NOTHING NEW

We will see what the central banks have to say tomorrow although it's not a very hard guess.  We might also look to news from Athens although that's not realling important any more as I have been saying.  Therefore, why don't we just solve the Greek problem by taking a page from catastrophies of long ago.

Look, nothing in a conventional sense is going to help Greece: it still has too much debt and too little growth.  Throwing them out of the Eurozone would be easy and relatively inexpensive.  Forget about what the geniuses on tv and in the papers are telling you; the Germans have already done he numbers. What scares everyone is the threat of contagion--if Greece goes, who's next--and that is a real concern if your aim is to hold the Eurozone together.  Look at Euroland and Greece as two seperate but interconnected problems.  If you can isolate Greece from the far more important Euroland Inc., you have a chance...a chance mind you...of bringing the latter problem under control.  Think Mexico, c.1983.

Mexico had two forms of debt, soverign and bank, the latter although nationalized, still was considered a seperate stock of debt.  If interbank lending was not continued, Mexican banks would collabse and bring the soverign debt down with it.  To preven this from happening a "gentleman's agreement" was reached: Mexican banks would refuse to repay interbank loans upon maturity and lenders would agree to roll over the advances outstanding and not accept repayment.  It was nuts but it actually worked.  Fear is a highly motivating factor.  Greece is Euroland's Mexican Banks so why don't we try something like this:

Restructure all the Greek debt for something like 30 years at 1%.  As part of the agreement Greece will agree not to attempt to buy back their debt at a discount for, say, five years and the obligees will agree to hold their debt until maturity.  Mark to market?  Nah.  The accountants will agree to make it inapplicable just like in 1983 if leaned upon and certainly the banks will not object if there is no need to engage in write-downs.  Will all parties be telling the truth and adhear to the agreements?  Of course not, but who cares.  The problem will resolve itself within the market which is as things should be.  At this point, Euroland can say bye-bye to the Greeks: if you want to stay in fine with us but no more money.  You are on your own.  Screw it up again and you're toast.  The fact that you still owe a gazillion Euros is of no consequence because any obligee with a brain in it's head will have the opportunity to reserve against insuing loss a little at a time over 30, 40, or 50 years which is no loss at all.  So au revoir, Greece and have a GREAT future.  We'll hold a meeting down in your parts from time to time as long as you keep Santorini available in February.  I think it's a wonderful idea, but I guess we have to wait to see what comes out of the talks with the Troika.

And of course, Thursday looms.  Let me reiterate; they better come up with something good otherwise there will be hell to pay.  Can't wait.