Monday, July 6, 2015

Barry Ritholtz — Greeks Stand Up to 'Lemon Socialism'

What the EU has foisted upon Greece appears to be a thinly disguised rescue for private sector (primarily German) lenders, not a plan for the future of Greece.
You may not be familiar with the phrase "lemon socialism," but that is precisely what this is: private profits and socialized losses....
Excellent post by Barry Ritholtz. Kudos.

Bloomberg View
Greeks Stand Up to 'Lemon Socialism'
Barry Ritholtz

2 comments:

mike norman said...

He cites Steve Randy Waldman, but we have been saying the same thing here for a long time.

Matt Franko said...

But how is this a "bailout"?

iow a member bank can have reserves AND/OR bonds ... BUT the CBs cannot have reserves the CBs only ISSUE reserves... iow a CB cannot have reserves...

The CBs operate off the NIM they make off the portfolios and the portfolios cannot be comprised of reserves but only bonds that they issue reserves against to buy them...

So all the CBs are doing is stepping in front of the member banks and buying the bonds and leaving the members with the reserves.. this is the same thing the US Fed is doing with the QE and that is NOT a "bailout" its simply the way the system is set up by these people to operate... good or bad... imo bad but it is not a "bailout"

Waldeman and Ritholtz want to turn everything into a "bailout".... they are like Taibbi wannabes with the "bailout schtick"...

iow if we would say "hey! no bailouts!" what would we have them do? Not let the CBs buy the bonds? ok, then the member banks and savers just buy the bonds and rake in the interest and redemptions instead of the CBs... so what?

The balances either have to be in reserve accounts or bond accounts (no where else they can be!!!) ... if they are in a reserve account it is not a "bailout" its simply so-called "monetary operations" of the ESCB...

If the Greek govt bonds default, it is just as big a financial problem for the CBs or IMF that might hold them as it would be for a member bank or saver that might hold them... those institutions would be in BIG trouble...

so where is the "bailout"?????