1 Comment
  1. David_Lazarus says

    After seeing the top video I would only add that I actually think that most of the big US banks are probably insolvent, only held afloat by the volume of free money from the Fed.

    The biggest policy mistake is even discussing possible Greek exit it only guarantees the risk of a Spanish exit. That is a big reason for the increases in Spanish CDS rates.

    Randazzo is completely wrong about “fake austerity”. Greece is suffering beyond anything that the US suffered in the thirties. Though you are right that they will have to make more write offs at some point. I am not so convinced that exit is on the cards. No one in Greece wants it, few in the eurozone want Greece out, bar a few banks who do not want odious debts eliminated.

    The problem is that if Greece exits the country will not recover because the main parties are corrupt. Merkel sealed Greece’s fate by campaigning for New Democracy, one of the corrupt parties that got Greece into this mess. If Greece were to exit who would realistically invest in Greece? Vulture funds are probably the only ones. It is not as if they have a functioning government to help. Corruption is rife and casting Greece out will just cause chaos. If the odds of exiting Greece look high then expect mass migration to avoid the borders being closed to them. Even working on the black-market in Italy will be preferable to staying in Greece. Any benefits of a currency devaluation would be short lived. Better to fix Greece with bail outs based on reforms and forget about repayments. Send corrupt politicians to jail and clean up the tax base so that taxes are paid. That will rebuild confidence in paying taxes.

    Your solutions for the Spanish banks is correct. Let senior bond holders swap debts for bank equity after all sub ordinate debts is wiped out. Only then nationalise banks.

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