Bankers and politicians win again. The citizens screwed again. And so it goes.
Tag: Greece
We Just Arrived in Athens… Here’s What We Saw
We Hopped on a Plane to Athens …
ATHENS, Greece – “It’s finished. The euro finished. Greece finished.”
With this apocalyptic shorthand, our taxi driver described the situation in Athens. The banks here have been closed for two weeks. To try to prop up the crumbling banking system, the government has banned Greek citizens – but not tourists – from withdrawing more than €60 ($67) a day from the ATMs.
The breaking news this morning is that the government and its creditors have cobbled together a deal to keep Greece in the euro zone.
Prime minister Alexis Tsipras has caved in to creditors’ demands on economic reforms. Trouble is his countrymen voted to reject almost the same deal in last weekend’s referendum.
And Tsipras still has to push the reforms through the Greek parliament on Wednesday. Otherwise all bets are off…
Clinging on to the euro train
Cartoon by Ingram Pinn
Continue reading “We Just Arrived in Athens… Here’s What We Saw”
‘Peace In Our Time’
Guest Post by Jesse
“Find out just what people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them; and these will continue until they are resisted with either words or blows or both. The limits of tyrants are prescribed by the endurance of those whom they oppress.”
Thomas Paine
Greek Prime Minister Alexis Tsipras seems to have folded precipitously, after apparently having taken all other options off the table including a Grexit, a movement toward the burgeoning China Development Bank, an impasse.
His strategy seemed a bit out of joint. I have heard that Victoria Nuland made him a personal offer he could not refuse, and he did not wish to offer a ‘principled resignation’ as did Varoufakis.
(Note: I am now mulling this and a few other things over in light of this new interview by Varoufakis.)
It could be that he was then taken aback and surprised by the sheer ferocity of the European (German) proposal, which was to essentially make Greek into a protectorate, and to visit a looting of national assets, given that the loans being granted are completely unpayable and the collateral will be forfeit.
FIXER-UPPER
The Greek Deal From Germany – Reading Between the Lines – Darkness Over the Earth
Guest Post by Jesse
Perhaps the Greeks made a mistake, and relied too much on rationality, on a belief in a Eurozone in which good sense and reason would prevail. As it was, the Germans were willing to ruthlessly crush the Greek banking system, while the ECB and IMF stood idly by, fomenting a financial panic and humanitarian disaster in order to displace a sovereign government and put an entire nation ‘in its place.’ We certainly have seen this kind of example made before.
This was an exercise in raw power. It was a financial blitzkrieg, an act of economic warfare and reckless destruction on a people that ought to be condemned by the free world. But this kind of ruthless abuse of financial systems seems to be the accepted thing now amongst the developed economies. And we might view Greece as a sort of an experiment in a new form of warfare and ruthlessness, as were Guernica, Warsaw, and Lidice.
It is a shame if the Greeks have not prepared for Grexit, although there are still clearly options despite the naysayers who see only difficulties in everything. Freedom is rarely the easier way.
The lesson that the countries of the Eurozone cannot trust Germany to act with wisdom and goodwill was known, but now we also see that restraint is also not in their repetoire. If one can read between the lines, it would be a pity if the rest of the European countries do not start planning now for their own active exit from such an failed concept as the European Monetary Union.
Continue reading “The Greek Deal From Germany – Reading Between the Lines – Darkness Over the Earth”
Greek Pudding
Guest Post by Jim Kunstler
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 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 $90-equivalent in new loans on top of the $350-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.
SLOPE OF HOPE
Greece is saved!!! I mean BANKERS are saved!!! The market will celebrate the total capitulation of Greece to the EU bankers. Nothing has been resolved. The debt won’t be repaid. The can has been kicked again. Portugal, Spain, Italy, Ireland and even France are essentially insolvent. It’s all a ponzi scheme. The bankers win and the people lose. Hope is not a strategy. Hussman’s weekly tome shows how a crisis plays out. Bad shit happens and the powers that be react with bad solutions that keep their wealth and power protected. Their bad solutions lead to a worse crisis. More bad solutions. And so on, until complete collapse.
Look back to the 2007-2009 market collapse, and you’ll notice something. Despite repeated monetary and fiscal interventions, a positive shift in market internals didn’t happen until March-April 2009. In hindsight, it was none of those interventions that produced the shift, but instead the change in accounting rule FAS 157 in the second week of March 2009 that finally ended the collapse. That accounting change eliminated the “mark-to-market” rule that had required banks to report the value of their assets at market value, and instead allowed banks considerable discretion to choose the value at which those assets were reported. With the stroke of a pen, banks that were insolvent on a mark-to-market basis became whole on a mark-to-model basis. In hindsight, regulatory authorities used that change to abandon any further action that might have put those insolvent banks and financial institutions into receivership or conservatorship. In the end, it was not monetary easing, nor troubled-asset relief, that ended the collapse. It was a change in accounting rules.
A similar failure of memory seems to prevail when the media incorrectly suggests that the collapse of the market in 2008 began with the Lehman bankruptcy on September 15. The fact is that the market fully recovered to even higher levels the following week as the government banned short selling of financial stocks (much like China is doing more broadly at present). Weeks later, in a wicked case of “sell the news,” the actual collapse started literally 15 seconds after the TARP bailout was passed by Congress. Investors want to tie market outcomes to very specific events or catalysts. But history suggests a different lesson: once extreme valuations are joined by a shift toward risk-aversion among investors, the specific events become irrelevant. One way or another, the market is likely to get hit by a truck.
Varoufakis: Behind Germany’s Refusal to Grant Greece Debt Relief and the Rise of the Will to Power
Guest Post by Jesse
“What is at stake is a rather heroic rebellion by a very beleaguered people against a doctrine which has been destroying their lives — the austerity doctrine and the whole neoliberal project. For the rest of us, what is at stake is whether we have the moral courage in the sense of ethical responsibility to stand up to it.”
Jamie Galbraith, Greek Revolt Threatens Entire Neoliberal Project
It is probably less an issue of ethical responsibility and more an act of self-interest for most. Having come out of the Third World and working into the developed nations, why would anyone assume that Greece would be sufficient for the maw of neoliberal greed.
The above interview with Galbraith is worth reading. For one thing it contains the seed of the current spin that Tsipras called the referendum in order to lose it, and to somehow save himself and betray the Greeks. And for another you will be able to read what Jamie Galbraith really thinks, the parts that the friends of the financial establishment have carefully excluded from their versions of the story.
The calling of the referendum was politically brilliant, because it defused the notion of an extremist government standing irrationally against the Troika. This derailed the path towards a scheme to stage a ‘color revolution’ backed by the oligarchs to take out these mad leftists who were not speaking for the people.
Remember the economic decision involving Europe which provoked the recent coup d’état in the Ukraine? In that case the government did not have the backing of the people, and it took hold, at least in the Western portions of the country. Wash, rinse, repeat.
YOUR MOMENT HAS COME
The Lesson for the World Coming from Greece
PHOTO: Distraught 77-year-old Greek retiree, Giorgos Chatzifotiadis, falls to the ground outside of a bank in Thessaloniki, July 3, 2015. (AFP: Sakis Mitrolidis)
The mainstream news is painting the Greeks as the bad guys, and the Troika as the savior of Europe. Quite frankly, it is really disgusting. Pictures of an elderly Greek pensioner have gone viral, depicting what the Troika is deliberately doing to the Greek people by punishing them for their own failed design of the euro in a system that is just economically unsustainable.
The heartbreaking photographs circulating are of 77-year-old retiree, Giorgos Chatzifotiadis, after he collapsed on the ground openly in tears, driven to despair, outside a Greek bank with his savings book and identity card strewn next to him on the ground. This illustrates the horror the Troika is deliberately inflicting upon the Greek population.
Continue reading “The Lesson for the World Coming from Greece”
Greece And The EU Situation
Guest Post by Paul Craig Roberts
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.
Financial Nonsense Overload
Guest Post by Dmitry Orlov
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| Kelly Hensing |
“Those whom the gods wish to destroy they first make mad” goes a quote wrongly attributed to Euripides. It seems to describe the current state of affairs with regard to the unfolding Greek imbroglio. It is a Greek tragedy all right: we have the various Eurocrats—elected, unelected, and soon-to-be-unelected—stumbling about the stage spewing forth fanciful nonsense, and we have the choir of the Greek electorate loudly announcing to the world what fanciful nonsense this is by means of a referendum.
As most of you probably know, Greece is saddled with more debt than it can possibly hope to ever repay. Documents recently released by the International Monetary Fund conceded this point. A lot of this bad debt was incurred in order to pay back German and French banks for previous bad debt. The debt was bad to begin with, because it was made based on very faulty projections of Greece’s potential for economic growth. The lenders behaved irresponsibly in offering the loans in the first place, and they deserve to lose their money.
However, Greece’s creditors refuse to consider declaring all of this bad debt null and void—not because of anything having to do with Greece, which is small enough to be forgiven much of its bad debt without causing major damage, but because of Spain, Italy and others, which, if similarly forgiven, would blow up the finances of the entire European Union. Thus, it is rather obvious that Greece is being punished to keep other countries in line. Collective punishment of a country—in the form of extracting payments for onerous debt incurred under false pretenses—is bad enough; but collective punishment of one country to have it serve as a warning to others is beyond the pale.
“Greece Is Coming To Your Neighborhood” Marc Faber Warns
Submitted by Tyler Durden on 07/06/2015 17:29 -0400
“Wake up people of the world and investors. Greece will come to your neighborhood very soon, maybe not this year, but next year or whenever it is, because the world is over infected. And defaults will follow, or they will have to create very high inflation rates.”
That’s Marc Faber’s message to all of those who may still think that Greece doesn’t matter in the grand scheme of things. In an interview with Bloomberg TV, Faber talks Greece, China, and of course the Fed.
On Greece:
And everybody knows in the world that Greece cannot pay its debt at the current size. So what will happen, in my view, is either Greece will leave the EU and will suffer very badly for a few months, maybe even longer. There will be a cash shortage. Or the EU, and the ECB and the IMF will have to cut a significant haircut. And Tsipras proposed a haircut of something like 30 percent. I don’t think that’s enough. I think they will need a haircut of at least 50 percent.
I think the likelihood of contagion is very high. And I have to say when you have a borrower, you also have a lender. And it’s actually, in my view, amazing how the EU kept on pumping money into Greece, partly also to bail out their own banks. And suddenly now the debt is no longer manageable.
And I would say, wake up people of the world and investors. Greece will come to your neighborhood very soon, maybe not this year, but next year or whenever it is, because the world is over infected. And defaults will follow, or they will have to create very high inflation rates.
On China:
Continue reading ““Greece Is Coming To Your Neighborhood” Marc Faber Warns”
There is Only One Way Out For Greece
Brussels has been dead wrong. This stupid idea that the Euro will bring stability and peace as it was sold from the outset, has migrated to European domination as if this were a game of Thrones. Those in power have misread history almost at every possible level. The assumption that the DMark’s strength was a good thing and this would be transferred to the Euro, has failed because they failed to comprehend the backdrop to the DMark.
Germany moved opposite of the USA and moved toward extreme austerity and conservative economics because of its experience with hyperinflation. The USA moved toward stimulation because of the austerity policies which created the Great Depression and led to such a shortage of money many cities had to issue their own currency just to function. The federal government thought, like Brussels today, that they had to sure up the confidence in the bond market and that called for raising taxes and cutting spending at the expense of the people. The same thinking process has played out numerous times throughout history. Our problem is, nobody ever asks – Hey, did someone try this before? Did it work? This is why history repeats – we do ZERO research when it comes to economics. It is all hype and self-interest.
Greece should immediately begin to print drachma. By no means has the introduction of a new currency been a walk in the park. There is always a learning curve as in the case of East Germany’s adoption of the Deutsche mark, the Czech-Slovak divorce of 1993, and the creation of the euro itself . However, the bulk of transactions today are electronic. That means we are dealing with an accounting issue more than anything.
It Is NOT Priced-In, Stupid!
Among all the mindless blather served up by the talking heads of bubblevision is the recurrent claim that “its all priced-in”. That is, there is no danger of a serious market correction because anything which might imply trouble ahead—-such as weak domestic growth, stalling world trade or Grexit——is already embodied in stock market prices.
Yep, those soaring averages are already fully risk-adjusted!
So the “oxi” that came screaming unexpectedly out of Greece Sunday evening will undoubtedly be explained away before the NYSE closes on Monday. Nothing to see here, it will be argued. Today’s plunge is just another opportunity for those who get it to “buy-the-dip”.
And they might well be right in the very short-run. But this time the outbreak of volatility is different. This time the dip buyers will be carried out on their shields.
Here’s why. The whole priced-in meme presumes that nothing has really changed in the financial markets during the last three decades. The latter is still just the timeless machinery of capitalist price discovery at work. Traders and investors in their tens-of-thousands are purportedly diligently engaged in sifting, sorting, dissecting and discounting the massive, continuous flows of incoming information that bears on future corporate profits and the present value thereof.
