10% falling rising falling rising ma50 on 2017-10-16 2017-10-20
Energy XLE -0.54% -4.08% falling rising falling rising ema9 on 2017-10-18 2017-10-20
Cons Staples XLP -1.23% 3.75% falling falling rising falling ema9 on 2017-10-18 2017-10-20
REIT RWR -1.60% -0.88% falling rising falling rising ma50 on 2017-10-20 2017-10-20
Gold Miners GDX -2.56% -6.37% falling rising rising rising ema9 on 2017-10-16 2017-10-20

Gold in Other Currencies

Gold fell in all currencies, and was down in XDR by -22.24.

Rates & Commodities

TLT plunged -1.49%, with most of that loss happening on Friday. TLT has mostly unwound last week's big rally. Forecaster ended the week at -0.46, which is a strong downtrend. It looks as though bonds are very news-driven right now, with no trend lasting more than a week. The weekly chart has flipped back into a downtrend.

JNK rose +0.38% on the week, a nice move higher. This brings JNK to a multi-month high. Forecaster ended the week at +0.37, which is a decently strong uptrend. JNK is above all 3 moving averages. It feels like risk on, at least in the near term anyway.

CRB fell -0.39% on the week; agriculture led lower (-2.37%), followed by PM (-1.85%). CRB is still slowly moving higher off its lows, but by no means has it recovered.

Crude rose +0.48 [+0.93%] to 52.07. Crude tried 3 times to move significantly through 52, but failed each time, and finally sold off on Thursday. It tried to follow through on Friday, dropping to 50.87, but buyers appeared ripping prices right back up to 52. In spite of the rally, crude's forecaster closed the week at -0.20, which suggests crude could still be heading lower. North American rig counts this week dropped by 25, which is a fairly sizable number. Is it cold weather? The hurricanes? That's what econoday says. EIA report showed a crude draw (-5.7m), gas build (+0.9m), distillates build (+0.5m). Market wasn't particularly impressed with the EIA report. My sense is that 52 resistance is quite strong. Most likely, shale drillers and speculators are going short here, and that's capping any rally.

My sense, from a bunch of different indicators, is telling me that the ponzi phase of shale is nearing an end.  This should help the oil market normalize a bit more quickly than anticipated.  At some point the market will become convinced, and the 52-54 resistance will fall. 

Physical Supply Indicators

* SGE premiums over COMEX are at +8.41.

* The GLD ETF tonnage on hand was unchanged, with 853 tons in inventory.

* ETF Premium/Discount to NAV:

 PHYS 10.44 -0.59% to NAV [up]
 PSLV 6.39 -0.73% to NAV [down]
 CEF 13.30 -2.2% to NAV [down]

* Bullion Vault gold (https://www.bullionvault.com/gold_market.do#!/orderboard) no premiums for gold or silver.

* Big bars premiums were: gold [1kg] 1.21% and silver [1000oz] 3.08%.

Futures Positioning/COT

The COT report was as of October 17th, when gold closed at 1287.00 and silver at 17.04.

In gold, the commercial net position rose by +1.4k contracts; 2.5k shorts were covered, and 1.1k longs were also sold. Managed money net fell by -1.8k contracts; 3.4k longs were bought, and 5.2k shorts were sold. These were very minor changes. We remain in COT limbo for gold.

In silver, the commercial net fell by -4.3k contracts; 4.8k shorts were added, and 502 longs were also bought. Managed money net rose by 6.8k contracts; 3.5k longs were added, and 3.3k shorts were closed. These were minor changes in position. COT for silver could be showing a low - from the managed money short perspective - but its not a clear signal.

Gold Manipulation Report

There were no after-hours spikes this week.

Eurozone Status

Summary

The metals have unwound most of last week's rally; only silver is still above-water in terms of a trend forecast, and it is right at the cusp of breaking down. A dollar rally appears to have played its usual role in the retreat. Last week's poor performance in the mining shares might have been the tell.

Gold and silver big bar shortage indicators shows no signs of shortage; premiums on big-bar gold and silver remain normal. GLD tonnage was unchanged, while ETF premiums were mixed but mostly lower. Shanghai premiums are rising.

COT report shows only small changes in commercial short positions for gold and silver. Gold is still out of balance, but we could be at a low for silver.  Maybe.

Last week's uptrend didn't last very long – the fading dollar reversed and started moving back up again. Still, I'm not certain this is some grand shorting opportunity. It looks as though the PM market is mostly chopping sideways alongside the currencies which seem to be doing much the same thing. Even pulling back to the weekly chart, I don't see any consistent pattern in where the currencies are going. Monthly chart shows the Euro topping out, although this month has yet to complete.

Armstrong is convinced that the melt-up in US equities is driven by capital flight from the EU. The ECB is about to taper, or so the market thinks, and there's the crisis in Catalonia; why hold euro-nation bonds right now? But if you sell your euro bonds to the ECB, where do you put the money? Cash? In an EU bank? You'll end up paying them – and that's no fun. To us, the US market looks crazy high, but the Euro has seen a strong currency rally recently, and that makes the US market look more reasonably priced to them.

Next week we have an ECB meeting and press conference on Thursday (Oct 26). The day after, the Spanish Senate will approve imposing central government rule on Catalonia – in response to which, Catalonia has threatened to actually declare independence; “we really mean it this time."

And to top it off, the Republicans in the Congress appear as though they have sufficient discipline to pass tax reform, thus Making America Great Again.

We should probably take our cue from the mining shares, which continue to look weak.  Momentum for PM remains to the downside.

Trend-following code says:

Uptrend: crude, USD, SPX.

Downtrend: gold, silver, copper, platinum, natgas, treasurys, miners.

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29 Comments

phusg's picture
phusg
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> Confidence in the EU

> Confidence in the EU project is having problems because – according to his EU clients – they wonder how the EU government can be so caring about human rights with respect to the migrants & refugees, but seem to care very little about their own citizens in Spain.

Strange interpretation; would they have the EU openly step into a domestic Spanish issue? I'm sure the EU cares about all Spanish citizens and would like to see a legally valid referendum held ASAP.

davefairtex's picture
davefairtex
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legally valid

Well, lets see.  From my perspective, Catalonia tried to have a referendum, and Madrid sent in the Federal police to disrupt it.  And now Madrid is suggesting the referendum is illegal - because it was disrupted?  Because they don't like referendums?  Because its illegal to vote on matters that the central authority finds disagreeable?

Case 1) Spanish federal police beat up their own people for voting.  EU says nothing.

Case 2) Eastern Europe refuses to accept migrants & refugees.  EU threatens to fine them for wanting to control who lives in their own country.

I suppose case 1 is a strictly domestic matter, while case 2 is...is...a strictly domestic matter too?

I think they call this "cognitive dissonance"

lambertad's picture
lambertad
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Logic > feelings

Dave, I have to say I totally agree with your interpretation of events. 

From my perspective you are analyzing the situation logically, devoid of how you may "feel" about the situation, which, is one reason I come here daily to read your PM commentary. 

As Chris has said before, morals aren't relative. You either believe in human rights and hold those beliefs equally and in all circumstances, or you don't. 

Here's an example - Everyone with a brain understands that women have the same rights as men. So how is it that the U.S. Government, especially under a liberal president, is so hush hush on Saudi Arabia allowing men to beat women in public? How does the U.S. Government allow gays to be murdered by the government of that country and we don't stand up and scream? Also, how does the U.S. allow the SA regime to be elected to the UN human rights council? The answer is simple, the U.S. Government doesn't actually care about human rights except when it meets their goals. I could come up with example after example and people in general are starting to catch on to this type of behavior. Do as I say, not as I do. Hence, Trump's election. 

The EU is therefore in the same boat as the USG. They don't actually care about human rights unless it meets their goals. If they did care, they would at least have criticized the Madrid regime about the public beatings. They wouldn't have to actually do anything, they'd just have to act outraged, but they couldn't even bring themselves to do that. Another nail in the coffin of the EU. Enough of them will seal the deal. 

 

 

Edwardelinski's picture
Edwardelinski
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Why not ask yourself?

Why 5 million women from around the world stood up on January 21st and said no more.Why not ask yourself why a man who publically admitted to assaulting any women of his choosing because he was rich and famous.Why not ask yourself why a nation voted for a man who slut-shamed 13 women who came forward from around the world with the same story......White,rich,entitled men have run this into the ditch,That,s why....

davefairtex's picture
davefairtex
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human rights as a tool

Thanks.  :)

Yeah.  Totally agree about Saudi Arabia example.  In the "small victory" department, I read that women are now allowed to drive in the Kingdom.

Human rights these days is just an emotional trigger used to rally the people when its convenient.  Say, if you don't like something Russia is doing, and you want a chunk of people behind you, you trot out the human rights thing.  "Russia is bad to gays."  The SJ crew immediately piles on Russia, and you aren't signaling the proper virtue when you point out its all just a big game.

While Russia is unpleasant to their gay population, "for some reason" we choose not to beat Saudi Arabia for doing much worse.  Acting out on your gay impulses, second offense = death penalty over in dear Saudi Arabia.  Most of the Arab world tosses gays in jail for being gay, and women appear to be more or less property.  But - by all means, let's open the doors to a million migrants and refugees, most of whom have very similar cultural programming.  What could possibly go wrong?

Oh well.  At least the women can drive now in Saudi Arabia.  There is that.

davefairtex's picture
davefairtex
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btc update

Not to put too fine a point on it - today was a sell signal.  Not by much, but there it is.  Also, today was a 3-candle swing high as well.  Today's "hammer" print was not a (bullish) reversal bar, in spite of the long lower shadow.  RSI7 reveals a bearish divergence (not shown) which suggests that the longer term BTC momentum is slowing.

That bearish divergence is a confirmation that this correction could be significant.

ETH has been in "sell mode" for 7 trading days now.  Today's print was a spinning top with a long lower shadow (57% reversal) but the downtrend in ETH remains fairly intense.  It will be hard for ETH to rally if BTC sells off.

phusg's picture
phusg
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Dave, I respect your usual

Dave, I respect your usual rational and objective analyses, but I think your missing some of the facts on this one...

> And now Madrid is suggesting the referendum is illegal - because it was disrupted?

Not at all, they are rightly pointing out that Spain’s democratic constitution of 1978, which was approved by more than 90% of Catalan voters, gave wide autonomy to the regions but affirmed “the indissoluble unity of the Spanish nation”. Only the Spanish parliament can change the constitution.

> Because they don't like referendums?

Well they certainly don't like secession referendums for the constitutional reason above. But I think it's unavoidable now that Madrid accepts a petition from the new Catalan government to get the constitution changed so that they can have a legal vote.

> Case 1) Spanish federal police beat up their own people for voting.  EU says nothing.

Police do what they do to maintain law and order and although I don't condone beatings to achieve this, it's still not something the EU should or normally does intervene in publicly.

> Case 2) Eastern Europe refuses to accept migrants & refugees.  EU threatens to fine them for wanting to control who lives in their own country.

This is too simplistic a take on it. These eastern european countries also committed to take their share of the refugees and then didn't stick to the agreement, that's why they got fined.

> I suppose case 1 is a strictly domestic matter, while case 2 is...is...a strictly domestic matter too?

Case 1 was domestic because the police were upholding Spain's own constitution and case 2 isn't because the courts were upholding an EU agreement.

davefairtex's picture
davefairtex
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legal vs moral

From a legal-theoretical standpoint, modern Western Civilization is based on the principle that "the people" should be sovereign, and the way they express their sovereignty is by voting.  Therefore, any law on the books that results in federal police beating grandmothers who are just trying to peacefully exercise their sovereign rights by voting must be an immoral law.  Put more strongly, such a law flies in the face of the underpinnings of Western Civ itself, and is a gross violation of the most basic human right of peaceful self-determination.

While "the people" may not be able to articulate this, they know it in their hearts to be true.  Voting = human rights.  Police beating voters = NOT human rights.  If the law says differently, then the law is an ass.  So when the EU bureaucrats support the central government police voter-beaters over "the people" trying to vote, it doesn't go over well.

From a practical standpoint, given that Catalonia is more or less the milk cow for the rest of Spain, I suspect it is very unlikely there will be be an amendment to the Spanish constitution because the majority of the milk-drinkers don't want their cow to leave.  So what "legal" options are open to Catalonia?  There are none.  Hence, we see the vote.

Same thing in Eastern Europe.  Again, from a practical standpoint, Eastern Europe doesn't want the refugees - at least partially due to the "challenges" (i.e. invasions) they have faced in the past from the Muslim world.  The result of the EU trying to override the will of the locals and force-feed refugees into Eastern Europe has led directly to the election results in the Czech Republic, Poland, Austria, and of course Hungary.

The good news is, this all has a historical inevitability to it.  It doesn't matter which one of us "wins" this argument.  The people of Europe clearly have a very strong belief in their human rights, even if the bureaucrats in Brussels do not share this belief, and at the end of the day, they will not be denied.

"Those who make peaceful revolution impossible will make violent revolution inevitable." -- JFK

"Its all fun and games until someone loses an eye." -- Mom

phusg's picture
phusg
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> It doesn't matter which one

> It doesn't matter which one of us "wins" this argument.

Dave, I thought you were above this and sought rational enlightening debate, maybe I was wrong.

Your last post is full of things I agree with and never said I disagreed with, i.e. all straw man arguments I can now only assume are designed to 'win' the argument.

My original point was only that the EU naturally doesn't like to meddle in members domestic/constitutional issues and that this shouldn't be misinterpreted as a lack of care or belief in the human rights of Catalans.

> "Those who make peaceful revolution impossible will make violent revolution inevitable." -- JFK

Nice quote and exactly why I said that I see it as inevitable that a legal Catalan secession referendum will be forthcoming.

davefairtex's picture
davefairtex
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meddling

Dave, I thought you were above this and sought rational enlightening debate, maybe I was wrong.

Oh, that's an interesting viewpoint.  From my perspective, I didn't make any assumptions about what you were seeking. I prefer to stay focused on the subject matter.

Your last post is full of things I agree with and never said I disagreed with, i.e. all straw man arguments I can now only assume are designed to 'win' the argument.

Ok, perfect.  We now have common ground.

My original point was only that the EU naturally doesn't like to meddle in members domestic/constitutional issues and that this shouldn't be misinterpreted as a lack of care or belief in the human rights of Catalans.

Great.  Are you by any chance a policy maker working in Brussels?  I hope so.  I've been wanting to talk with one of you guys for quite some time.

To respond to your original point, from the outside, the EU appears perfectly happy to meddle in members' domestic issues when it pleases them to do so.

Greece for instance is at this moment a debt colony of the EU, all in the name of saving the German and French banks.  I can't imagine more meddling in domestic affairs than the EU has done to date: spending the past 5 years dictating explicitly how the Greek government must spend its money.  I mean I could get the list of diktats but its really long and why repeat it all here?  Bottom line: that's meddling with a capital M.  Bailing out French and German banks on the backs of the Greek populace, with the details dictated from Brussels.

But Catalonia?  Hands off.  When the police beat up the voters, we will wag our fingers at them, but then point out how those white-haired grandmothers were in fact breaking the law by voting.  Bad grandma!

Poland?  You'd better accept all those refugees and migrants whom you must house and feed (refugees and migrants encouraged by the Germans to come en masse) or we will punish you - regardless of what elections you have, or how your people vote.

Schauble famously said about Greece: "elections change nothing."  That, in a nutshell, seems to epitomize the philosophy of the EU central authority.

As for that "legal referendum" - do you honestly see that happening, when the Spanish central authority gets to define what "legal" happens to be?  That would seem to be a triumph of wishful thinking over experience.  No dairy farmer will allow the milk cow to run free - dairy farmer won't let the cows vote on whether or not they can leave the barn; "that would be illegal."  Sorry cows.  Can't change the law, and can't vote.  You're stuck in the barn.  If the farmer beats you...well...we can't interfere in the farmer's domestic affairs.  Just stick around for that "legal referendum".  It's coming real soon.  We promise.

From where I sit, the EU interferes in its member states affairs when it serves its purpose, and it stands aside what that too serves its purpose.  Human rights are trotted out when necessary - as platitudes, rather than adhered to as any sort of core belief system.

Of course, the US behaves identically, so its not like there is any hint of moral superiority in our case.

thc0655's picture
thc0655
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Finger wagging and other such things

But Catalonia?  Hands off.  When the police beat up the voters, we will wag our fingers at them, but then point out how those white-haired grandmothers were in fact breaking the law by voting.  Bad grandma!

 
Finger wagging?!  The Eurocrats in Brussels have evolved well past primitive finger wagging.  Here they are on their castle wall giving it to King Arthur and the other liberty-minded freedom-lovers in Catalonia and elswhere in the EU (0:00 - 3:31):

And JUST WAIT until Brussels gets its own army under its command which doesn't need the component countries' permission to put into action.

The conflict between the centralizers/globalists and the decentralizers is going to be one for the ages.  But not to worry, the coming economic collapse should be a huge force multiplier for the decentralizers.  I'm already planning how to get in front of the decentralizers' parade late enough not to get killed but soon enough to take credit for their victory (paid for by the Collapse).

"Welcome to the Hunger Games. And may the odds be ever in our favor."

https://www.youtube.com/watch?v=aWPWHU8x6kE 

 

 

phusg's picture
phusg
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davefairtex wrote: Great. 
davefairtex wrote:

Great.  Are you by any chance a policy maker working in Brussels?  I hope so.  I've been wanting to talk with one of you guys for quite some time.

No, I did almost go in that direction, so I'll do my best to represent the Brussels perspective, even though I don't agree with everything they do.

davefairtex wrote:

To respond to your original point, from the outside, the EU appears perfectly happy to meddle in members' domestic issues when it pleases them to do so.

Greece for instance is at this moment a debt colony of the EU, all in the name of saving the German and French banks.  I can't imagine more meddling in domestic affairs than the EU has done to date: spending the past 5 years dictating explicitly how the Greek government must spend its money.  ... Bottom line: that's meddling with a capital M.  Bailing out French and German banks on the backs of the Greek populace, with the details dictated from Brussels.

Of course this is meddling with a capital M, but in no way does it please anybody to do so. This was deemed necessary meddling because Greece was unable to manage it's own finances, broke EU agreements in the process and given the choice didn't want to leave the EU. Any country can relatively easily avoid 'meddling' (and also the strength unity brings) by managing their finances sanely or alternatively leaving the EU as Britain has chosen to do.

davefairtex wrote:

But Catalonia?  Hands off.  When the police beat up the voters, we will wag our fingers at them, but then point out how those white-haired grandmothers were in fact breaking the law by voting.  Bad grandma!

Yes hands off, Spain has respectable courts that can deal with any transgressions and the EU has a human rights court if necessary. No EU agreements were broken, so as bad as video fragments look, no need to openly meddle in Spains domestic affairs. No doubt behind closed doors Spain will be told how bad it looks and that a legal democratic vote is probably unavoidable.

davefairtex wrote:

Poland?  You'd better accept all those refugees and migrants whom you must house and feed (refugees and migrants encouraged by the Germans to come en masse) or we will punish you - regardless of what elections you have, or how your people vote.

Yes, probably overly encouraged by Germany but refugees and migrants displaced because of decades of British/US and Russian meddling in the middle east who had nowhere else to go at the time.

Not regardless of elections, if Poland wishes to vote to leave the EU because of this then Britain has already shown them the way. If they wish to stay in then they also have take their share of migrants. Makes perfect sense to me.

davefairtex wrote:

Schauble famously said about Greece: "elections change nothing."  That, in a nutshell, seems to epitomize the philosophy of the EU central authority.

I'm assuming your not deliberately quoting him out of context, he actually said, "New elections change nothing about the agreements that the Greek government has entered into," the eurozone's most powerful finance minister added. "Any new government must stick to the contractual agreements of its predecessors."

They are as always free to break the contract(s) and pay the accompanying fine, which is part of what the Brexit negotiations are currently about i.e. the divorce bill.

davefairtex wrote:

As for that "legal referendum" - do you honestly see that happening, when the Spanish central authority gets to define what "legal" happens to be?  That would seem to be a triumph of wishful thinking over experience.

Well, I'm no expert on Spain, but we agree that it looks like some type of civil war if they don't allow it, so I don't see what choice they have.

davefairtex wrote:

From where I sit, the EU interferes in its member states affairs when it serves its purpose, and it stands aside what that too serves its purpose.  Human rights are trotted out when necessary - as platitudes, rather than adhered to as any sort of core belief system.

Of course there is often some degree of pragmatism at work, but maybe the EU and Europeans are more principled than you think. Unfortunately they may be less principled than I like to think too. Certainly they care just as much about Spanish citizens human rights as those of migrants.

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Stupid spelling

Stupid spelling mistake...

I'm assuming your not you're not blush

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kennethbolin
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"Stupid......."

Not only spelling!

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Feel free to enlighten me, if

Feel free to enlighten me, if you can string more than 3 words together!

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the project

No, I did almost go in that direction, so I'll do my best to represent the Brussels perspective, even though I don't agree with everything they do.

Perfect!!  That works for me.  I'll keep in mind that you don't necessarily agree with all the stuff you're saying - you're just representing their viewpoint.  I appreciate you playing the role.

All right, let's see if I can summarize, folding in your comments.

This was deemed necessary meddling because Greece was unable to manage it's own finances, broke EU agreements in the process and given the choice didn't want to leave the EU

Ok.  You think it was about helpfully managing Greece's finances so they didn't break EU agreements (which, incidentally, every country other than Germany has done to date).  That plus "Greece didn't want to leave" explains the 7 years of austerity-torture Greece has gone through.  Sorry Greece, you guys just can't manage your finances, and you want to remain a member of the club, so we're going to helpfully step in and solve the problem for you.  Applause, atta-boys all around.

That's certainly the story for public consumption, but it bears no resemblance to the truth on the ground.

The entire goal was to save German and French banks, who had made huge bets on Greek debt.  Had Greece left the EU and then defaulted on their debt, most every large German and French banking institution would have gone down.  So the EU leadership absolutely did not want Greece to leave.  Instead, at the time the agreement was struck, they desperately wanted Greece to stay in, and pay.  The corrupt Greek government of the time went along.  This way:

  • Greeks became the whipping boy for the German/French bank bailout for the DE/FR voters.
  • Greeks ended up paying for the whole bailout
  • Greek elites could remain members of the club, able to ship their financial assets off to Germany.
  • Greece becomes an object lesson for anyone else who might think about "managing their finances badly" - effectively shot on the quarterdeck "pour encourager les autres".  https://en.wikipedia.org/wiki/John_Byng

Throwing Greece into 7 years of depression (with the resulting thousands of Greeks who have died as a direct result) is just the price that had to be paid for fixing the German and French banks.  I'm guessing that the EU leadership treated this as "regrettable, but necessary to keep the project together", effectively sacrificing the lives of thousands of citizens in one of their junior members so that the leaders of the big two didn't end up having a tough election.

What's more, the storyline used in Northern Europe is: "Greeks did a bad job with their finances so they deserve literally everything that has happened to date" including death, poverty, etc.  That sells well to the people in Northern Europe - who have suffered a bit of collective memory loss, conveniently forgetting just how much debt was forgiven after WW2.

And my last point, modern western civ has a thing called "bankruptcy" - which allows debtors to receive forgiveness (a Christian virtue) and can move on, instead of tossing people in debtor's prisons like they did back in the good old days.  But somehow, that doesn't happen inside the EU.  Curious, that.  Who benefits?  Banks who make bad bets, that's who.

So why do I drone on and on about Greece?  Migrants coming into the EU are treated better than the people of Greece by the EU.  Its really clear that when banks need to be saved, and a scapegoat is required, human rights get tossed into the BBQ.  Especially for junior members.

Of course there is often some degree of pragmatism at work, but maybe the EU and Europeans are more principled than you think. Unfortunately they may be less principled than I like to think too. Certainly they care just as much about Spanish citizens human rights as those of migrants.

I'm going to go with "no" on that one.  From what I can tell, they are not more principled than I think - they are exactly as principled as I think.  The place is almost entirely about expediency.  That's a structural problem, not a "humanity" problem.  People in Brussels are no better and no worse than people anywhere.  The EU was designed poorly; the gang in charge are not subject to any sort of vote by the people they supposedly represent.  They are not required to be responsive, and so they aren't.  That's just human nature.  It fosters expediency, and so that's exactly what we end up seeing.

Again, what the leadership did in Greece, and why - and who ended up with the benefit - is the lens through which I view the rest of their actions.

Walks like a duck + quacks like a duck = its a duck.

So...viewing Catalonia through this lens, I know their actions are all about expediency.  The people of that area will be tossed into the fire right along with the people of Greece because they are causing problems for the project.  Rights don't matter, only results matter - results that benefit Germany, and France.  That's what the Greek experience shows, and so that's what we'll see.

And the migrants get treated well - perhaps they are intended to be the new labor force for a demographically-challenged Germany - while the people of Greece endures year after year of austerity-torture.

Quack!

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Right On
davefairtex wrote:

Throwing Greece into 7 years of depression (with the resulting thousands of Greeks who have died as a direct result) is just the price that had to be paid for fixing the German and French banks.  I'm guessing that the EU leadership treated this as "regrettable, but necessary to keep the project together", effectively sacrificing the lives of thousands of citizens in one of their junior members so that the leaders of the big two didn't end up having a tough election.

I'd file this under "The Untold Story". I think with the exception of the Guardian newspaper in the UK I haven't seen any report which addresses the recent Greek suicide rate. Of course we all know why - it doesn't fit the narrative. And, as you clearly state, the narrative is that the Project must continue at all costs. Hence dead Greeks don't matter. Perhaps it's time to wonder how many Catalonians will be sacrificed for the good of the Project - Rajoy must have got the nod from someone.

Theresa May's response to the Catalonian Declaration of Independence was predictably toothless. I guess she doesn't understand the concept of leverage or momentum (or is perhaps 'advised' to act otherwise). Examples such as these should be used to shine a light on the philosophy of the EUSSR. It'll end eventually, it's just a matter of how many are killed in the process.

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davefairtex wrote: The EU
davefairtex wrote:

The EU was designed poorly; the gang in charge are not subject to any sort of vote by the people they supposedly represent.  They are not required to be responsive, and so they aren't.  That's just human nature.  It fosters expediency, and so that's exactly what we end up seeing.

First of all this is only slightly true; yes, you could argue that there is a democratic deficit with regards to the European commission, but the European parliament is democratically elected and for big decisions like Greece, the council of (democratically elected) finance ministers from the member states had the final say.

davefairtex wrote:

Had Greece left the EU and then defaulted on their debt, most every large German and French banking institution would have gone down.

Personally I think that would have been a good solution, but I'm afraid Draghi et al would have bailed the banks out anyway, seeing as moral hazard is considered a barbarous relic these days.

If I recall all holders of Greek debt did receive a pretty decent hair cut, so at least they got a bit of a bloody nose for their bad investments.

I understand you focusing on Greece as there is more of an argument to be made there than in Catalonia at the moment, fair enough.

I still disagree with your narrative though and I don't see the benefit of this politics of division, that has taken hold of the US and is threatening to poison public debate in the EU too.

Sure there are 'eurocrats' who are willing to sacrifice much for their great European integration project, maybe partially with the strategic intentions of avoiding another world war, but as the majority of Europeans are now strongly against further integration, this its pretty much a dead end and I think they are a dying breed.

On the other hand there are plenty in Brussels and plenty of member state ministers (who ultimately wield the power in my view) who have a much more practical view of the European Union and what it should and shouldn't be and who place human rights above any European superstate project.

davefairtex wrote:

Migrants coming into the EU are treated better than the people of Greece by the EU.

Well as you yourself admitted it was a corrupt Greek government that agreed to the EU deal and as I recall there was no popular support at all in Greece for leaving the EU, so surely any 'treatment' the Greeks have had comes more from their own government and their own choices than from the EU?

davefairtex wrote:

Greece becomes an object lesson for anyone else who might think about "managing their finances badly"

Well of course there needs to be some financial pain for terrible financial mismanagement! If there had been an unprecedented peacetime total debt jubilee for Greece there probably wouldn't be a euro today, as the other southern European states (and probably many northern states too, who aren't as austere as they once were) would never have gone through with anything approaching austerity at all.

Suggesting the Greek deal entailed the loss of thousands of lives is illogical and a divisive narrative. You seem to be suggesting that saying no to the deal, declaring Greece bankrupt whilst also allowing them to say in the EU was the best course of action. How would that have been better for human rights in the long term?

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On your last point
phusg wrote:

Suggesting the Greek deal entailed the loss of thousands of lives is illogical and a divisive narrative. You seem to be suggesting that saying no to the deal, declaring Greece bankrupt whilst also allowing them to say in the EU was the best course of action. How would that have been better for human rights in the long term?

Hi phusg,

Would that imply that divisive issues cannot be discussed? I'd say that's a pretty big problem. And why is it illogical? Financial repression brings job losses. Job losses burden household finances. Household finances have the potential to fracture relationships, leading to depression, loneliness and in some cases suicide.

On the alternative, defaulting and leaving the euro would have put Greece in charge of her own destiny - for better or for worse. But she wouldn't have bore the brunt of the hardship. There seemed, at least from the outside, a degree of optimism when Tsipras was elected. From what I've read, Varoufakis was ready to go with an alternative system but was talked down and eventually ejected. Again, from my perspective, all I see is the screw tightening - and endless misery as a result.

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Luke Moffat wrote: phusg
Luke Moffat wrote:
phusg wrote:

Suggesting the Greek deal entailed the loss of thousands of lives is illogical and a divisive narrative. You seem to be suggesting that saying no to the deal, declaring Greece bankrupt whilst also allowing them to say in the EU was the best course of action. How would that have been better for human rights in the long term?

Would that imply that divisive issues cannot be discussed? I'd say that's a pretty big problem.

Not at all, certainly not in the sense of division as separating from a union. Perhaps I should have said 'polarizing narrative' which is closer to what I meant.

Luke Moffat wrote:

And why is it illogical? Financial repression brings job losses. Job losses burden household finances. Household finances have the potential to fracture relationships, leading to depression, loneliness and in some cases suicide.

Very true, as you say 'in potential', I'm merely saying it's illogical to say it's a 100% necessary causal relationship as Dave seemed to be claiming.

Luke Moffat wrote:

On the alternative, defaulting and leaving the euro would have put Greece in charge of her own destiny - for better or for worse. But she wouldn't have bore the brunt of the hardship.

I'm going to have to say illogical again, as your second sentence claims it would have been for the better and not the worse ;-)

Of course it's all speculation, but I agree with your first sentence, they may have been worse off leaving the EU and the suicide rate may have been as high or higher too. It was a bad situation with no easy out. Blaming everything on meddling northern eurocrats is polarizing and damaging to improving european relations.

 

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EU parliament isn't a "real" parliament

I"m going to go through these issues one by one.  That way, nothing slips through the cracks.  I'm going to start with the EU parliament, which I have claimed has no real power.

First of all this is only slightly true; yes, you could argue that there is a democratic deficit with regards to the European commission, but the European parliament is democratically elected and for big decisions like Greece, the council of (democratically elected) finance ministers from the member states had the final say.

No, its not "slightly true."  Unlike every other real elected parliament, the EU parliament can neither initiate legislation, nor can they extinguish it.  They can only vote on matters put before them by the EC.  I think the designers of the EU copied the design from the old Soviet Union, who had the Duma - the rubber stamp "legislative" body for decisions that had already been made by the Politburo.

But you don't have to believe me, I have one of those common sense proofs.  Everyone knows who Nigel Farage is - he's an MEP, and a crank.  If the EU parliament had real power, he never would have made it in.  As in, never, ever, ever.  But since its just a largely ceremonial position that pays a bunch of money so the MEPs go along with the game, nobody says boo.  Except Farage.   He points out the scam.  The MEPs swipe their cards showing they were on site, collect their 258 Euros for that day, and then they leave.  And when the EC hands them something for them to vote on, they vote on it, up or down, like good little children.  They are well paid to keep quiet about their lack of power: 415,000 pounds in total aggregate benefits per year see to that.

http://www.telegraph.co.uk/news/worldnews/europe/eu/10777351/MEPs-second-pension-gravy-train-pays-and-perks-of-MEPs.html

How many times has the EU parliament said "NO" to the EC?  Hint: the EC has a 99%+ success rate in getting the EU Parliament to say yes.

If the parliament had the power to initiate legislation, the power to amend or cancel legislation, and the power to control the budget, it would be another matter entirely.

But they don't.  That power lies elsewhere.  And that's where the real power is in the EU.

And guess what?  Those people aren't elected.

This wasn't some accident.  The architects of this structure weren't stupid - they know very well how to design a real democratic government.  The clear message is, the designers didn't want the EU to be a real democracy.  After all, that would mean that the Greeks could get together with the Poles and initiate legislation that might affect Germany.  That would give the Greek MEPs real power.  And that just wouldn't do.

I daresay that if the Greeks had real representation within the EU structure, they never would have been hosed the way they have been.  Can you imagine the US government stomping on a US state the way that Greece has been stomped on?  For 7 years running?  Their Congressional delegation would be livid, and they would cause as much trouble as possible.  For close votes (which the EU parliament very seldom has, because its largely a rubber-stamp body), they could tip the balance of power.  They'd have real influence.

Once we address the utter lack of democracy (and/or accountability to the people - especially the people in the "junior member" nations) in the EU governance structure, I'll be happy to move on to the rest of the points you made.

 

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phusg

Question; since even I could use some extra income, what is the salary for being a Bryssel-internettroll these days?

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davefairtex wrote: I"m going
davefairtex wrote:

I"m going to go through these issues one by one.  That way, nothing slips through the cracks.  I'm going to start with the EU parliament, which I have claimed has no real power.

First of all this is only slightly true; yes, you could argue that there is a democratic deficit with regards to the European commission, but the European parliament is democratically elected and for big decisions like Greece, the council of (democratically elected) finance ministers from the member states had the final say.

No, its not "slightly true."  Unlike every other real elected parliament, the EU parliament can neither initiate legislation, nor can they extinguish it.

...

Once we address the utter lack of democracy (and/or accountability to the people - especially the people in the "junior member" nations) in the EU governance structure, I'll be happy to move on to the rest of the points you made.

It's true that the European parliament can't initiate or amend votes but you are mistaken in claiming they can't 'extinguish' legislation, they can certainly vote to reject it.

But generally your post is again a straw man argument as you only talk about the EC and EP, where (changed to bold above) I clearly stated that in reference to the Greek issue you raised, the democratically elected council of ministers had the final say, which Greece also has and had a seat in. I'm confused as to why you would claim an "utter lack of democracy".

I'm still interested in your view on whether declaring Greece bankrupt whilst also allowing them to say in the EU was the best course of action, as you seem to suggest. Don't you think that would also have led to economic depression situations, possibly across all of southern Europe, with the same potential for mass suicides?

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kennethbolin
kennethbolin wrote:

Question; since even I could use some extra income, what is the salary for being a Bryssel-internettroll these days?

Hahaha, nice one trolling me with an ad hominem attack whilst I'm taking (my own private) time to debate rationally. Try looking up the difference between troll and shill too while you're googling ad hominem.

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fake parliaments

It's true that the European parliament can't initiate or amend votes but you are mistaken in claiming they can't 'extinguish' legislation, they can certainly vote to reject it.

Since you're a smart guy, you know already that the power to reject currently-proposed legislation (a VETO) is vastly less powerful than being able to - at any time - repeal a law that had already been passed (a REPEAL).  The EU fake parliament only has the VETO power, while all real parliaments have the REPEAL power.

A VETO can only happen at a single point in time.  A REPEAL can happen whenever the people decide they don't like that law any more.  If your goal is to bribe a law into existence, you definitely prefer "the people" to have only the VETO power, rather than the REPEAL power.  That way you just need to bribe the power structure one single time, rather than continuously.

The EU fake parliament is democratically elected, and is called a parliament, but has very few of the powers that real parliaments have.  Its a simulacrum of democracy, put there so the EU can claim to be democratic, while the groups that have the real power do not have to actually answer to the people for what they do.

What recourse do "the people" have regarding an existing law they don't like?  If they vote out every member of fake parliament, nothing changes, since fake parliament cannot enact law, or repeal old law.  Ideally, "the people" could replace the EC, and that would fix the problem.  Oh - one problem: the EC isn't elected.  So "the people" are out of luck.

And that's by design.

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fake bankruptcy

So the recipe that was supposed to be used in Greece was the usual recipe employed by the IMF to deal with bankrupt nations:

  1. engage in austerity to cut back on spending to sustainable levels.
  2. sell public assets to reduce losses to bondholders. 
  3. apply haircuts on old debt to the point where the debt is sustainable
  4. currency inflates, reducing imports, increasing exports, and encouraging inward capital flows.  "local things are now a good deal."

Leaving aside for the moment whether this recipe is a good or reasonable one, it wasn't actually followed.  Greeks got hit with demands for #1 and #2, #4 couldn't happen, and #3 didn't happen, and probably never will.

As a result, Greece got a fake bankruptcy proceeding from the fake EU democracy - which makes a twisted sort of sense.  An organization that pretends to be one thing but in fact operates as quite another came up with a fake bankruptcy process that ended up being 7 years of real torture for the citizens, and at the end of the day, the debt remains unsustainable.  Meanwhile, the German and French banks walked away clean.

That's what "the bailout" was - most of the outstanding Greek debt was paid off at par using 3 tranches of "bailout cash" that is now owed by Greece to the bailout organizations, on which no haircut can occur.  After sufficient time had passed, a big haircut was handed out - but only to the remaining small number of private bondholders.

Right now, Greek debt is 179% of GDP.  It needs to be reduced, immediately, to 60% of GDP.  There has been quite enough austerity & reform.  Current debtholders ("the institutions") can be provided GDP-linked warrants of some sort that would become valuable in the event the Greek economy rebounds.

https://tradingeconomics.com/greece/government-debt-to-gdp

But that won't happen, of course.  Greece has executed on austerity, but will receive no debt relief.  You can call it a fake bankruptcy.  A sandbag job.  A bait-and-switch.  A breach of contract.   Or "just a normal Tuesday" in Brussels.

This is just the EU way. Migrants & refugees get free stuff - to the point where they are force-fed to the junior member nations who do not want them -  while citizens of Greece get eternal punishment in a fake bankruptcy proceeding that was never intended to succeed.  This makes moral sense only to those who believe in fake democracy.  Cui bono?

Germany.  France.

Given my observation of the Greek experience, I have zero confidence that the EU organization will treat any junior member in good faith.  They wouldn't know good faith if it bit them on the ass.

And that's why I say the things I do about Catalonia, human rights, and the EU.  The EU has "fake" written right into its DNA, so why would I ever expect anything genuine out of the place?

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one more thing

phusg-

For what its worth, I enjoy you coming here to comment.  If you are a troll, I think you are vastly exceeding your mandate.  :)  Intelligent counter-points make me think.  I have a lot of ideas rolling around in my head, and I enjoy the catalyst you give me for organizing them and presenting them in an organized and coherent way.

You have already stated that you don't agree with everything they do, so please don't take what I said about that organization personally.

Most importantly, the wise man knows that contrast is required in order to help one sort out what one would really like to create:

When people see some things as beautiful,
other things become ugly.
When people see some things as good,
other things become bad. 

Being and non-being create each other.
Difficult and easy support each other.
Long and short define each other.
High and low depend on each other.
Before and after follow each other. 

Therefore the Master
acts without doing anything
and teaches without saying anything.
Things arise and she lets them come;
things disappear and she lets them go.
She has but doesn’t possess,
acts but doesn’t expect.
When her work is done, she forgets it.
That is why it lasts forever.

I haven't quite mastered that bit about "teaches without saying anything."

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i didn't answer

Sorry for not directly answering your question.  I'll try again.

I'm still interested in your view on whether declaring Greece bankrupt whilst also allowing them to say in the EU was the best course of action, as you seem to suggest. Don't you think that would also have led to economic depression situations, possibly across all of southern Europe, with the same potential for mass suicides?

It could have worked out fine.  If Greece had been given a genuine bankruptcy process, they would have had a tough 3 years, but they'd be through it by now.  Namely, real haircuts for the bondholders leading to a sustainable debt, in exchange for reforms.  But that's not what happened.  There were no real haircuts - it was designed as just a backdoor bailout of the banks.  It was a simulacrum of a bankruptcy process that only served to help Merkel and Sarkozy.  One wonders how they sleep at night.  No doubt they blame Greece.

So no, a fake bankruptcy process was not the best course of action.

A real bankruptcy process would have led to money flooding back into Greece once the reform period was over.  They'd be prospering right now, a model junior member of the EU.  My opinion anyway.

 

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I'll have to be a bit short

I'll have to be a bit short as I'm in the midst of a heavy workload...

davefairtex wrote:

After sufficient time had passed, a big haircut was handed out - but only to the remaining small number of private bondholders.

I was under the impression that the big haircut hit all holders of Greek debt, but then at the time I wasn't around here but followed mainstream news media. I’m no fan of bank bailouts, but I have to mention this certainly wasn’t unique to the EU at the time.

Let’s also not forget that there is enough blame to go around, what with the French and German banks originally getting screwed by Greece cooking their books with the help of an English educated Greek employee of an American bank. Without that deception the EU wouldn't have been Greece into the euro in the first place.

davefairtex wrote:

For what its worth, I enjoy you coming here to comment.  If you are a troll, I think you are vastly exceeding your mandate.  :) 

Haha, thanks for that. I’ll certainly be monitoring the Greek situation more closely from now with a view to changing my perspective. Maybe enough is enough.

davefairtex wrote:

Given my observation of the Greek experience, I have zero confidence that the EU organization will treat any junior member in good faith.  They wouldn't know good faith if it bit them on the ass.

And that's why I say the things I do about Catalonia, human rights, and the EU.  The EU has "fake" written right into its DNA, so why would I ever expect anything genuine out of the place?

You're not a fan then I take it ;-)

Your arguments seem to favour a breaking up of the EU, aren't you worried that this is exactly what Russia and maybe also China want to see? Of course the end goal of some sort of democratic union should never justify the means of human rights abuses, but surely some form of European union is desirable, for these and other global challenges?

davefairtex wrote:

A real bankruptcy process would have led to money flooding back into Greece once the reform period was over.  They'd be prospering right now, a model junior member of the EU.  My opinion anyway.

As you’ve probably gathered I’m partial to real bankruptcy solutions. I think the 'Brussels' thinking at the time was all geared towards limiting contagion. Would the euro and the EU have survived a Greek bankruptcy? Maybe that doesn't bother you, but surely it would have led to a lot more of the suffering you decry.

And if it had worked out so well for Greece, wouldn’t many more governments now be dumping any austerity plans, cooking their books and/or running huge deficits and allowing retirement in your 50’s?

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