My pay cut continues

[Suff]

The Euro is now at 135.22 to the £ It's solidified over the weekend after the Euro meeting.

The other Austerity governments are clearly worried about the same kind of anti austerity happening at home and so are closing ranks with Germany and Finland.

However, what they don't realise is that Tsipras simply can't back down. I read the press release about Merkels statements over the weekend. It stated there was "room to negotiate". What I read was "we'll talk about changes after you have done what we want". That might have worked before but it certainly is not going to work now.

All the EU seem to think that if they keep saying NO to Greece then Greece will fold and go away. They are becoming annoyed and irritated and they just don't understand. Because this is not how EU politics are done. In EU politics the politicians make impossible statements and then come to Europe, get told "go away sonny" and they turn around and tell their population that they've been spanked for being such naughty boys and they'll just have to do what they are told.

Except, this time, that is suicide. Tsipras knows that he has more chance of surviving if Greece is thrown out of the Euro than he does if he accepts a continuance of Austerity and promises "milk and honey later". So Tsipras has nothing to lose. This time it will be No, No and No again from Greece and the EU will be faced with an unpalatable choice. Fold or act. It might be good for the EU to have this humbling experience but I don't believe they are going to go there. I believe they are going to be come nasty and vindictive as the pressure ratchets and the 28th Feb approaches and the story from Athens does not change.

Sadly I can't accelerate my January pay. I will get it at the beginning of March, right in the middle of the mess and there is not a thing I can do about it..... Perhaps except to spit on the EU commission building each time I walk past it....

[Workingman]

It is all bluff and bluster, and I am sick of it.

Come the end of February something will have to be done. What that 'something' is, is up for grabs. The sides will eventually come to an agreement, or they won't. Big deal!

Meanwhile, back in my world, the UK is part of the EU: that is good. The UK is not part of the Eurozone, and that is also good. I have £s in my pockets, the shops have food and the heating works. The sky is not falling in, despite what the papers say.

If a lot of that changes on March the 1st then that will be the time to deal with it. Till then, keep on keeping on.

[Suff]

Actually come Friday something will have to be done because the governments of the EU will have to vote on making any changes even if it is an extension.

So, given that the talks today failed miserably today, which was not unexpected, then we're going to see yet more pain in the Euro world. Which won't particularly hurt the UK in the first instance, but will hurt in the long run as we still do ~49% of our business with them.

I particularly take exception to the German finance ministers statements. He claims that Greece is being "unreasonable" yet he has done absolutely no accommodating at all. Which does not bode well for an agreement. Greece can't back off, the EU and Euroland feels they don't have to. The only possible end result is a train wreck.

The EU finance ministers seem to think that all they have to do is put on a completely intransigent face, give nothing but promise future "benefits" and Greece will back down. They're wrong and they are the architects of their own doom.

I don't see that they will back down. The Germans feel that it is politically too sensitive, the Finns have an election soon, the parties in power in the rest of the PIIGS feel that backing down is going to allow their own radicals to gain a power base at home. They are going to hold fast to the plan praying that Greece backs off as it has every time before.

My take is that they have completely misread the situation and won't realise it until they are committed to a path to grexit until they drive the whole shebang off the cliff edge. Greece can't back down, only the EU can.

Well it will be decided one way or another in another week or two. I just hope I've managed to get a job somewhere else in the interim.

[Suff]

On reflection this morning, I have come to the conclusion that the EU is thinking that they can "easily lose" Greece just like the US once thought it could "most easily" lose Lehmans. The US decision was a serious mistake. I wonder if the EU will do the same with Greece? Market forces are far greater than the GDP of the entire EU and have a way of making fools of people who make precipitous decisions.

Soros has already stated that Greece was an eventual exit target and that, were he not retired, he would make a killing on it as he once did with the ERM and the British £. That should be enough for the EU to back down and negotiate if only just a little bit. Apparently it's not.

[Suff]

Next instalment.

Tomorrow the ECB votes on whether to continue funding the Greek Banks, 3/4 of which are state funded, or to cut off the funding. Interestingly they have to give two weeks notice of that funding cut off.

The word in the back halls is that if Greece do not agree a deal by Friday, they will get no more funds. So from Feb 28th they will be insolvent. If the government is insolvent then the state banks which hold more Government debt than they can support, are also bankrupt.

Guess which way the ECB will jump?

You really have to dig to find out what happened on Monday night. They all say it was too fast for comfort. So after my digging I find that Tsipras and some financial whizzes on each side, worked over the weekend with Jean-Claude Junker to draft a document which gave a little something to everyone, was worded to give Greece part of what they wanted and also worded to give Germany part of what it wanted. It was then passed to the Ecofin meeting, which Varoufakis was invited to later on. In that meeting without the Greek finance minister, they changed the document and it's wording so that Greece got nothing, Germany got everything and the wording was that which had been rejected out of hand by Athens 3 times.

Now to the meeting. less than 4 hours. Not that short really? Well it took 2 hours to shred the document. Enter Greece, 18 windbags and a "young whippershapper" At least 1.5 hours of grandstanding from the 18 other members then about 5 minutes to read out and clarify the letter of "agreement".

30 Seconds for Vroufakis to say "shove it where the sun don't shine" and the meeting is over. Remembering that Varoufakis had a copy of that text, as it was, before he joined the meeting. Perhaps Tsipras is now feeling a bit more sympathy for Varoufakis and the fact that he has not achieved anything from these meetings?

Think there will be a coming together and an 11th hour reconciliation this week after the ECB do their thing (if they do, I might be wrong)? Not a chance.

If Tsipras does it will be political suicide less than 3 weeks into his parliament.
This weekend, for those who didn't read it, there were some regional local elections in Germany and there was a shock loss from Merkel's party to a more extreme party
Finland has elections in just a few weeks
Spain and Portugal have elections this year and the anti bailout parties are snapping at their heels
Italy has a fragile coalition and 5Star is champing at the bit to get the government out. Possible the coalition could come down.

My take? Greece is out. Unlike before, Merkel and the Germans were aware that the impact to Germany would be huge if they did not agree a deal. Now the German banks have been mainly repaid for their Greek bonds using EU money. They think they can just stand fast and they won't feel the impact when Greece hits the floor after a long fall.

This is not 2010 and certainly not 2012. Then we were in/emerging from a huge recession with countries finances in disarray and the banking system fragile. Even if lenders had been willing to prop up an independent Athens, they would not have. Leaving Greece to sink.

Today things are totally different. Whilst still badly out of whack, they can withstand a few shocks.

So everyone is looking to their own home domestic situation and, basically, saying so what? Even Greece. I believe that the "charm" offensive that Athens is currently doing is part wish to stay in the euro and part handing rope to the Eurozone and the ECB to hang themselves with.

What nobody is thinking of, clearly, is what happens if Athens is forced out? Followed by Portugal, Spain and Italy. As each of these countries elects Governments which are anti austerity and keen to get out from under no matter what the initial cost.

The system is not that robust. Nobody but Athens is making any sense right now. Certainly not the EU the ECB or the Eurozone. I don't think we're going to see an 11th hour agreement. Everyone is either too scared to do what is right, or too committed to their actions to back off now. Greece can't back off. That leave the EU and they are not about to back off for one second as the Ecofin meeting, changing the agreed statement, proves.

The only people who can now pull this off are the respective heads of state (well the powerful one's, not the titular ones) and they are simply not going to do it. I could be wrong, but this does not feel like before.

I read a huge amount about the whole mess when it happened. After all it put me out of work and financially destroyed me so I should be interested. I read the side articles. Like the ones which talked about the IMF agreeing sensible measure for debt haircuts and the ECB/EU walking in and demanding that no haircut happened to their debt. They overruled the IMF and bullied these countries into levels of debt, austerity and repayments which would blight them and their economies for the next 50 years minimum. At the time the IMF specialists stated that it was a problem which would come back to haunt us in time.

But these were the governments which had presided over the whole mess in the first place. Those governments were ashamed, accountable to the people and cowed. Willing to sign any deal so long as it would get them out of the immediate hole even if it dropped them in a rough prison with bread and water for the rest of their lives.

Today this is not true. These new anti austerity parties have no shame. They did not bring this on the people. They have nothing to fear, either from the people or the system so long as they do what they were voted in to do.

There are a lot of people in the EU world who have grown complacent on old victories who believe that if they just "Hold Fast" then they will get what they want. In fact what they need. To avert a slow moving disaster which will consume them all....

I think they are wrong. Well it will only take a max of 3 weeks to find out. Shall we sit on the side-lines and see how it plays out?