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.

Germany Drawing Up Plans For Greece To Default And Leave The Euro

It seems Germany is finally ready to pull the trigger now that it's obvious Greece is likely to default on its debt with or without a second eurozone bailout:

But the severe austerity measures being demanded have caused such fury in Greece, and the cuts required are so deep, that Wolfgang Schäuble, the German finance minister, does not believe that any government would be able to implement them.

His pessimism has been tipped into despair with a secret European Commission, Central and IMF report that even if Greece made good on its promises, it would not be enough to reach the target of bringing total debt to 120 per cent of GDP by 2020.

"He just thinks the Greeks cannot do what needs to be done. And even if by some miracle they did what has been promised, he - and a growing group - are convinced it will not pull Greece out the hole," said a euro zone official.

Of course it won't...and it was never really intended to. That became obvious after the first bailout failed. Greece agreeing to reforms in exchange for billions of euros was one thing but implementation was always the problem, just as it's likely to be after another bailout. Demonstrations and riots in the streets, high unemployment, strikes, an unwilling bureaucracy and a power struggle as different politicians play football with the unrest all make Greece an unlikely candidate for instituting the reforms called for by what Greeks refer to as 'the German diktat'. At least one Greek politico is using stories of the Greek resistance against the Nazis as a rallying point.

Even if the Greeks did manage to implement all the reforms properly, the euro zone's own figures now show it would still fall short, with debt likely to total 129 per cent of GDP in 2020.

None of this was any secret even before the current crisis. However, the kabuki was needed because there are certain legal problems with kicking Greece out of the euro zone.Unless the country fails to honor its agreements to implement reforms and pay back its creditors as agreed. So the solution is to hold out the carrot of another bailout while asking for reforms that are impossible to implement and debt service levels that are unsustainable,nicht wahr?

Under the current austerity demands, 20% of Greek civil servants are going to lose their jobs, a substantial rise in unemployment where a major percentage of the country's labor force works in the public sector and unemployment is already at over 18%. The minimum wage would be cut sharply, public sector salaries would be slashed even further,pensions reduced, taxes raised and the defense budget slashed to the bone.

No Greek politician wants to have him or herself associated with this.

In Greece itself there have been widespread increases in crime. Greeks are heading into the national forests to cut firewood to get them through the winter, and a barter economy is becoming common in some parts of the country.Greece's National Gallery has already been burgled, and a gang of armed thieves looted a museum in Olympia on Friday, stealing bronze and pottery artifacts for sale. Meanwhile, many Greeks, especially those 25 and under with educational qualifications or practical skills like plumbing or electrical work are leaving the country, because there simply aren't any jobs to be had.

In a very real sense, the country is already bankrupt. And even many Greeks are saying what's been obvious to me for quite some time. They'd be far better off defaulting on their debts,going back to the drachma and starting fresh. No one is going to lend Greece money or buy their public debt anyway for quite some time.Provided they make necessary reforms, reign in corruption,cut the public sector sharply and take steps to make Greece a preferred place to do business, getting out from under the euro might be the best thing that ever happened to them.

The country still has its gorgeous climate and its picturesque beaches, islands and scenery, and if they can manage to get their current law and order problem under control Greece has the potential to become a major tourist mecca for all budgets. In fact, tourism accounts for about 20% of the country's GDP right now as it is.

Greece also has its fishing industry, its shipping industry with the largest merchant navy in the world and the possibility of increasing its market share in commodities like olives and olive oil, tobacco, cotton and other agricultural products due to the reduced labor costs. And a fresh start might even encourage high tech companies to start making things like computers, cell phones and silicone chips in Athens.

The real downside of Greece defaulting is more of a problem for Germany, France and the other members of the euro zone. Once countries like Portugal, Italy, Spain and Ireland see the Greeks getting away with walking away from their debts, they're likely to make a move to do so too.

Germany Drawing Up Plans For Greece To Default And Leave The Euro

It seems Germany is finally ready to pull the trigger now that it's obvious Greece is likely to default on its debt with or without a second eurozone bailout:

But the severe austerity measures being demanded have caused such fury in Greece, and the cuts required are so deep, that Wolfgang Schäuble, the German finance minister, does not believe that any government would be able to implement them.

His pessimism has been tipped into despair with a secret European Commission, Central and IMF report that even if Greece made good on its promises, it would not be enough to reach the target of bringing total debt to 120 per cent of GDP by 2020.

"He just thinks the Greeks cannot do what needs to be done. And even if by some miracle they did what has been promised, he - and a growing group - are convinced it will not pull Greece out the hole," said a euro zone official.

Of course it won't...and it was never really intended to. That became obvious after the first bailout failed. Greece agreeing to reforms in exchange for billions of euros was one thing but implementation was always the problem, just as it's likely to be after another bailout. Demonstrations and riots in the streets, high unemployment, strikes, an unwilling bureaucracy and a power struggle as different politicians play football with the unrest all make Greece an unlikely candidate for instituting the reforms called for by what Greeks refer to as 'the German diktat'. At least one Greek politico is using stories of the Greek resistance against the Nazis as a rallying point.

Even if the Greeks did manage to implement all the reforms properly, the euro zone's own figures now show it would still fall short, with debt likely to total 129 per cent of GDP in 2020.

None of this was any secret even before the current crisis. However, the kabuki was needed because there are certain legal problems with kicking Greece out of the euro zone.Unless the country fails to honor its agreements to implement reforms and pay back its creditors as agreed. So the solution is to hold out the carrot of another bailout while asking for reforms that are impossible to implement and debt service levels that are unsustainable,nicht wahr?

Under the current austerity demands, 20% of Greek civil servants are going to lose their jobs, a substantial rise in unemployment where a major percentage of the country's labor force works in the public sector and unemployment is already at over 18%. The minimum wage would be cut sharply, public sector salaries would be slashed even further,pensions reduced, taxes raised and the defense budget slashed to the bone.

No Greek politician wants to have him or herself associated with this.

In Greece itself there have been widespread increases in crime. Greeks are heading into the national forests to cut firewood to get them through the winter, and a barter economy is becoming common in some parts of the country.Greece's National Gallery has already been burgled, and a gang of armed thieves looted a museum in Olympia on Friday, stealing bronze and pottery artifacts for sale. Meanwhile, many Greeks, especially those 25 and under with educational qualifications or practical skills like plumbing or electrical work are leaving the country, because there simply aren't any jobs to be had.

In a very real sense, the country is already bankrupt. And even many Greeks are saying what's been obvious to me for quite some time. They'd be far better off defaulting on their debts,going back to the drachma and starting fresh. No one is going to lend Greece money or buy their public debt anyway for quite some time.Provided they make necessary reforms, reign in corruption,cut the public sector sharply and take steps to make Greece a preferred place to do business, getting out from under the euro might be the best thing that ever happened to them.

The country still has its gorgeous climate and its picturesque beaches, islands and scenery, and if they can manage to get their current law and order problem under control Greece has the potential to become a major tourist mecca for all budgets. In fact, tourism accounts for about 20% of the country's GDP right now as it is.

Greece also has its fishing industry, its shipping industry with the largest merchant navy in the world and the possibility of increasing its market share in commodities like olives and olive oil, tobacco, cotton and other agricultural products due to the reduced labor costs. And a fresh start might even encourage high tech companies to start making things like computers, cell phones and silicone chips in Athens.

The real downside of Greece defaulting is more of a problem for Germany, France and the other members of the euro zone. Once countries like Portugal, Italy, Spain and Ireland see the Greeks getting away with walking away from their debts, they're likely to make a move to do so too.

Athens On Fire

Under severe pressure by Germany and the other EU nations, the Greek parliament finally agreed to the harsh austerity program the EU demanded in exchange for yet another €130bn bail out:

( Greek PM)Mr Papademos warned earlier the €3.3bn package of cuts was “the only alternative to a catastrophic default ... that would force Greece, sooner or later, to leave the euro.”

“The social cost of this package is limited in comparison with the social and economic disaster that would follow if it is not adopted,” he said.

Lawmakers voted 199-74 in for the cutbacks, but with heavy dissent among the two main coalition members.

In response, the Socialists expelled 22 members and the conservatives expelled 21 lawmakers, reducing their majority in the 300-seat parliament from 236 to 193.

Intense rioting broke out in Athens as the new of the vote circulated, and has reportedly spread to the islands of Corfu and Crete, the northern city of Thessaloniki and towns in central Greece, the worst hit town in that part of the country being Volos, where the town hall and other buildings were burned to the ground.

Among other things, the new cuts call for cutting one in five civil service jobs and slashing Greece's minimum wage by more than 20 per cent.In exchange, as part of the new bail out package Greek bond holders agree to take a 'haircut' of 70 per cent of the value of their holdings.It will be years before anyone buys Greek bonds again.

In Athens,crowds of rioters set bonfires in front of parliament and only squads of dozens of riot police formed lines kept them from making a run on the building. The police fired fired dozens of tear gas volleys at rioters, who attacked the police with firebombs and chunks of marble broken off the fronts of luxury hotels, banks and department stores.

Masked rioters also attacked a police station with firebombs and stones.

Streets all over Athens were strewn with stones, smashed glass and burnt wreckage, while terrified passers-by sought refuge in hotel lounges and cafeterias.Looting was wide spread as shop windows were smashed, with the police occupied in guarding Parliament,City Hall and other public buildings.

Money quote from one rioter via Twitter: "I hate the deal. Maybe if I wreck this city I can get a job in construction building it up again."

Athens On Fire

Under severe pressure by Germany and the other EU nations, the Greek parliament finally agreed to the harsh austerity program the EU demanded in exchange for yet another €130bn bail out:

( Greek PM)Mr Papademos warned earlier the €3.3bn package of cuts was “the only alternative to a catastrophic default ... that would force Greece, sooner or later, to leave the euro.”

“The social cost of this package is limited in comparison with the social and economic disaster that would follow if it is not adopted,” he said.

Lawmakers voted 199-74 in for the cutbacks, but with heavy dissent among the two main coalition members.

In response, the Socialists expelled 22 members and the conservatives expelled 21 lawmakers, reducing their majority in the 300-seat parliament from 236 to 193.

Intense rioting broke out in Athens as the new of the vote circulated, and has reportedly spread to the islands of Corfu and Crete, the northern city of Thessaloniki and towns in central Greece, the worst hit town in that part of the country being Volos, where the town hall and other buildings were burned to the ground.

Among other things, the new cuts call for cutting one in five civil service jobs and slashing Greece's minimum wage by more than 20 per cent.In exchange, as part of the new bail out package Greek bond holders agree to take a 'haircut' of 70 per cent of the value of their holdings.It will be years before anyone buys Greek bonds again.

In Athens,crowds of rioters set bonfires in front of parliament and only squads of dozens of riot police formed lines kept them from making a run on the building. The police fired fired dozens of tear gas volleys at rioters, who attacked the police with firebombs and chunks of marble broken off the fronts of luxury hotels, banks and department stores.

Masked rioters also attacked a police station with firebombs and stones.

Streets all over Athens were strewn with stones, smashed glass and burnt wreckage, while terrified passers-by sought refuge in hotel lounges and cafeterias.Looting was wide spread as shop windows were smashed, with the police occupied in guarding Parliament,City Hall and other public buildings.

Money quote from one rioter via Twitter: "I hate the deal. Maybe if I wreck this city I can get a job in construction building it up again."

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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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 Chinese Agree To Bail Out Eurozone..In Exchange For..

China has cleverly agreed to help the EU out of the pit it dug for itself...but with certain conditions.

They obviously want financial guarantees on their investment. What they also want is in essence a silent veto on criticism or opposition to China's policies, like its opposition to sanctions on Iran, any disagreements with the US or China's currency policy, which artificially undervalues the renminbi to support Chinese exports at the expense of western producers.

If they get that, China could be willing to throw substantial amounts into the EFSF, the EU's bailout fund. Another possibility that's being looked at is a new fund set up under China's auspices in collaboration with the IMF.

French President Sarkozy is already prepared to take China's terms. “Our independence would not be put into question by this,” he said in a television interview. “Why would we not accept that the Chinese had confidence in the eurozone and place a part of their surpluses in our funds or our banks? Would you rather they placed it with the US?”

If President Sarkozy seriously thinks the EU's independence won't be compromised by a deal with the Chinese, he's in for a rude awakening.

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The Chinese Agree To Bail Out Eurozone..In Exchange For..

China has cleverly agreed to help the EU out of the pit it dug for itself...but with certain conditions.

They obviously want financial guarantees on their investment. What they also want is in essence a silent veto on criticism or opposition to China's policies, like its opposition to sanctions on Iran, any disagreements with the US or China's currency policy, which artificially undervalues the renminbi to support Chinese exports at the expense of western producers.

If they get that, China could be willing to throw substantial amounts into the EFSF, the EU's bailout fund. Another possibility that's being looked at is a new fund set up under China's auspices in collaboration with the IMF.

French President Sarkozy is already prepared to take China's terms. “Our independence would not be put into question by this,” he said in a television interview. “Why would we not accept that the Chinese had confidence in the eurozone and place a part of their surpluses in our funds or our banks? Would you rather they placed it with the US?”

If President Sarkozy seriously thinks the EU's independence won't be compromised by a deal with the Chinese, he's in for a rude awakening.

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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.

please donate...it helps me write more gooder!

Hippocrates cartoon