Dawn over Marblehead

According to this, the IMF has decided that a third bailout for Greece would be a waste of money.   Jeez, took 'em long enough to see the light.  The noise from Europe is when the IMF backs out, so does every one else.  All the Greek  bailout will do is finance the Greeks in paying off some of their fantastic international debt.  It would be cheaper just to stop bailing Greece, let the Greeks default on their loans, and learn to run a balanced budget.  All that debt was run up by Greeks spending more than they take in with taxes.  Time to stop subsidizing them, Greece can learn to cut spending and hike taxes just like a real country.  And the banking idiots who loaned the money deserve to take a good solid loss.  Maybe that will learn 'em. 

Grexit

Jargon for Greek Exit from the Euro.  The Economist is highly concerned.   The new left wing Syriza government of Greece is making silly noises.  Economist has a good cartoon, showing the new Greek government barreling along a one lane mountain road in a steamroller, bearing a sign reading "Irresistible Force".  Coming the other way is a big 18 wheeler, filling the road from side to side, with Angela Merkel at the wheel.  Bearing a sign reading "Immovable Object".
   What will happen?  No one knows. 
   What ought to happen, is the EU tells the Greeks to keep sucking it up, or do without.  There is a multi billion Euro chunk of bailout money still due the Greeks.  The EU could, if it has the stones, with hold it if they don't like what the Greeks are doing. 
   The EU may not have the stones.  There are plenty of lefties all over Europe who dislike "austerity" (a balanced national budget).  The think if the Greeks drop austerity, it will be a signal to their own governments to crank up the welfare spending. 
  The other issue for Greeks is leaving the Euro.  This would enable them to print all the drachmas they need to pay for all the welfare they want.  At the stroke of a keyboard, all the Euro deposits in Greek banks would become drachma deposits.  And everyone expects the newly declared drachma to drop 50% or more against the Euro.  So every Greek with money, in the bank (maybe half of them?) is against Grexit.  Will their interests be strong enough to overcome the desire of the welfare staters to print all the money they want?

Greasing the skids

Greece, somehow has bamboozled the EU into giving them handouts.  After being allowed into the Euro back in  the 1990's, the Greeks managed to paper over their humungeous deficits by floating bonds.  Somehow, a bunch of sucker banks, mostly in Germany, was stupid enough to buy the bonds, thinking that they would get paid back on time.  The Greeks kept the illusion going by using the proceeds of the latest bond sales to the roll over old bonds. 
  This scam finally unraveled and every one, even the sucker banks, stopped buying Greek bonds, or making loans to Greece.  At this point, the Greeks owned so much money, that allowing them to default would cause intense pain thru out Europe.  The sucker banks cried that a Greek default would bankrupt them.  So, the EU decided to bail the Greeks out, a bit.  They demanded that the Greeks clean up their act, balance their budget, lay off the enormous number of Greeks on the Government payroll, and tighten up tax collection.  In return for promises to reform, the EU would give the Greeks enough money to pay the interest on their debts.  Which means that the sucker banks can carry their Greek loans as assets on their books.  If the Greeks stop paying, then sooner or later, the sucker banks would have to declare a whacking big loss.  A loss big enough to put a number of them out of business. 
   This stop gap situation may come unraveled this spring.  The Greeks have to hold national elections and the polls all show a new populist party Syrisa about to win outright.  Syrisa  is threatening to scrap all the promises of reform, and stop paying on Greece's foreign debt.  At which point the EU handouts will stop. 
   What happens to the EU and the Euro is unknown, but the Europeans are worried about it.  The Greeks will have to figure out how to live within their means.  They may decided to drop out of the Euro so they can print their own money, as much as they need, to meet payroll.  They may not, because all Greeks with any kind of money, in Euros, will be against the idea.  Dropping out of the Euro, would mean everyone's Euros would turn into Drachma, and then the Drachma would drop 50% or more against the Euro.  In effect, every Greek gets a real close haircut.  No one wants that. 

Words of the Weasel, Part 31

From The Economist.  "Earlier this year private sector bond holders reduced their nominal claims by more than 50%".
How nice and cooperative that sounds.  In actual fact the Greeks gave lenders a 75% haircut.
The Economist went on to urge canceling more Greek debt and lending them more money.  After all ,  the poor things cannot improve their economy with out lots of foreign investment.   Wouldn't we all like to lend them more money?

Gotta keep all them drones on the payroll

The new, not yet  sworn in, government of Greece has announced that they will not be doing the big layoffs of government  workers that their EU lenders/bailer-outers have demanded.  Good call that.  With the treasury empty and running a serious deficit and nobody will loan them money, it is essential to the life of the Greek republic that we keep every single bureaucrat on the payroll.  The Parthenon would crumble with out every single paper pusher drawing his pay.  And benefits, and pension.
    I haven't heard any response from Angela Merkel.  She is smart enough to understand that getting into a shouting match with Greeks just makes Germany look mean to the rest of the Euros.  There is a lot of Euro ill will toward Germany left over from the 1940's.  
    Wanna bet the next hand out to the Greeks gets delayed some how?