Eurozone Ministers Agree To Second Greek Bailout

The final deal has been hammered out, and the euro zone ministers have finally agreed to the conditions for a second Greek bailout. In exchange for a new loan of over 130 billion euros, the Greeks are going to have over 107 billion euros worth of debt written off.

Greece will also have to agree to the following tough conditions, with the goal of getting Greece to reduce its debt to a mere 120.5% of GDP by 2020:

Private holders of Greek debt are going to take a 70% 'haircut' on the value of their bonds, equivalent to 70 cents on the dollar.

Greece's economy will be subjected to permanent monitoring by euro zone monitors from the EU, the IMF and the ECB on the ground in Athens. In other words, Greece is essentially not in control of its own economy any longer.

The Greek constitution will be amended to give priority to debt repayments over the funding of government services

Greece will set up a special account, managed separately from its main budget, that must always contain enough money to service its debts for the coming three months

Essentially, the euro zone has 'purchased' Greece in exchange for lending them the money they need to pay their debts.

The deal reflects the schizoid nature of the euro zone on the matter. On one hand,they'd like to be rid of Greece, so they came up with conditions almost impossible to meet. On the other hand,they're afraid that if Greece defaults and skips put of the euro zone, it will give other countries like Spain, Portugal, Italy and Ireland similar ideas.

The Greek parliament is expected to vote on the bailout tomorrow.Personally, I think they'd be far better off simply defaulting,going back to the drachma and starting over fresh. No one is going to lend Greece any money or buy its bonds for some time anyway, so it's not like the country's credit ratings matter.And a number of Greeks see it that way.

"The funds that are coming in are not staying in Greece, are not being invested in Greece, are not here to help the Greeks get out of this crisis," Constantine Michalos, president of the Athens Chamber of Commerce and Industry, told the BBC.

"It's simply to repay the banks, so that they can retain their balance sheets on the profit side."

Yes...and also to provide the EU time for the euro zone to build greater firewall protection around its banks and reduce their exposure when Greece eventually defaults, as well as around other potentially vulnerable countries like Spain and Italy.

In a reversal of that old saying, it's the Greeks that need to beware of foreigners bearing gifts.

Eurozone Ministers Agree To Second Greek Bailout

The final deal has been hammered out, and the euro zone ministers have finally agreed to the conditions for a second Greek bailout. In exchange for a new loan of over 130 billion euros, the Greeks are going to have over 107 billion euros worth of debt written off.

Greece will also have to agree to the following tough conditions, with the goal of getting Greece to reduce its debt to a mere 120.5% of GDP by 2020:

Private holders of Greek debt are going to take a 70% 'haircut' on the value of their bonds, equivalent to 70 cents on the dollar.

Greece's economy will be subjected to permanent monitoring by euro zone monitors from the EU, the IMF and the ECB on the ground in Athens. In other words, Greece is essentially not in control of its own economy any longer.

The Greek constitution will be amended to give priority to debt repayments over the funding of government services

Greece will set up a special account, managed separately from its main budget, that must always contain enough money to service its debts for the coming three months

Essentially, the euro zone has 'purchased' Greece in exchange for lending them the money they need to pay their debts.

The deal reflects the schizoid nature of the euro zone on the matter. On one hand,they'd like to be rid of Greece, so they came up with conditions almost impossible to meet. On the other hand,they're afraid that if Greece defaults and skips put of the euro zone, it will give other countries like Spain, Portugal, Italy and Ireland similar ideas.

The Greek parliament is expected to vote on the bailout tomorrow.Personally, I think they'd be far better off simply defaulting,going back to the drachma and starting over fresh. No one is going to lend Greece any money or buy its bonds for some time anyway, so it's not like the country's credit ratings matter.And a number of Greeks see it that way.

"The funds that are coming in are not staying in Greece, are not being invested in Greece, are not here to help the Greeks get out of this crisis," Constantine Michalos, president of the Athens Chamber of Commerce and Industry, told the BBC.

"It's simply to repay the banks, so that they can retain their balance sheets on the profit side."

Yes...and also to provide the EU time for the euro zone to build greater firewall protection around its banks and reduce their exposure when Greece eventually defaults, as well as around other potentially vulnerable countries like Spain and Italy.

In a reversal of that old saying, it's the Greeks that need to beware of foreigners bearing gifts.

The Eurozone Under The Gun: France And Germany At Odds

Saving the eurozone has come down to two countries, France and Germany. President Sarkozy and Chancellor Merkel are meeting today to try and craft a common proposal to save the eurozone and the EU,but their differences are fairly wide.

The Germans are desperate to preserve the eurozone because their economy depends on exports, and returning to the Deutschmark would create a rise in the prices of German products. On the other hand, German taxpayers are fed up with costly bailouts.

Merkel wants a 'federalized' eurozone to enforce budget discipline and to have euro zone states surrender the control of their budgets to a European authority with veto power and the ability to punish governments that step out of line.

France opposes this, and Sarkozy, with only five months to go before elections, is taking major criticism from his political opposition and the press over handing French sovereignty to unelected EU officials.

At that, a proposal along the lines of what the Germans want might necessitate a change in the EU treaty.

It'll be interesting to see what they come up with.

Meanwhile, Italy has joined Greece, Spain, Ireland and Portugal as another country whose debt is out of control and may need an EU bailout.

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The Eurozone Under The Gun: France And Germany At Odds

Saving the eurozone has come down to two countries, France and Germany. President Sarkozy and Chancellor Merkel are meeting today to try and craft a common proposal to save the eurozone and the EU,but their differences are fairly wide.

The Germans are desperate to preserve the eurozone because their economy depends on exports, and returning to the Deutschmark would create a rise in the prices of German products. On the other hand, German taxpayers are fed up with costly bailouts.

Merkel wants a 'federalized' eurozone to enforce budget discipline and to have euro zone states surrender the control of their budgets to a European authority with veto power and the ability to punish governments that step out of line.

France opposes this, and Sarkozy, with only five months to go before elections, is taking major criticism from his political opposition and the press over handing French sovereignty to unelected EU officials.

At that, a proposal along the lines of what the Germans want might necessitate a change in the EU treaty.

It'll be interesting to see what they come up with.

Meanwhile, Italy has joined Greece, Spain, Ireland and Portugal as another country whose debt is out of control and may need an EU bailout.

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Auto Bailout Losses From Obama's Gift To His Union Supporters Skyrockets To $23.6B

In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion from its $85 billion bailout of the auto industry. This is a mere $9 billion jump from its previous estimate of $14.33 billion.

Since Democrats are constantly claiming to be concerned about 'new revenues', it's worth mentioning that the above figures don't include that $45.4 billion dollar tax credit against future profits at the American taxpayer's expense given to them by the Obama Administration that could keep GM and its UAW owners tax free for years.

It also doesn't include $5 billion the government set aside to guarantee payments to auto suppliers in 2009.

What's going on here is a sharp decline in the value of GM's stock price. GM's Sept. 30 closing price is $20.18, down one-third over the previous quarterly price.

As I told you early this year, the Initial Public Offering (IPO) of stock for Government Motors was a huge bust, and the Feds were forced to sell a large block of shares it was holding as 'collateral' for the $85 billion bailout at a below break even price (otherwise known as a loss) of $33 per share. For those of you whom are math challenged, the current price reflects over a 38% decline in value since January from even that fire sale price.

In order for the taxpayers to have broken even, the price of the stock would have to rise to at least $52 and by some estimates as high as $103. It'll take years to get there, if it ever does, and the Obama Administration was simply being deceptive when it suggested that the stock price of $45 per share ( which it never even came close to hitting) would be enough for the taxpayers to recoup their considerable investment.

Part of the reason the stock has declined so rapidly is that GM is simply not making cars the public wants to buy. The Volt was a huge bust, even with the $10K government subsidy..it had sold only 3,895 units as of September. The Nissan Leaf, a similar hybrid car sold over twice as many cars during the same period, and did it without the American taxpayers paying people to buy it.

Overall productivity and quality control have also plummeted sharply since the government and the unions took over the reins.

The other reason the stock price has tanked is, well, poetic justice.

When the Obama Administration took over, the existing private stockholders, many of them retirees, saw their investment become virtually worthless overnight, as they were placed in the food chain behind the federal government and the UAW. In the restructuring, their 'equity' was reduced to 10% by government decree.

Stuff like that tends to be remembered. Is it any wonder no one wants to buy the stock as a private or institutional investor after that hosing?

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Auto Bailout Losses From Obama's Gift To His Union Supporters Skyrockets To $23.6B

In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion from its $85 billion bailout of the auto industry. This is a mere $9 billion jump from its previous estimate of $14.33 billion.

Since Democrats are constantly claiming to be concerned about 'new revenues', it's worth mentioning that the above figures don't include that $45.4 billion dollar tax credit against future profits at the American taxpayer's expense given to them by the Obama Administration that could keep GM and its UAW owners tax free for years.

It also doesn't include $5 billion the government set aside to guarantee payments to auto suppliers in 2009.

What's going on here is a sharp decline in the value of GM's stock price. GM's Sept. 30 closing price is $20.18, down one-third over the previous quarterly price.

As I told you early this year, the Initial Public Offering (IPO) of stock for Government Motors was a huge bust, and the Feds were forced to sell a large block of shares it was holding as 'collateral' for the $85 billion bailout at a below break even price (otherwise known as a loss) of $33 per share. For those of you whom are math challenged, the current price reflects over a 38% decline in value since January from even that fire sale price.

In order for the taxpayers to have broken even, the price of the stock would have to rise to at least $52 and by some estimates as high as $103. It'll take years to get there, if it ever does, and the Obama Administration was simply being deceptive when it suggested that the stock price of $45 per share ( which it never even came close to hitting) would be enough for the taxpayers to recoup their considerable investment.

Part of the reason the stock has declined so rapidly is that GM is simply not making cars the public wants to buy. The Volt was a huge bust, even with the $10K government subsidy..it had sold only 3,895 units as of September. The Nissan Leaf, a similar hybrid car sold over twice as many cars during the same period, and did it without the American taxpayers paying people to buy it.

Overall productivity and quality control have also plummeted sharply since the government and the unions took over the reins.

The other reason the stock price has tanked is, well, poetic justice.

When the Obama Administration took over, the existing private stockholders, many of them retirees, saw their investment become virtually worthless overnight, as they were placed in the food chain behind the federal government and the UAW. In the restructuring, their 'equity' was reduced to 10% by government decree.

Stuff like that tends to be remembered. Is it any wonder no one wants to buy the stock as a private or institutional investor after that hosing?

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U Turn: Papandreou Cancels Greek Referendum On EU Bailout

After being summoned to an emergency meeting with Nicolas Sarkozy, French president, and Angela Merkel, German chancellor, Greek PM George Papandreou announced that a planned referendum in Greece over whether to accept the additional austerity measures demanded by the EU as part of a second €130 billion bailout had been canceled.

Papandreou had announced the referendum after wide spread opposition to the new measures, but it provoked outrage among EU leaders who threatened to cut off all EU funds to Greece.

Without the funds from the EU, Greece wouldn't have been able to pay more than 700,000 public sector workers and more than 2 million pensioners at the end of November.Reportedly, the Greek government has already started postponing payments to suppliers.

In a meeting with his cabinet after his talks with Sarkozy and Merkel, Papandreou had offered his resignation, but it was withdrawn after the opposition New Democracy conservative party came aboard and said they would back the new measures in order to keep Greece in the eurozone.

Papandreou said: “We had a dilemma: consensus or a referendum ... Failure to back the package would mean the beginning of our departure from the euro. But if we have consensus, then we don’t need a referendum.”

How this is going to fly with the Greek electorate is another story.

Civil servants are going to mount another anti-austerity protest outside parliament on today, with officials from their union, Adedy, complaining that the latest round of pay cuts had reduced average public sector salaries by more than 20 per cent.

“We will send the message to the government that we have reached the limit of what we can take, “ a union official said.

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U Turn: Papandreou Cancels Greek Referendum On EU Bailout

After being summoned to an emergency meeting with Nicolas Sarkozy, French president, and Angela Merkel, German chancellor, Greek PM George Papandreou announced that a planned referendum in Greece over whether to accept the additional austerity measures demanded by the EU as part of a second €130 billion bailout had been canceled.

Papandreou had announced the referendum after wide spread opposition to the new measures, but it provoked outrage among EU leaders who threatened to cut off all EU funds to Greece.

Without the funds from the EU, Greece wouldn't have been able to pay more than 700,000 public sector workers and more than 2 million pensioners at the end of November.Reportedly, the Greek government has already started postponing payments to suppliers.

In a meeting with his cabinet after his talks with Sarkozy and Merkel, Papandreou had offered his resignation, but it was withdrawn after the opposition New Democracy conservative party came aboard and said they would back the new measures in order to keep Greece in the eurozone.

Papandreou said: “We had a dilemma: consensus or a referendum ... Failure to back the package would mean the beginning of our departure from the euro. But if we have consensus, then we don’t need a referendum.”

How this is going to fly with the Greek electorate is another story.

Civil servants are going to mount another anti-austerity protest outside parliament on today, with officials from their union, Adedy, complaining that the latest round of pay cuts had reduced average public sector salaries by more than 20 per cent.

“We will send the message to the government that we have reached the limit of what we can take, “ a union official said.

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EU Gives Greece An Ultimatum - Accept Our Terms Now Or Leave The EU

The EU is not at all pleased with Greek PM George Papandreou's decision to hold a popular referendum on whether to accept the austerity terms the EU wants in exchange for a second bail out.

They gave Greece what amounts to an ultimatum...either accept the terms now or leave the eurozone.

"Does Greece want to remain part of the euro zone or not," German Chancellor Angela Merkel said. "That is the question the Greek people must now answer."

French President Nicolas Sarkozy said the Greeks would get no more euro-zone rescue aid—"no French taxpayer money, no German taxpayer money"—until they answer. Greece would go bankrupt without the aid in a matter of weeks.

The Eurocrats are angry because they were under the impression they had a deal. Instead, Papandreou went back home, saw how deeply unpopular the new terms were with his own party and the Greek people and decided he needed the cover of a popular referendum, which he says can't be put together until December 5th at the earliest, which would take Greece over the brink. So the EU is essentially demanding that there be no referendum,which isn't going to happen.

If the EU insists on this course of action, Greece will simply default on its debt and start from scratch, leaving the other eurozone members holding the bag

The problem for the eurozone is that if the other troubled members like Ireland, Portugal, Italy, and Spain see Greece defaulting and going back into the drachma, they're going to do exactly the same thing and flee back to their own currencies after defaulting on their debt.

And the entire rotten edifice could come tumbling down, with major repercussions for world financial markets.

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EU Gives Greece An Ultimatum - Accept Our Terms Now Or Leave The EU

The EU is not at all pleased with Greek PM George Papandreou's decision to hold a popular referendum on whether to accept the austerity terms the EU wants in exchange for a second bail out.

They gave Greece what amounts to an ultimatum...either accept the terms now or leave the eurozone.

"Does Greece want to remain part of the euro zone or not," German Chancellor Angela Merkel said. "That is the question the Greek people must now answer."

French President Nicolas Sarkozy said the Greeks would get no more euro-zone rescue aid—"no French taxpayer money, no German taxpayer money"—until they answer. Greece would go bankrupt without the aid in a matter of weeks.

The Eurocrats are angry because they were under the impression they had a deal. Instead, Papandreou went back home, saw how deeply unpopular the new terms were with his own party and the Greek people and decided he needed the cover of a popular referendum, which he says can't be put together until December 5th at the earliest, which would take Greece over the brink. So the EU is essentially demanding that there be no referendum,which isn't going to happen.

If the EU insists on this course of action, Greece will simply default on its debt and start from scratch, leaving the other eurozone members holding the bag

The problem for the eurozone is that if the other troubled members like Ireland, Portugal, Italy, and Spain see Greece defaulting and going back into the drachma, they're going to do exactly the same thing and flee back to their own currencies after defaulting on their debt.

And the entire rotten edifice could come tumbling down, with major repercussions for world financial markets.

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GOP Senator Calls For Obama to Cancel Huge Fannie Mae, Freddie Mac Bonuses

Sen. John Barrasso, R-Wyo called today for President Obama to cancel large bonuses set to be awarded to Fannie Mae and Freddie Mac executives.

“I am calling on the president of the United States to cancel those bonuses and explain to the American people, the taxpayers who bailed out Freddie and Fannie, why he continues to reward failure,” Sen. John Barrasso, R-Wyo., said at a news conference Tuesday.

The bonuses? Oh, a mere $12.8 million in bonuses approved for 10 executives at the government-seized mortgage companies.

Fredie Mac and Fannie Mae have received about $141 billion in taxpayer funds since the government took them over in 2008:

Politico first reported the $6.46 million in bonuses for the top five officers at Freddie Mac -- including $2.3 million for CEO Charles E. Haldeman Jr., who is stepping down next year -- and $6.33 million for Fannie Mae officials, including $2.37 million for CEO Michael Williams, for meeting modest goals.

A second bonus installment for Freddie executives in 2010 has yet to be reported to the Securities and Exchange Commission, Politico reported.

According to the White House, clamping down on what it czlled 'excessive compensation' on Wall Street via Dodd-Frank was just fine, but none of those provisions apply to Fannie and Freddie. Given who wrote Dodd-Frank and their history with those institutions, it's not hard to imagine why.

Just for the record, here's a flashback from candidate Barack Obama during the 2008 presidential campaign:

“I’ve always said that any action with respect to Fannie Mae and Freddie Mac needs to put taxpayers first and can’t under any circumstances bail out shareholders or senior management of that company.”

Lest you think this is yet another Republican attempt to embarrass the president,Senate Majority Leader Harry Reid had this to say when asked about this obscenity by reporters:

“A gag reflex in front of all of you would be improper.”

If Barrasso tries to get legislation passed to have Fannie and Freddie execs forfeit their bonuses, it'll be interesting to see if Reid supports it.

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GOP Senator Calls For Obama to Cancel Huge Fannie Mae, Freddie Mac Bonuses

Sen. John Barrasso, R-Wyo called today for President Obama to cancel large bonuses set to be awarded to Fannie Mae and Freddie Mac executives.

“I am calling on the president of the United States to cancel those bonuses and explain to the American people, the taxpayers who bailed out Freddie and Fannie, why he continues to reward failure,” Sen. John Barrasso, R-Wyo., said at a news conference Tuesday.

The bonuses? Oh, a mere $12.8 million in bonuses approved for 10 executives at the government-seized mortgage companies.

Fredie Mac and Fannie Mae have received about $141 billion in taxpayer funds since the government took them over in 2008:

Politico first reported the $6.46 million in bonuses for the top five officers at Freddie Mac -- including $2.3 million for CEO Charles E. Haldeman Jr., who is stepping down next year -- and $6.33 million for Fannie Mae officials, including $2.37 million for CEO Michael Williams, for meeting modest goals.

A second bonus installment for Freddie executives in 2010 has yet to be reported to the Securities and Exchange Commission, Politico reported.

According to the White House, clamping down on what it czlled 'excessive compensation' on Wall Street via Dodd-Frank was just fine, but none of those provisions apply to Fannie and Freddie. Given who wrote Dodd-Frank and their history with those institutions, it's not hard to imagine why.

Just for the record, here's a flashback from candidate Barack Obama during the 2008 presidential campaign:

“I’ve always said that any action with respect to Fannie Mae and Freddie Mac needs to put taxpayers first and can’t under any circumstances bail out shareholders or senior management of that company.”

Lest you think this is yet another Republican attempt to embarrass the president,Senate Majority Leader Harry Reid had this to say when asked about this obscenity by reporters:

“A gag reflex in front of all of you would be improper.”

If Barrasso tries to get legislation passed to have Fannie and Freddie execs forfeit their bonuses, it'll be interesting to see if Reid supports it.

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Greeks Rebel: Eurozone Bailout Hangs By A thread

The Eurozone bail out cobbled together last week is hanging by a thread and has sent stock markets world wide tumbling as a result.

In view of the vast civil unrest that accompanied the last austerity measures, Greek PM George Papandreou wisely decided to hold a referendum in parliament to get support for the new measures the EU is demanding as part of the current proposal.

And it unfortunately hasn't gone well. Papandreou's socialist Pasok party is shedding support from its own members over the new austerity measures, and it's doubtful whether Papandreou even has a simple majority anymore in the 300-seat parliament. A vote of confidence is planned for Friday, which might even end up with Papandreou being ousted and the country going to early elections.

In view of this, Papandreou announced that Greece would hold a popular referendum in January on whether to adopt the new spending cuts and austerity measures. So far, the polls show that the vast majority of Greeks are against them.

If Greece does not approve the new austerity measures, the EU won't release bail out funds from the EFSF, which means that Greece would default on its sovereign debt. Essentially, a vote against the austerity measures would be a vote against the euro and in favor of bringing back the Greek drachma.

From Greece's personal standpoint, they might actually be better off. Even the current 130-billion-euro bailout and 50-percent write-down on its debt only gets Greece to a debt level of 120% of its gross domestic product(GDP), which is like restructuring your debts down to $2,400 per month when you only have an income of $2,000. And that's the best case scenario.

The country's credit would be shot, but it already is anyway, and at least they could devote what there is of Greece's resources to the country's actual expenses instead of debt service.

The big losers would be the other members of the eurozone ( especially France and Germany) , who would get stuck with the worthless debts from the earlier Greek bailout and would then almost certainly face a whole slew of countries defaulting as the entire rotten structure collapsed.

Since chaos tends to spread,the effect on US and foreign financial markets can hardly be expected to be good.

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Greeks Rebel: Eurozone Bailout Hangs By A thread

The Eurozone bail out cobbled together last week is hanging by a thread and has sent stock markets world wide tumbling as a result.

In view of the vast civil unrest that accompanied the last austerity measures, Greek PM George Papandreou wisely decided to hold a referendum in parliament to get support for the new measures the EU is demanding as part of the current proposal.

And it unfortunately hasn't gone well. Papandreou's socialist Pasok party is shedding support from its own members over the new austerity measures, and it's doubtful whether Papandreou even has a simple majority anymore in the 300-seat parliament. A vote of confidence is planned for Friday, which might even end up with Papandreou being ousted and the country going to early elections.

In view of this, Papandreou announced that Greece would hold a popular referendum in January on whether to adopt the new spending cuts and austerity measures. So far, the polls show that the vast majority of Greeks are against them.

If Greece does not approve the new austerity measures, the EU won't release bail out funds from the EFSF, which means that Greece would default on its sovereign debt. Essentially, a vote against the austerity measures would be a vote against the euro and in favor of bringing back the Greek drachma.

From Greece's personal standpoint, they might actually be better off. Even the current 130-billion-euro bailout and 50-percent write-down on its debt only gets Greece to a debt level of 120% of its gross domestic product(GDP), which is like restructuring your debts down to $2,400 per month when you only have an income of $2,000. And that's the best case scenario.

The country's credit would be shot, but it already is anyway, and at least they could devote what there is of Greece's resources to the country's actual expenses instead of debt service.

The big losers would be the other members of the eurozone ( especially France and Germany) , who would get stuck with the worthless debts from the earlier Greek bailout and would then almost certainly face a whole slew of countries defaulting as the entire rotten structure collapsed.

Since chaos tends to spread,the effect on US and foreign financial markets can hardly be expected to be good.

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The EU's Big Fat Greek Bailout

The EU leaders, led by Germany's Chancellor Angela Merkel and France's President Nicholas Sarkozy have reached a deal for a second Greek bailout.

The deal involves a new €130 billion bailout of Greece by the European Union and the International Monetary Fund (which means American taxpayers are going to take a bite of this particular sandwich), and acceptance by current Greek bond holders of fifty percent of face value and a increase in the EU's bailout fund to over €1 trillion.

As Chancellor Merkel announced with a straight face, the goal of all this manipulation is to get Greece's debt down to - wait for it - a mere 120% of the country's gross domestic product by 2020.

President Sarkozy announced that he would hit up the Chinese to see if they're willing to pony up any cash to help in supporting the fund.

A number of details remain deliberately vague, which was probably the intent to get some kind of consensus and just try to muddle through somehow.

For example, under the terms of the deal, Greece agreed to pay €15 billion back into the EU's bailout fund, the European Financial Stability Facility(EFSF). The money is supposed to come from additional revenues raised by a vast Greek privatization plan, which would see a lot of functions currently run by the government go into private management.Unfortunately, the international monitors have already reported that Greece isn't going to be able to come up with the €50 billion for the EFSF from privatization it already pledged earlier this year, and this new €15 billion is supposed to come on top of the money the Greeks have already been unable to pay back.

The most inadvertently hilarious quote on this particular item came from Yves Leterme, the Prime Minister of Belgium, a country not exactly noted for its sense of humor. When he was asked by reporters whether adding another €15 billion to Greece’s expected pay back to the bailout fund out of expected revenues from privatization was realistic when the Greeks couldn't come up with the €50 billion from privatization they'd already committed to, he replied: “This element was not a necessity for Belgium.”

Another interesting bit that promises future fireworks came from George Osbourne, Britain's Chancellor of the Exchequer, the equivalent of America's Secretary of the treasury.He's claiming that Britain (which is already in financial straits) won't pay into the bailout fund out of its its IMF contributions. Moreover, he doubled down and is insisting that the IMF's mandate doesn't allow any cash to go into the bailout fund. Since there's no other place the money can conceivably come from except perhaps the Chinese, this is another of those little details that looks like it's being left to work out later.

Another problem with all this has to do with the internal problems of Greece itself.The EU has apparently realized belatedly that the country is one of the most corrupt in Europe, has a poisonous investment climate, a government fully prepared to cook the books and and little besides tourism as a source of revenue. So Chancellor Merkel is demanded the EU put what she describe as 'monitoring' in place to try and make some kind of order out of this.

"There will be a reinforced monitoring regime in connection with the fulfillment of the Greek obligations," she said.

"That will be anchored in a memorandum of understanding. There will be a permanent presence there. It will be possible to monitor the measures taken by Greece. I think that this is better than when every three months a 'troika' travels there and back, a permanent system of supervision."

Viel glück damit, Madame ReichsKanzler.

If this all seems like simply kicking the can down the road, I couldn't agree more. And that's going to become even more obvious when further bailouts are needed for countries like Spain, Ireland and Portugal, among others.

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The EU's Big Fat Greek Bailout

The EU leaders, led by Germany's Chancellor Angela Merkel and France's President Nicholas Sarkozy have reached a deal for a second Greek bailout.

The deal involves a new €130 billion bailout of Greece by the European Union and the International Monetary Fund (which means American taxpayers are going to take a bite of this particular sandwich), and acceptance by current Greek bond holders of fifty percent of face value and a increase in the EU's bailout fund to over €1 trillion.

As Chancellor Merkel announced with a straight face, the goal of all this manipulation is to get Greece's debt down to - wait for it - a mere 120% of the country's gross domestic product by 2020.

President Sarkozy announced that he would hit up the Chinese to see if they're willing to pony up any cash to help in supporting the fund.

A number of details remain deliberately vague, which was probably the intent to get some kind of consensus and just try to muddle through somehow.

For example, under the terms of the deal, Greece agreed to pay €15 billion back into the EU's bailout fund, the European Financial Stability Facility(EFSF). The money is supposed to come from additional revenues raised by a vast Greek privatization plan, which would see a lot of functions currently run by the government go into private management.Unfortunately, the international monitors have already reported that Greece isn't going to be able to come up with the €50 billion for the EFSF from privatization it already pledged earlier this year, and this new €15 billion is supposed to come on top of the money the Greeks have already been unable to pay back.

The most inadvertently hilarious quote on this particular item came from Yves Leterme, the Prime Minister of Belgium, a country not exactly noted for its sense of humor. When he was asked by reporters whether adding another €15 billion to Greece’s expected pay back to the bailout fund out of expected revenues from privatization was realistic when the Greeks couldn't come up with the €50 billion from privatization they'd already committed to, he replied: “This element was not a necessity for Belgium.”

Another interesting bit that promises future fireworks came from George Osbourne, Britain's Chancellor of the Exchequer, the equivalent of America's Secretary of the treasury.He's claiming that Britain (which is already in financial straits) won't pay into the bailout fund out of its its IMF contributions. Moreover, he doubled down and is insisting that the IMF's mandate doesn't allow any cash to go into the bailout fund. Since there's no other place the money can conceivably come from except perhaps the Chinese, this is another of those little details that looks like it's being left to work out later.

Another problem with all this has to do with the internal problems of Greece itself.The EU has apparently realized belatedly that the country is one of the most corrupt in Europe, has a poisonous investment climate, a government fully prepared to cook the books and and little besides tourism as a source of revenue. So Chancellor Merkel is demanded the EU put what she describe as 'monitoring' in place to try and make some kind of order out of this.

"There will be a reinforced monitoring regime in connection with the fulfillment of the Greek obligations," she said.

"That will be anchored in a memorandum of understanding. There will be a permanent presence there. It will be possible to monitor the measures taken by Greece. I think that this is better than when every three months a 'troika' travels there and back, a permanent system of supervision."

Viel glück damit, Madame ReichsKanzler.

If this all seems like simply kicking the can down the road, I couldn't agree more. And that's going to become even more obvious when further bailouts are needed for countries like Spain, Ireland and Portugal, among others.

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