Tag Archives: Greece

How Many Euro Crises Will This Make? It’s Getting Hard To Keep Track, by John Rubino

Sooner or later, Europe and its euro will collapse under its debt load. From John Rubino at dollarcollapse.com:

Every few years, it seems, one or another mismanaged eurozone country falls into one or another kind of crisis. This leads to speculation about the end of the common currency, which in turn spooks the global financial markets. Then the ECB conjures another trillion euros out of thin air, buys up and/or guarantees all the offending country’s bonds, and calm returns for a while.

At least, that’s how it’s gone in the past.

The latest crisis has more than the usual number of flash-points and could, therefore, be something new and different. Currently:

Greece. This charming but apparently ungovernable country only got into the eurozone in the first place because its corrupt leaders conspired with Goldman Sachs to hide the true condition of the government’s finances. It quickly blew up and has been on intensive care ever since. Now the latest bailout has become deal-breakingly messy:

‘From bad to worse’: Greece hurtles towards a final reckoning

(Guardian) – With another bailout set to bring more cuts, quitting the euro is back on the agenda.

The country’s epic struggle to avert bankruptcy should have been settled when Athens received €110bn in aid – the biggest financial rescue programme in global history – from the EU and International Monetary Fund in May 2010. Instead, three bailouts later, it is still wrangling over the terms of the latest €86bn emergency loan package, with lenders also at loggerheads and diplomats no longer talking of a can, but rather a bomb, being kicked down the road. Default looms if a €7.4bn debt repayment – money owed mostly to the European Central Bank – is not honoured in July.

Amid the uncertainty, volatility has returned to the markets. So, too, has fear, with an estimated €2.2bn being withdrawn from banks by panic-stricken depositors since the beginning of the year. With talk of Greece’s exit from the euro being heard again, farmers, trade unions and other sectors enraged by the eviscerating effects of austerity have once more come out in protest.

To continue reading: How Many Euro Crises Will This Make? It’s Getting Hard To Keep Track

A World of Problems, by The ZMan

Europe is facing a banking crisis, a reappearance of Greece’s financial crisis, and a crisis in Syria. Hold on to your hats. From The Zman at theburningplatform.com:

Back when the Germans were threatening to shut down Greece and sell it off for parts, it was fairly obvious that there was no way to “fix” the Greek problem. Even it were possible to radically overhaul their public sector, the debt payments are too high to maintain the level of social services expected from a modern social democracy. Default was unthinkable because close to 80 percent of Greece’s public debt is owned by public institutions, primarily the EU governments and the ECB.

The “solution” was to kick the can down the road until a miracle happened, but now the problem is back.

ATHENS—Greece’s economic recovery is proving elusive, challenging the forecasts of the country’s government and foreign creditors still counting on growth reviving this year.

The International Monetary Fund said last week that the economy is stagnating, in the first admission from creditors that Greece’s recovery is off track again. Growth will only restart next year, the head of the IMF’s team in Greece said on a conference call with reporters, without offering details.

Of particular concern is that exports, which are supposed to lead Greece out of trouble, are on a slow downward trajectory, hampered by capital controls, taxes and a lack of credit.

“There is no chance we will see a rebound unless we see some bold political decisions that would introduce a more stable business environment,” said Dimitris Tsakonitis, general manager at mining company Grecian Magnesite.

The bailout agreement between Greece and its German-led creditors assumes rapid growth from late 2016 onward, including an official forecast of 2.7% growth in 2017. Private-sector economists believe next year’s growth could be closer to 0.6%.

Weaker growth would undermine the budget, likely leading to fresh arguments with lenders about extra austerity measures.

Greece is still grappling with the measures it has already agreed to. Late on Tuesday the country’s parliament approved pension overhauls and other policy changes that have been delayed for months, holding up bailout funding.

Greek government officials are sticking to their view that the economy is on the cusp of growth. “We are at the turning point at which we can we say with certainty that we are leaving the recession behind us,” Economy Minister George Stathakis told supporters of the ruling left-wing Syriza party Sunday.

The economy will get a push from investors as of the end of the year, when lenders are expected to provide some debt relief and the country qualifies for a European Central Bank bond buyback program, Prime Minister Alexis Tsipras said in an interview with The Wall Street Journal last week.

In other words, the miracle did not happen and the problem is now worse. This comes at a time when Europe’s biggest bank is in very serious trouble.

To continue reading: A World of Problems

Greece Is A Nation Under Occupation, by Raúl Ilargi Meijer

From Raúl Ilargi Meijer at automaticearth.com:

Perhaps the best way to show what a mess Europe is in is the €3 billion deal they made with Turkey head Erdogan, only to see him being unmasked by EU archenemy Vlad Putin as a major supporter, financial and who knows how else, of the very group everyone’s so eager to bomb the heebees out after Paris. It could hardly have been more fitting. That’s not egg on your face, that’s face on your egg.

But Brussels thinks it’s found a whipping boy for all its failures. Greece. It’s fast increasing its accusations against Athens’ handling of the 100s of 1000s of refugees flooding the country. Everything that goes wrong is the fault of Greece, not Brussels. The EU has so far given Greece €30 million in ‘assistance’ for the refugee crisis, while the country has spent over €1.5 billion in money it desperately needs for its own people. But somehow it’s still not done enough.

The justification given for this insane shortfall is that Greece doesn’t blindly follow all orders emanating from Europe’s ‘leaders’. Orders such as setting up a joint patrol of the Aegean seas with … yes, Erdogan’s Turkey. Where Greece gets next to nothing as the children keep drowning, Turkey gets €3 billion and a half-baked promise to join the Union sometime in the future.

Which was never going to happen, the EU would blow up before Turkey joins and certainly if it does, and most certainly now that Russia’s busy detailing the link between the Erdogan cabal and Europe’s supposed new archenemies -move over Putin?!, which, incidentally, are reason for France to ponder a kind of permanent state of emergency; ostensibly, this is Hollande’s way of exuding confidence. ‘We must protect our way of life’.

Given Schengen -while it lasts-, which effectively erases all frontiers, this de facto means permanent emergency across the entire EU. And that, to a degree, though the two may seem unrelated, plays into the EU’s insistence to station foreign border guards (military police) at Greek borders. A, we can’t put it in different words, completely insane demand to which Alexis Tsipras’ government has apparently even acceded.

Insane because once you have foreigners deciding who can enter or leave your country, you’re effectively a country under occupation. It really is that simple. This latest attempt at power grabbing on the part of Brussels could have some ‘unexpected side effects’, though. And that may be a good thing.

To continue reading: Greece Is A Nation Under Occupation

Jim Chanos on What Lies Ahead for Greece, by Lynn Parramore

Jim Chanos, a hedge fund manager, made a fortune shorting Enron. He’s been a leading China skeptic, which is looking more and more like another good call. His heritage is Greek and he has made many visits to Greece. Remember Greece? It’s for the most part dropped out of the headlines. This interview of Chanos with Lynn Parramore at inteteconomics.org offers an opportunity to circle back.

Jim Chanos, the well-known hedge fund manager and president and founder of Kynikos Associates, is half Greek on his father’s side. He has been traveling to the country since 1970 and has also been active in the Greek community in the United States. A long-time observer of Greece, he became more involved in 2010 when he was part of a group that met with then-prime minister Papandreou to offer some pro bono advice. Since then, he has been watching closely from the sidelines with increasing levels of concern. In the following interview, he discusses how Greece reached this point of crisis, the upcoming elections, and what lies ahead.

LP: You’ve recently returned from a trip to Greece to visit family and friends. How did you find the mood in the country?

JC: It was grim — away from the vacation spots, of course, which are more international than domestic locations. I’d gotten there just after they’d finally agreed to sign the third memorandum. There was a general sense of resignation and not knowing what else they can do. The feeling of the people I spoke to — whether high level or people in restaurants and tavernas — was that they [the Troika] have them by the short hairs because of the banking system. And I think that was pretty clear. Really, there was no sense of any chance of this working out with an alternative currency. To this day we’re really not quite sure whether they had that planned — various reports differed as to whether they could have even done it — but I think that there’s just this general level of resignation coupled with despair amongst people worried about the long-term growth of the country and its well-being. People are worried about their kids, as they should be.

LP: I think pretty much everybody agrees that the negotiations with the Troika have been a fiasco. How do you assess what’s happened? Who is to blame?

JC: It’s important to understand that while Syriza may have botched the negotiations —and I do I think there’s a general consensus that they did or at least didn’t play it as well for their country as they could have — they didn’t cause this mess.

When the first memorandum was signed and then agreed to by PASOK and Papandreou, and then the follow-on was agreed to by Samaras and New Democracy to the right, in effect they were the same types of understandings. But they couldn’t work from the get-go because, as we now know, there was no net new money in any meaningful way coming into Greece. Whatever new capital was coming in was just a way to keep the banks current. It was going in the front door and out the back door.

Greece really did a decent job from an austerity point of view. They brought down spending, they raised taxes. I know there’s this belief that the Greeks are just world-class tax evaders, but in fact, in terms of taxes collected as a percentage of GDP, they’re now quite a bit higher than a number of European countries because a lot of the taxes are indirect: the Greeks couldn’t evade them if they wanted to. They also cut spending dramatically. Can you imagine what would happen in the U.S. if you cut spending by 20 or 30 percent and cut Social Security? You’d have riots in the streets, more so than we ever saw in Greece.

So this country has gone through a lot of pain. The beginning of the endgame was actually a year ago, in August and September under Mr. Samaras. At the time, even he realized that under the second agreement he needed more breathing room. Greece’s economy did actually begin to show some improvement in 2013, but by 2014, it was hitting stall speed again. What all sides agree — center-left, center-right, and far-left — is that there were lots of investment projects that actually could have paid off really big time in terms of immediate returns to the economy and investors. They just couldn’t get capital. No private investors wanted to come forward in light of everything that was going on with negotiations and uncertainty about the currency. In addition to trying to get some relaxation under the original agreements to get some breathing room, the Greeks were also trying to get a separate track for investment and venture capital. The response was immediate and brutal.

Schäuble and Merkel immediately threw Samaras under the bus in September of ‘14. It was like they were saying, you’re backtracking now: we thought you were one of the good guys and we thought you were going to toe the line but you’re just like everybody else. That began the whole unraveling, from my perspective, of the New Democracy coalition government (the right-center government) and basically led to Syriza’s election in January. Now Syriza comes in and feels it has a mandate. People want change. Varoufakis, under Tsipras’s guidance, approaches the Troika in February and said look, we need breathing room. The previous government said that and we say that. We see the numbers. We want to work within the spirit of the agreement, but you have to give us some concessions because this is just not working.

As it was relayed recently to a group of us (Greek Americans) in Washington, the Troika was initially receptive to Varoufakis. They said, all right, we’ll think about it. But as soon as it sort of got public — the date that comes to mind is February 20 th of this year — it got immediately batted down from that initial private reception to a public rejection. You will toe the line, you will agree to the previous agreement. There’s no wiggle room. The Tsipras government, Syriza, put out a set of counterproposals in March that, while there were a couple of items that were “out there” and were not going to fly from the beginning like a thirteenth month of pension payments, there was a lot of reasonable stuff, and stuff that people on the right thought was actually reasonable in terms of collections and whatever. The counterproposals were rejected outright. At that point it became apparent to me and others that this wasn’t about economics or finance anymore,

This was political. Greece was going to be made an example so that Italy, Spain, Portugal, and France — who, let’s be clear, are one bad recession away from where Greece is today — better toe the line, or else. No wiggle room. No let up. The beatings will continue. All that was very clear from the negotiations from March on. Any time there was any sort of proposal, well, it was said to be about personalities. It was this or it was that. Greece never stood a chance, because, of course, their banking system was being kept alive by the ELA, the emergency liquidity assistance that the European Central Bank provides. In effect, a huge amount of deposits in Greek banks were from the ECB. They could close the banking system in a minute, which they basically did in July. So this really was sort of preordained, I think, come February of 2015. The invitation to negotiate and then the abrupt about-face at the end of February told me, anyway, that this was a political decision.

Germany had decided to cut Greece loose in terms of negotiating in good faith; this is our offer, take it or leave it. If you want to stay in the euro, you’ve got to continue the austerity.

To continue reading: Jim Chanos on What Lies Ahead for Greece

Greece is being taxed to death, by Alan Reynolds

For all the discussion about Greece the last several months, one subject rarely gets mentioned: the Greek tax burden. It is high, punitive even, and the recently agreed deal will make it even higher and more punitive. From Alan Reynolds, at politico.eu:

No debtor ever became more creditworthy by being forced to accept less income.

More than five years have passed since May 2010, when Greece was enticed to borrow €73 billion from the International Monetary Fund (IMF), European Commission (EC) and European Central Bank (ECB) with painful strings attached.

That 2010 program, said the IMF, “had two broad aims: to make fiscal policy and the fiscal and debt position sustainable, and to improve competitiveness.” There was no emphasis on improving domestic economic growth or employment — just “competitiveness” in trade. The IMF speculated that “restoring confidence” would “lead to a growth recovery” in 2012. When that didn’t happen, another €154 billion in loans was provided. And the IMF blamed the bad “investment climate” on a “lack of confidence,” rather than any lack of after-tax income.
Prominent U.S. economists blame the seven-year depression in Greece on savage cutbacks in government spending. “The contraction in government spending has been predictably devastating,” wrote Joseph Stiglitz in February. And Paul Krugman later criticized the period “from 2009 to 2013, the last year of major spending cuts” in Southern Europe. In reality, however, Greek government spending rose from 44.9 percent of GDP in 2006 to 53.7 percent from 2009 to 2012 and to 60.1 percent in 2013. That 2009-2013 “fiscal stimulus” was precisely when the economy contracted — by 4.4 percent in 2009, 5.4 percent in 2010, 8.9 percent in 2011, 6.6 percent in 2012 and 3.9 percent in 2013. By contrast, the economy grew slightly in 2014 when government spending was “only” half of GDP. That is, the economy fell when government’s share rose, and the economy rose when government’s share fell.

What is rarely or never mentioned in the typically one-sided misperception of spending “austerity” is the other side of the budget — namely, taxes.

The latest Greek efforts to appease creditors would raise corporate tax again to 28 percent, raise the 5 percent “solidarity surcharge” on personal incomes, and discourage tourism by raising the VAT on restaurants and island shopping.

Looked at separately, each of these suffocating tax rates might appear almost reasonable. Looked at together, they are totally unreasonable. To offer a Greek employee an extra €100 requires that €42 be first subtracted for Social Security tax, and then up to €46 more subtracted for income tax. Out of the original €100 of marginal labor cost, the remaining €14 of after-tax income going to a skilled worker could only buy about €10 worth of goods after value-added tax is paid.

The tax wedge between what employers pay for labor and what workers have left to spend, after taxes, is 43.4 percent for a Greek family of four with average earnings — the highest in the OECD and more than double the comparable U.S. wedge of 20.6 percent. This demoralizing tax wedge, which grows even larger at higher incomes, clearly depresses hiring and working in the formal economy. It also helps explain why a third of the Greek labor force is self-employed (making tax avoidance easier).

Little wonder that Greece has been suffering a massive brain drain — with hundreds of thousands of the best and brightest emigrating in recent years, including many doctors. At least a fourth of the remaining Greek economy survived by going underground, but that “shadow economy” ran on cash and banks are now sternly rationing cash withdrawals and transfers to delay capital flight.

To continue reading: Greece is being taxed to death

Greece should seize Germany’s botched offer of a velvet Grexit, by Amrose Evans-Pritchard

Ambrose Evans-Pritchard at telegraph.co.uk hits the nail on the head:

One day we will learn the full story of what went on at the top levels of the German government before the villenage of Greece last weekend.

We already know that the EMU accord – if that is the right word – is an economic and diplomatic fiasco of the first order. It does serious damage to the moral credibility of the EU but resolves nothing.

There is not the slightest chance that Greece will be able to stabilize its debt and return to viability under the Carthaginian settlement imposed on Alexis Tsipras – after 17 hours of psychological “water-boarding”, as one EU official put it.

The latest paper by the International Monetary Fund has torn away the fig-leaf. The country needs a 30-year moratorium on debt payments and probably outright subsidies to recover from the devastation of the past six years.

Instead it gets pro-cyclical fiscal contraction of 2pc of GDP by next year.

Some are already comparing the terms to the Versailles Treaty but this does not quite capture the depravity of it. The demands imposed on Germany in 1919 were certainly vindictive and narrow-minded – as Keynes rightly alleged – but they were not, on the face of it, beyond reach.

France was forced to pay reparations after the Franco-Prussian War in 1871 that were roughly equivalent to Versailles, albeit in very different circumstances. It dutifully did so, while plotting revenge.

What Greece is being asked to do is scientifically impossible. Almost everybody involved in the talks knows this. Yet the lie goes on because the dysfunctional nature of EMU politics and governance makes it impossible to come clean. The country is dishonestly kept in a permanent state of crisis.

Wolfgang Schauble is one of the very few figures who has behaved honourably in this latest chapter. As readers know, I have been highly critical of the hard-bitten finance minister for a long time, holding him directly responsible for the 1930s regime of debt-deflation and contraction imposed on much of Europe, and for refusing to accept that the eurozone’s North-South divide must be closed by both sides. Any policy that puts all the burden of adjustment on the South is destructive and doomed to failure.

To continue reading: Greece should seize Germany’s botched offer

IMF Rips Pandora’s Box To Shreds, Demands Greek Debt Relief “Far Beyond What Europe Has Been Willing To Consider”, by Tyler Durden

The first two sentences run on and on, but this Zero Hedge article offers a good summary of the IMF’s view of Greek debt. From Tyler Durden, at zerohedge.com:

Earlier today, Reuters first leaked that just two weeks after the IMF released its first revised Greek debt sustainability report, one which the Eurogroup desperately tried to squash as it urged for a 30% debt haircut and came hours before the Greek referendum vote giving the Oxi camp hope and crushing Tsipras’ carefully laid plan to lose the vote and capitulate with integrity instead of having to capitulate a week later after 17 hours of “mental waterboarding” and have his reputation torn to shreds, the IMF would release a follow up report updating its view on the Greek economy which in just two short weeks of capital controls has utterly imploded.

Just like the first IMF report, which we correctly compared to the opening of a Pandora’s box, and with which the IMF also obliterated the careful plans of the Troika, so with this follow up the IMF effectively crushes the glideslope of the latest Greek bailout process barely scraped together on Monday morning and has torn Pandora’s box to shreds with the following summary assessment: “Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.”

Yes, debt relief… just the others’ debt: not the IMF’s, please.

So what just happened?

As of this moment the IMF is telling Greece that if nothing changes, it will die of cancer with 100% certainty; on the other hand the Eurogroup is telling Greece it will die of a heart attack also wih 100% certainty if anything changes.

Good luck with the choice.

To continue reading: IMF Rips Pandora’s Box To Shreds

The Curse Of The Euro: Money Corrupted, Democracy Busted, by David Stockman

David Stockman saves SLL the trouble and mauls the Greek-EU debt agreement. SLL may well take a break from this topic until the agreement meets its inevitable political or economic failure. From Stockman at davidstockmanscontracorner.com:

The preposterous Gong Show in Brussels over the weekend was the financial “Ben Tre” moment for the Euro and ECB. That is, it was the moment when the Germans—–imitating the American military on that ghastly morning in February 1968——set fire to the Eurozone in order to save it.

Some day history will judge good riddance……..but that get’s ahead of the story.

According to an American soldier’s first hand recollection of the Vietnam event, it was a Major Booris who infamously told reporter Peter Arnett, “It became necessary to destroy the town to save it”.

After the massacre of Greek democracy in the wee hours Monday morning, Angela Merkel said the same thing—even if her language was a tad less graphic:

“It reflects the basic principles which we’ve followed in rescuing the euro. It now hinges on step-by-step implementation of what we agreed tonight.”

Now no one in their right mind could think that lending another $96 billion to an utterly bankrupt country makes any sense whatsoever. After all, the Greek economy has shrunk by 30% since 2008 and is wreathing [sic] under what is objectively a $400 billion public debt already in place today.

That figure follows from the fact that on top of Greece’s acknowledged $360 billion of general government debt there’s at least another $25 billion loan embedded in the ELA advances to the Greek banking system. The latter is deeply insolvent, meaning that some considerable portion of the $100 billion ELA currently outstanding is not an advance against good collateral in any plausible banking sense of the word, but merely a backdoor fiscal transfer from the ECB to keep Greece’s financial shipwreck afloat.

Likewise, as I demonstrated Friday, given the even deeper deep hole into which the Greek economy has tumbled during the last six months, the fiscal targets extracted from Greece under this weekend’s demarche are utterly ridiculous. Indeed, even if the targeted primary surpluses of 1,2,3 and 3.5% of GDP are miraculously reached through 2018, upwards of $15 billion of budget deficits after interest accruals would be incurred anyway, and a lot more than that if there are material budget shortfalls, which is a virtual certainty.

So even before the latest dose of Troika economic punishment further debilitates its economy, Greece at this very moment has a de facto public debt of $400 billion sitting atop $200 billion of GDP.

To continue reading: The Curse of the Euro: Money Corrupted, Democracy Busted

He Said That? 7/13/15

From German philosopher, cultural critic, poet, composer, and Latin and Greek scholar Friedrich Wilhelm Nietzsche:

Eveything that is ponderous, vicious and pompously clumsy, all long-winded and wearying kinds of style, are developed in great variety among Germans.

There is something to Mr. Nietzsche’s condemnation of his countrymen. The Germans have long complained about the harsh terms imposed on them in the Treaty of Versailles after WWI. The complaint is valid. John Maynard Keynes savaged the treaty and predicted another war in The Economic Consequences of the Peace.  The burdens of debt and financial reparations contributed to German hyperinflation and the severity of the Great Depression in Germany. Economic hardship was in part, but only part, responsible for the rise of Hitler.

One of the lesser known WWII depredations of Hitler and the German Army came after the Germans overcame fierce Greece resistance and occupied the country from 1941 through 1944. The Germans took everything of value that wasn’t nailed down, including food. There was probably no deliberate plan of extermination, but between 250,000 and 300,000 Greeks died from famine. The Germans also took control of the Bank of Greece and inflicted a hyperinflation that rivalled their own hyperinflation. In 1941, a  British sovereign, a gold coin weighing not quite one-quarter ounce and worth a pound sterling, was worth 1,200 drachmas. When Germany left Greece in 1944, a sovereign was worth 71 trillion drachmas.

Learning something from WWI, in 1953 German creditors granted Germany relief from war debts, reducing principal, limiting repayment to times when Germany ran a trade surplus, and limiting repayment to 3 percent of export earnings. This created an incentive for creditor nations to buy German exports, and eventually the German economy took wing and Germany repaid the entire amount of the reduced debt, including debt that only became due when Germany was reunified.

Given its own history—the Treaty of Versailles, hyperinflation and the Great Depression, the famine, ruin, and hyperinflation inflicted on Greece, and the rescheduling of its debts after WWII allowing repayment on preferential terms—a certain humility and grace was to be expected from the Germans during the Greek debt negotiations. The Treaty of Versailles was vindictive, but understandable—Allied casualties in WWII were in the millions. The Greeks haven’t killed anybody, they’ve just lived beyond their means for years. The Germans well know the destructive economic, financial, and political repercussions that can befall a country struggling under a burden of debt for which payment is impossible. The Germans also well know the potential benefits of debt forbearance.

With the ponderousness, viciousness, and pompous clumsiness Nietzsche noted, the Germans gave not one concession, and seemed to delight in brutally humiliating the Greeks. They have sent Tsipras back to Greece with his tail between his legs, where he must try to sell his people on a deal worse than the one they just rejected. The overbearing Germans do not seem to realize that by acting as they have, they stoke Greek resentment and reduce the chances that the Greeks will accept their deal. Or perhaps that is their intent, and they want to see Greece exit the Eurozone in the most humiliating and punitive way possible. For the Greeks, there is only one appropriate gesture: the middle finger. For the Germans, there is only one appropriate word: schande.

Greek Pudding, by James Howard Kunstler

From James Howard Kunstler, of kunstler.com:

The proof of the pudding is in the eating, the old saw goes. This one, alas, is a mélange of several old shit sandwiches bound in a liaison of subterfuge and seasoned with political absurdities. Having been fooled in this bistro before, citizen-patrons leave the table resigned to yet another bout of food poisoning as the music of universal upchuck rings across the European Union from Helsinki to Lisbon

What is on display more brightly and clearly than ever, though, is the utter fakery of international banking. The players have lost faith in their own shenanigans. They simply go through the motions now awaiting the political fallout, which is to say the revolt of the people who can still do arithmetic. So, now Greece can supposedly expect another $90Billion-equivalent in new loans on top of the $350Billion-equivalent already racked up. That’s rich. The loan repayment schedule must look like a map of Middle Earth.

Most perplexing — especially for those on summer hiatus in which time seems to be suspended — is the fact that the rescue package will take weeks, perhaps months, to gin up while Greece is right now so utterly paralyzed in bankruptcy that no goods can move, no bills can be paid, and the economy cannot deliver the necessities of daily life. The old refrain, “your check is in the mail” may not be so reassuring to folks who haven’t eaten for three days. Personally, I would expect the gasoline bombs to be flying around Syntagma Square before the middle of the week.

Has anyone noticed the eerie paucity of news emanating from the other hard-luck nations of the EU, namely Spain, Portugal, Italy, and Ireland? The money hole that these deadbeats are in makes Greece look like a dimple in the sand. What, I wonder, is the message to them from the Greek negotiation melodrama? (Lend more money to real estate developers to build more houses and condos that will never be sold? That’ll work!) No, the entire EU debt fiasco harks back to the original meaning of “ring around the rosie” — a theme song of the Black Death. The eventual implosion of the European Union, and the banking system hugging its face vampire squid style, will be the financial equivalent of the Black Death. Kingdoms will fall and social systems will be turned upside down.

The agonizing wait for that outcome is obviously fraying the nerves of all concerned to the degree that all their exertions seem like little more than tragic and pointless exercises in futility — for instance, the terms arrived at in last weekend’s negotiations. Nobody has a shred of faith that they can or will be carried out. In effect, what they’ve done is put together a Potemkin framework allowing them to go just give up for a month or so and go on vacation.

That would, of course, set things up for a mighty financial convulsion in the autumn — history’s favorite season for ruin — when all the ministers and their factotums venture back to the dismal realities they left fermenting at the office. Of all the many things apt to happen, we can count at least on the current Greek government falling and a failure of Greece to make any gesture of repayment in their just-negotiated loan schedule. That would leave the “Troika” (the EU, the ECB, and the IMF) with zero credibility and initiate the epochal widespread repudiation of the entire EU loan structure — in short, the collapse of Europe.

That wouldn’t necessarily be the end of the world, but it would be the end of nearly seventy-year period of peace, prosperity, and stability. The sorting-out would be epic. The standard of living across Europe would sink to the level of the 1830s. The fundamentals of banking and currency would have to be rebuilt from ashes. More nations will break up into smaller units. Western intellectual life would suffer immense shock as all the certainties of the Enlightenment project seemed to go up in a vapor of insolvency and political upheaval. You have to even wonder whether Europe could defend itself against an onrushing Jihad.

But these are admittedly gloomy thoughts for a morning so early in summer. Myself, I’m going to shop for an outfit to wear to Diddy’s annual party in the Hamptons. Coonskin caps may be oddly coming back in style as people all over America try to emulate Donald Trump and the furry creature that lives on the top of his head. Something tells me that the ladies will not be buying many Hillary-style pantsuits. Wouldn’t it be cunning if Diddy’s caterer came up with something like miniature Greek Pudding bites? That would bring a real frisson to the doings, something to chat about besides the marketing genius of Kim Kardashian.

http://kunstler.com/clusterfuck-nation/greek-pudding/