Tag Archives: Greece

He Said That? 7/13/15

Posted on July 13, 2015 | 1 comment

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.

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Greek Pudding, by James Howard Kunstler

Posted on July 13, 2015 | Leave a comment

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/

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Tsipras Invites Schäuble To Fall Into His Own Sword, by Raúl Ilargi Meijer

Posted on July 12, 2015 | Leave a comment

Raúl Ilargi Meijer has made the Greek situation his focus the last month or two on the website automaticearth.com. He has had some good insights, although he apparently believes that the suffering of the Greek people justifies more European taxpayer largess. Yes, it is unfortunate, often heart-rending, that old people, their pensions cut, are digging in garbage cans and Greek hospitals and doctors lack necessary supplies. However, when your government spends more than it takes in for years, is corrupt, and fails to collect taxes, those sort of bad things happen. America will find out about it soon enough. When the shit really hits the fan, there won’t be enough money, even the kind conjured from thin air, to alleviate all the misery coming Europe and America’s way.

However, in this article, Meijer suggests an interesting possibility: that Alexis Tsipras has maneuvered his way brilliantly through the crisis, from the standpoint of both the negotiations and domestic Greek politics. He was elected in January with less than 40 percent of the vote. The electorate wanted to stay in the EU, but to forego austerity. The referendum gave him a mandate to reject further austerity. Tsipras then essentially agreed to the austerity package his voters had just opposed, contingent on some sort of debt reduction and restructuring. The IMF, one member of the hated “Troika,” had, just before the referendum, said Greece’s debt was unpayable and would need to be reduced and restructured, putting the IMF in opposition to the other two members, the EC and the ECB. Now, apparently, led by the Germans, Dutch, and Finns, the EU will not grant any reduction other than tweaks on maturities and interest rates, and are “suggesting” that Greece leave the Eurozone.

Tsipras is the same position as Lincoln after Fort Sumter or Roosevelt after Pearl Harbor—he has got the other side to fire the fateful first shot. He can claim he was willing to meet the EU’s demands, but it was they who initiated the Grexit. He will not be blamed in Greece, and he can, like Lincoln and Roosevelt, rally his country around him for the undoubtedly tough times ahead, provided there actually is a Grexit and not some 11th hour, can-kicking agreement. Then, if Tsipras is really smart, he’ll pull a Nixon goes to China, swear off socialism, embrace free markets, low taxes, protection of contract and property rights, and minimal regulation. In 10 years Greece would be on its way to becoming the Hong Kong, rather than the Venezuela, of the Mediterranean. This is an extremely low-ods bet, but it sure would scare the hell out of the rest of Europe.

From Meijer, at automaticearth.com:

Too many voices the past few days are all pointing the same way, and I’ve always thought that is never good. A guessing-based consensus, jumping to conclusions and all that. Look, it’s fine if you don’t have all the answers, no matter how nervous it makes you.

What I’m referring to in this instance is the overwhelming conviction that Greece and Tsipras have conceded, given in to the Troika, flown a white flag, you get the drift. But guys, the battle ain’t over yet.

So here’s an alternative scenario, purely hypothetically (but so in essence is the white flag idea, always got to wait for the fat lady), and for entertainment purposes only. Let ‘er rip:

Tsipras, first through holding a referendum, and then through delivering a proposal that at first sight looked worse than what the Troika provided before the referendum, has managed a number of things.

First, his domestic support base has solidified. That’s what the referendum confirmed once more. Second, he’s given the Troika members, plus the various nations that think they represent them, something that was sure from the moment he sent it to them: a way to divide and rule and conquer the lot.

Tsipras has set the IMF versus the EU versus the ECB. Schäuble snapped at Draghi last night: ”Do you hold me for a fool?” Germany itself is split too, Merkel and Schäuble are at odds. Germany and France don’t see eye to eye anymore. The US doesn’t see eye to eye with any party involved.

Italy is about to tell Germany to stop its shenanigans and get a deal done. The True Finns may get to decide the entire shebang, with less than 1 million rabid voters calling the shots for 320 million eurozone inhabitants.

From that point of view, Tsipras has done a great job at playing the other side of the table off against each other. So much so, it doesn’t even have to have been intentional, and it still works out great. He’s exposed the entire EU structure as a bag of bones, let alone a naked emperor.

Moreover, imagine this also purely hypothetical and for entertainment purposes only notion: maybe Tsipras has known forever that for Greece to stay inside the eurozone was a losing proposition. But he never had the mandate. Well, after Schäuble’s antics last night, that mandate has come a lot closer. And it’s not even just in Greece either.

And he may not even need such a mandate: Schäuble may do the job for him. If Tsipras pokes him just a little more, he’ll throw such a hissyfit that Alexis will be able to get Greece out of the euro without carrying the blame himself. And get money for the effort. Lots of money.

And that’s not all: he’ll sow division in the ranks to such an extent that the whole EU won’t survive. How can Schäuble stay in his post after this? How can Draghi? He’s shown them all, for the whole world to see, to be nothing but hot air bags of bones. Their entire credibility is shot to bits.

To continue reading: Tsipras Invites Schäuble To Fall Into His Own Sword

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The Facade Crumbles, by Robert Gore

Posted on July 11, 2015 | 2 comments

That governments and central banks can “manage” economies and financial markets is a delusion that only receives widespread acceptance when financial markets rise in tandem with activist measures. Just because two things happen at the same time, or one after the other, does not mean one causes the other. However, that’s how superstitions are born, and the “potent directors” superstition refuses to die.

Governments’ two macroeconomic “tools” are issuing debt and taking money out of some pockets to put in other, more politically favored pockets. Central banks monetize debt, print money, and suppress interest rates. It is a mystery why anyone thinks that debt, coercion, entries on a computer screen, counterfeit fiat scrip, and price controls can dictate economic outcomes. The course of economies and financial markets are ultimately determined by the decentralized production, consumption, saving, and investment decisions and actions of millions of people, and those decisions and actions are affected by powerful waves of crowd psychology.

During the 2007-2009 financial crises, governments and central banks around the world frantically announced measures and promulgated jerry-built programs to arrest falling markets. The measures and programs produced sharp but brief rallies that were quickly reversed, overwhelmed by panic and unraveling debt. One of the wonders of the six years since US equity markets reached bottom in 2009 is how quickly the disillusionment faded and the potent directors superstition again seized the public imagination.

The foundation of the so-called recovery since 2009 has been quicksand: huge increases in public debt; moving private debt onto public balance sheets; central bank monetization of that debt, and artificially low interest rates—to mask the true cost to governments of their debt and promote economic activity and rising asset markets. Now the whole ugly edifice is sinking, but the belief persists that it can be stopped by pouring in more quicksand! If that belief was delusional before, to retain it after the events of the last few months is psychosis unhinged from reality.

In “Oil Ushers in the Depression” (SLL, 12/1/14), SLL said the oil glut and its precipitous fall in price were a harbinger of things to come, a prelude to falling prices and contracting economic activity. This occurred not despite years of quicksand policies, but because of them. The biggest global debt monetization and central bank balance sheet expansion in history did not stop the deflation in oil and other commodities. The article’s predictions rested on the analysis from two other SLL articles: “A Skyscraper of Cards,” 10/19/14, and “The Economics of Debt, Deterioration, Deflation, Depression, and Disorder,” 11/17/14. That analysis will not be repeated here (interested readers are referred to those articles). What is important is that the measures taken the last six years will, now that debt is unraveling and euphoria and greed are giving way to despair and fear, make the coming crash much worse.

If the steep fall in the prices of oil and other industrial commodities hasn’t been enough of a wake up call about the burgeoning debt disaster and government and central bank inability to stop it, then Greece and Puerto Rico should be a croquet mallet applied hard upside the head. When Greece first ran into problems in 2010, it had about €110 billion in debt. After two “rescues” it has €340 billion in debt and is bankrupt. The Greek referendum served welcome notice of a simple but often overlooked truth: the ability of any government to pay its debts rests on the willingness of its constituents to pay (see “Oxi! Greece’s 9.0 Earthquake,” SLL, 7/5/15). Greece’s politicians may knuckle under to pressure from the European Union and the US government, accepting proposals their voters so recently rejected, but now it is apparent to all: promises by governments can be repudiated by the people who are expected to pay for them.

Governments may not allow any more debt referendums in the future, but people vote with their feet, or stay where they are and work only hard enough to provide for themselves. Which is what has happened in Puerto Rico, whose governor recently announced that it could not pay all its debts. Any Puerto Rican with ambition and a willingness to work has already left or is planning to. Why hang around for perpetual depression and debt serfdom? Meanwhile, many of the individuals and mutual fund managers in the US who own Puerto Rico’s debt have seen the value of their bonds plummet, but are still hoping that someone, somewhere (i.e., the US government) will be stupid enough to bail them out. Keep hoping.

If anybody could manage an economy and financial markets, it would be the Chinese government, which can seemingly do what it wants. Belief in that government runs deep in the financial markets. It has rested on the Chinese economic “miracle,” and was reinforced by a massive expansion of credit expansion during the depths of the financial crisis in 2008 and 2009 that appeared to miraculously prolong the miracle. It is disturbing that even in supposed bastions of capitalism more participants believe in the Chinese government’s totalitarian command and control than believe in capitalism and unfettered markets.

However, whether it gets repaid or not, there is always a pay back with debt. The slowing Chinese economy and the crack up of Chinese stock markets the past few weeks after a huge margin-fueled and government-promoted run up, despite emergency measure after emergency measure, demonstrates that Chinese leaders and bureaucrats are just as ineffectual as the US’s were in 2008. While SLL believes the future belongs to Asia (see “Buy Asia; Short the US and Europe,” SLL, 2/3/15, and “Trading Places,” SLL, 6/27/15) markets and more importantly, crowd psychology, are bigger than governments. Panic will eventually exhaust itself and markets will find their own level, as US markets did in March, 2009, but in the interim, the Chinese government’s measures will make matters worse, just as the US government’s did. Some things never change.

The acceleration point of the debt and deflation crisis has been reached (see “Crisis Progress Report (8): Acceleration,” SLL, 7/2/15, and “Acceleration Confirmed,” SLL, 7/13/15). Things will happen much quicker now, which means the time to prepare was yesterday. If unprepared, you’ll probably not get everything done you should get done, but that does not mean the effects of the looming disaster cannot be mitigated. Greeks who took most of their money out of banks and stocked up on supplies are much better off than those now reduced to €60 daily withdrawals and scouring near-empty stores. Chinese investors and owners of Puerto Rico bonds who “panicked” and sold “too early” are breathing much easier than those who are stuck and pondering selling into illiquid markets. Or not being able to sell at all either because selling of their particular security has been banned or markets have been suspended.

We no longer have the illusory luxuries of time, delusion, or hope in governments, central banks, and mainstream propaganda. The facade is crumbling. Are you ready? For ideas, strategies, and common sense, check out preparedness websites. Survival Blog and the Western Rifle Shooters Association’s articles and blog rolls are good places to start. For separating financial fact from mainstream fiction—and cogent analyses—see SLL David Stockman’s Contra Corner, and Zero Hedge, and their blog rolls, and Elliott Wave International. The latest edition of Robert Prechter’s book Conquer The Crash is a must read. Get to know your neighbors and seek out the like-minded. When the wheels fall off, there will be much that is ignoble and heinous. However, there are many great people out there, and they will perpetuate a proud American tradition: helping each other out.

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Maintaining the Illusion of Stability Now Requires Ever-Greater Extremes, by Charles Hugh Smith

Posted on July 10, 2015 | Leave a comment

From Charles Hugh Smith, at oftwominds.com:

This much-needed re-set to an economy that serves the many rather than the few is what the Powers That Be are so fearful of.
On the surface, everything still looks remarkably stable in the core industrial economies. The stock markets in Japan, Germany and the U.S. are only a few percentage points off their highs, and we’re constantly assured that inflation no longer exists and official unemployment is low.

In other words, other than the spot of bother in Greece, life is good. Anyone who signs on the dotted line for easy credit can go to college, buy a car or house or get another credit card.
With more credit, everything becomes possible. With unlimited credit, the sky’s the limit, and it shows.

Europe is awash with tourists from the U.S., China and elsewhere, and restaurants are jammed in San Francisco and New York City, where small flats now routinely fetch well over $1 million.

In politics, the American public is being offered a choice of two calcified, dysfunctional aristocracies in 2016: brittleness is being passed off as stability, not just in politics but in the economy and the cultural zeitgeist.

But surface stability is all the status quo can manage at this point, because the machine is shaking itself to pieces just maintaining the brittle illusion of prosperity and order.

To continue reading: Maintaining the Illusion of Stability

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He Said That? 7/9/15

Posted on July 9, 2015 | 3 comments

From Nigel Farage, leader of the United Kingdom Independence Party:

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Greece Illustrates 150 Years of Socialist Failure in Europe, by Patrick Barron

Posted on July 9, 2015 | Leave a comment

From Patrick Barron, at mises.org:

Greece cannot pay its debts … ever. Nor can several other members of the European Union. That’s why Europe’s elite are loath to place Greece in default. If Greece is allowed to abrogate its debts, why should any of the other debtor members of the EU pay up? The financial consequences of massive default by most of the EU members is hard to predict, but it won’t be pretty. Europe has built a financial house of cards, and the slightest loss of confidence will bring it crashing down.

The tragedy of Europe has socialism at its core. Europe has flirted with socialism since the late nineteenth century. Nineteenth century Bismarckian socialism produced two world wars. Leninist socialism slaughtered and enslaved hundreds of millions until it collapsed, mercifully without a third world war. Yet, not to be deterred, in the ashes of World War II, Europe’s socialists embarked on a new socialist dream. If socialism fails in one country, perhaps it will succeed if all of Europe joined a supra-national socialist organization. Oh, they don’t call what has evolved from this dream “socialism,” but it is socialism nonetheless.

Socialism will not work, whether in one country, a multi-state region such as Europe, or the entire world. Ludwig von Mises explained that socialism is not an alternative economic system. It is a program for consumption. It tells us nothing about economic production. Since each man’s production must be distributed to all of mankind, there is no economic incentive to produce anything, although there may be the incentive of coercion and threats of violence. Conversely, free market capitalism is an economic system of production, whereby each man owns the product of his own labors and, therefore, has great economic incentives to produce both for himself, his family, and has surplus goods to trade for the surplus product of others. Even under life and death threats neither the socialist worker nor his overseer would know what to produce, how to produce it, or in what quantities and qualities. These economic cues are the product of free market capitalism and money prices.

Under capitalism, man specializes to produce trade goods for the product of others. This is just one way of stating Say’s Law; i.e., that production precedes consumption and that production itself creates demand. For example, a farmer may grow some corn for his family to consume or to feed to his own livestock, but he sells most of his corn on the market in exchange for money with which to buy all the many other necessities and luxuries of life. His corn crop is his demand and money is simply the indirect medium of exchange.

Keynes attempted to deny Say’s Law, claiming that demand itself — created artificially by central bank money printing — would spur production. He attempted, illogically and unsuccessfully, to place consumption ahead of production. To this day Keynes is very popular with spendthrift politicians, to whom he bestowed a moral imperative to spend money that they did not have.

We see the result of 150 years of European socialism playing out in grand style in Greece today. The producing countries are beginning to realize that they have been robbed by the EU’s socialist guarantee that no nation will be allowed to default on its bonds. Greece merely accepted this guarantee at face value and spent itself into national bankruptcy. Other EU nations are not far behind. It’s time to give free market capitalism and sound money a chance: it’s worked every time it’s been tried.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

https://mises.org/library/greece-illustrates-150-years-socialist-failure-europe

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Greece And The EU Situation, by Paul Craig Roberts

Posted on July 8, 2015 | Leave a comment

The US government certainly doesn’t want to see Greece leave the EU, and Paul Craig Roberts, in a guest post from theburningplatform.com, is predicting the government will get its way.

I doubt that there will be a Greek exit.

The Greek referendum, in which the Greek government’s position easily prevailed, tells the troika (EU Commission, European Central Bank, IMF, with of course Washington as the puppet master) that the Greek people support their government’s position that the years of austerity to which Greece has been subjected have seriously worsened the debt problem. The Greek government has been trying to turn the austerity approach into reforms that would lessen the debt burden via a rise in employment, GDP, and tax revenues.

The first response of most EU politicians to the Greek referendum outcome was to bluster about Greece exiting Europe. Washington is not prepared for this to happen and has told its vassals to give the Greeks a deal that they can accept that will keep them within the EU.

Washington has a higher interest than the interests of the US financial interests who purchased discounted sovereign debt with a view toward profiting from a deal that pays 100 cents on the dollar. Washington also has higher interest than the interests of the European One Percent intent on using Greece’s indebtedness to loot the country of its national assets. Washington’s higher interest is the protection of the unity of the EU and, thereby, NATO, Washington’s mechanism for bringing conflict to Russia.
If the inflexible Germans were to have Greece booted from the EU, Greece’s turn to Russia and financial rescue would put the same idea in the heads of Italy and Spain and perhaps ultimately France. NATO would unravel as Southern Europe became members of Russia’s Eurasian trade bloc, and American power would unravel with NATO.

This is simply unacceptable to Washington.

If reports are correct, Victoria Nuland has already paid a visit to the Greek prime minister and explained to him that he is neither to leave the EU or cozy up to the Russians or there will be consequences, polite language for overthrow or assassination. Indeed, the Greek prime minister probably knows this without need of a visit.

To continue reading: Greece And The EU Situation

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First Was A Head Fake—–Now Comes Einen Shitschturm, by David Stockman

Posted on July 7, 2015 | 1 comment

David Stockman, at davidstockmanscontracorner.com, on the coming turmoil in Europe and beyond:

If you don’t believe financial markets are well and truly broken Monday’s tepid response to the Greferendum should be dispositive. The house of cards known as the Eurozone is about to hit the wall, unleashing financial contagion and turmoil far and wide. So any investor or trader in their right mind should have been slamming Jim Cramer’s triple sell button early and often.

For lack of doubt, consider what Merkel’s Vice-Chancellor and leader of the German socialists had to say on Monday. Recall Herr Gabriel is purportedly the voice of the enlightened left and the politician hoping to soon relieve Angela Merkel of her job:

Sigmar Gabriel, the German vice-chancellor and economy minister, said there could be no question of writing off Greek debt because other countries that have had loans such as Ireland, Portugal and Spain would demand equal treatment.

‘I really hope that the Greek government – if it wants to enter negotiations again – will accept that the other 18 member states of the euro can’t just go along with an unconditional haircut,’ he said.

‘How could we then refuse it to other member states? And what would it mean for the eurozone if we’d do it? It would blow the eurozone apart, for sure.’

Oh, yes, he used the “conditional” word, meaning that if Greece signs up for a permanent regime of reform, austerity and depression its paymasters in Brussels and Berlin might be open to an accounting double shuffle. That is, to having Greece’s crushing loans extended to 40 years from 25 years, its grace period on interest and principle repayments stretched beyond the current 2023 time frame and its interest rates pared to something less than 1.5%. On an NPV basis, this is supposed to be some big deal concession.

But who do these clowns think they are kidding? Some day all of this debt will have to be rolled over, and eventually the monetary mountebanks running the ECB and other central banks will be unable to prevent interest rates from normalizing.

So put an honest interest rate—–say 6% on a country that has been a chronic deadbeat for two centuries——-on its current $350 billion of fiscal debt and the pro forma interest computation rounds out to 10% of GDP. It is doubtful that even Art Laffer would claim Greece could grow out from under that kind of financial albatross.

So the real red line is very simple. Above all else, 61% of the Greek public voted for relief from the onerous debt that has been imposed upon them by the troika and faithless Greek politicians in Athens. If they don’t get an outright haircut in excess of $100 billion, Greek democracy will remain permanently indentured to its troika paymasters.

Yet is there an iota of chance that the other 18 Eurozone nations plus the IMF will agree to a meaningful and honest “haircut” during the next 48 hours that Angela Merkel has allotted for reaching a new deal or a Grexit? Well, for starters, her iron- fisted finance ministers has just averred that a discount on the ESF debt is actually “prohibited” by the EU treaties.

End of discussion.

To continue reading: Now Comes Einen Shitschturm

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The Biggest Winner From The Greek Tragedy, by Tyler Durden

Posted on July 7, 2015 | Leave a comment

From Tyler Durden at zerohedge.com:

Long after Greece has left the Eurozone and Germany is using the Deutsche Mark as its currency, the people of the two nations, antagonized to a level unseen since World War II, will be accusing each other of benefiting more from the brief but tumultuous period of the common currency.

In reality, nobody had put a gun to Greece’s head and told it to lever up, enriching local oligarchs and corrupt politicians, taking advantage of credit that was artificially cheap only due to the common currency and an implicit monetary, if not fiscal, union.

Germany, whose exports account for nearly 50% of GDP, on the other hand experienced an unprecedented exporting golden age, made possible only due to an artificial currency, the Euro, that was by definition created to be weaker than the Deutsche Mark and benefitted from any bout of weakness in Europe’s periphery, such as the past 5 years.

The truth is, when things were good nobody second-guessed any decisions for a second, and since the rising economic tide lifted all boats, nobody cared.

And then the tide rolled out, displaced by trillions in bad loans and gargantuan mountains of sovereign and financial debt, which ultimately would lead to the first, then second, then third and then an all-out cascade of sovereign defaults.

Sadly, the losers – regardless of the propaganda and jingoist rhetoric – are the ordinary, common, taxpaying people of Germany and Greece (and every other European nation), who enjoyed a few brief years of artificial prosperity, which in retrospect was entirely due to debt, masked well by the “currency swaps” and other financial engineering concocted by banks such as Goldman Sachs, in clear violation of the Maastricht treaty which is now a long-forgotten memory of the founding ideals behind the Eurozone.

For every loser there is a winner, and in the case of Greece and its tragedy, just as millions are about to lose everything, a few not only made billions but quietly, under the guise of “sovereign bailouts” transferred their entire risk onto the taxpaying public.

They are shown in the chart below.

It is that transfer of private-to-public risk, which is also the main reason why the public debt of so many European countries, not only Greece, whose debt is record high despite a default to its private creditors in 2012 and where only 10% of bailout proceeds ever made it to the actual economy…

… but the entire periphery has soared in the last few years.

To continue reading: The Biggest Winner From The Greek Tragedy

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