Sox First

© phault

Get ready for Greece's third bailout. Business commentator Alan Kohler writes that this latest exercise giving Greece a bailout is an exercise in wishful thinking. "As for the latest Greek bailout, nobody seriously believes it will hold. The forecasts on which it is based assume GDP contraction of 1 per cent in 2013 and growth of 1.4 per cent in 2014, which means a return to growth sometime late next year. This, to say the least, is a heroic assumption considering its GDP shrank at a horrible annual rate of 7 per cent in the December quarter and the government must now impose further budget cuts of €325 billion. But even with these assumptions, Greece's debt only gets as low as 157 per cent of GDP before starting to rise again, and certainly not down to the required level of 120 per cent. And since private bondholders have been subordinated to government lenders (because the ECB has refused to take a haircut) they won't be back lending to Greece for a long time, if ever. Greek GDP is now about €220 billion and falling. It has a persistent current account deficit, increasingly impoverished citizenry, massive capital flight and a bankrupt government. It is going nowhere fast."

In a sense, as blogger Bill Mitchell says, this latest bailout amounts to an effective default. "The terms of the deal are obvious – private debtors will be coerced by the threat of a 100 per cent loss into accepting a 53.5 per cent reduction (the so-called "haircut") on the face value of their Greek public bond holdings. That is a €107 billion default. Further, the creditors will be asked to accept new long-term bonds which have lower returns than originally promised in December. This part of the default will be worth around €100 billion if it all went to plan.

The Open Europe blog makes the point that Greek banks don't have enough money because their main source of capital (government bonds) has now been wiped out significantly. This means we will need a bond restructuring, and that will be a minefield. "The one thing that is clear is that even if this bailout is 'successful', it will set Greece up for a decade of painful austerity and low growth leading to social unrest, while the eurozone will have to provide on-going transfers to help it keep its head above water."

© stoneysteiner

Good luck if you manage to do it. According to The Guardian, Facebook bans images of breastfeeding if nipples are exposed. However, it allows "graphic images" of animals if shown "in the context of food processing or hunting as it occurs in nature". "Equally, pictures of bodily fluids – except semen – are allowed as long as no human is included in the picture; but "deep flesh wounds" and "crushed heads, limbs" are OK ("as long as no insides are showing"), as are images of people using marijuana but not those of "drunk or unconscious" people."

The Guardian describes it as something that indicates "that the sometimes arbitrary nature of picture and post approval actually has a meticulous – if faintly gore-friendly and nipple-unfriendly – approach."

Facebook's zealousness in banning content has been a subject of much controversy. Last year, Facebook was criticised for removing a picture of two men kissing. And this year, it got in trouble when it suspended the accounts of women who had posted pictures of themselves breastfeeding.

According to Gawker, part of the problem is that the moderating of content is outsourced to third world countries, which all fits in with Facebook's secretiveness about how it vets material that people put up.

It might be forced to change that when it becomes a listed company.

© Tilemahos_E

The world has heaved a sigh of relief that Eurozone ministers have sealed a 130-billion-euro ($172 billion) bailout for Greece to avert a massive default never moth after persuading private bondholders to take bigger haircuts and persuading Athens to commit to deep cuts. Don't hold your breath, it's not going to work.

Peter Spiegel from the Financial Times has obtained a confidential 10-page memo distributed to senior officials in Europe over the last week, which lays out the truth. The memo spells things out in no uncertain terms and suggests Greece will probably need another bailout after this one. Spiegel says the document makes it clear that Greece won't be able to climb out of this debt hole. "It warned that two of the new bail-out's main principles might be self-defeating. Forcing austerity on Greece could cause debt levels to rise by severely weakening the economy while its €200bn debt restructuring could prevent Greece from ever returning to the financial markets by scaring off future private investors. 'Prolonged financial support on appropriate terms by the official sector may be necessary,' the FT said."

In other words, the medicine being fed to Greece, driving down wages and costs through austerity measures to make the Greek economy more competitive internationally, will lead to higher debt levels in the near term that may never be overcome.

Arjuna Mahendran from HSBC has spelled it pretty clearly. It's not the deal that will save the global economy. "Greece has gradually become less relevant over the last few weeks. It's also to do with the fact that other European countries, the troika i.e. the EU, the IMF and the ECB have effectively ring fenced Greece from having any repercussions on its neighbours in Europe if it were to default."

What he should have added is that Greece has been ring fenced for now. This deal just buys time. The Greek government won't pull it off so there'll be another bailout. Greece will be reduced to permanent beggar state.