Posted on 02/09/2015 10:26:07 PM PST by NRx
Greece’s finance minister Yanis Varoufakis has spelled out the negotiating strategy of the Syriza government with crystal clarity.
“Exit from the euro does not even enter into our plans, quite simply because the euro is fragile. It is like a house of cards. If you pull away the Greek card, they all come down,” he said.
“Do we really want Europe to break apart? Anybody who is tempted to think it possible to amputate Greece strategically from Europe should be careful. It is very dangerous. Who would be hit after us? Portugal? What would happen to Italy when it discovers that it is impossible to stay within the austerity straight-jacket?”
(Excerpt) Read more at telegraph.co.uk ...
“The troika is lending Greece more money (increasing that debt) so they can repay the debt!! It’s like playing a Ponzi scheme on yourself.”
That’s true. Good money after bad.
We’ll see if they have the nads to cut them off, and eat the loss. It is getting harder to kick the can down the road anymore. The current Greek Government is like Occupy Wall Street and Fergeuson protestors took over Congress.
Obama is lobbying for them to keep paying for Greek restaurant tabs, but I think it is past the point were they will be repaid.
Maybe Obama will pony up a shipload of US taxpayer money to help build socialism over there.
The Greeks elected their government led by socialists and including conservatives called Independent Greeks.
They are all anti-EU New World Order and I hope they give the EU-NWO a bloody nose.
“As far as I recall, Iceland did the opposite...they let it all collapse, defaulted on loans”
True.
Iceland is only about 300,000 people. Greece has a much bigger debt, and the fear is that if Greece defaults, leftists in Spain, Portugal and even Italy... even possibly France might do the same. Financially, it is very attractive to the debtors.
If the lenders lose so much money, banks go out of business, bank accounts disappear, and there are no loans available for business investment, or even day to day operations. Such a liquidity crisis could grind the economy to a crawl, possibly causing shortages of essential goods.
So the governments will just fill them with newly created money, to keep things flowing. All that additional money chasing the same amount of goods will mean more units of money for each unit of goods - inflation.
That is the big reason that the euro has been dropping lately as this debt crisis is brewing. The euro is approaching 1:1 with the dollar. If the Greeks have to print Drachmas on their own to prop up their banks, they would likely see a third world rate of inflation, or hyper-inflation.
Although it is mathematically possible for the Greeks to work their way out of debt, it would boil down to a generation of hard work and frugality. They famously lack a culture of hard work. The joke goes that the Greeks work 24x7 - 24 hours a week, 7 months a year.
The Germans and Northerners have been financing a higher standard of living in much of Southern Europe. If there is a big default, that arrangement (the European Monetary Union) is really unlikely to be sold again to the bill-payers, and it is back to Deutschmarks and Drachmas.
Actually Iceland, like Ireland, had a banking crisis, rather than too many government loans to pay. They just could not possibly bailout their banks (it would have been 10 times GDP), and had to watch most of them go into bankruptcy.
Some people lost the money in their accounts (a lot of Brits), and the Icelandic banks had to be restarted over again.
So part of Greece defaulting would be losses to banks that might sink them. But additionally, they might not get any new loans, and have to sharply cut back to only what they have cash for - which is very little. There are already significant shortages of medicines in Greece. They could literally end up with food shortages, like Venezuela or worse, if they are cutoff from credit and their banks go under. They import a lot of their food.
I would agree...it’s bogus leverage. Based on various comments by bankers, it’s doubtful that they manage to get past end of March...unless they use some of their remaining cash reserves to make a payment on a loan, and get some extensions agreed upon. The question would be....is it even worth dragging this out to late summer when the next problem occurs? That’s why no EU banking official will talk positive about any of this.
The talk from the last four days from Greece....saying a lot of negative comments over Spain, Ireland and Italy...probably guarantees that no one will support their delaying tactics.
As for the scenario to unfold? I’ll predict that come early April...they default and start to print Drachma. Exchange of Euro bills occurs by mid-April...but they discover that no one wants to exchange their Euro bills because they think they are worth more than the Drachma deal. Over the whole summer, tourists arriving in Greece will find everyone happy to accept Euro, and the banking sector is really screwed up because of this public perception. I’ll predict another election before December....because this whole plan is regarded as a failure.
Very interested. Europe will sever ties with greece and the cards will fold with germany and england realizing they are footing the bills for the other deadbeats
Sounds like a petulant teenager with his head in the fridge and a copy of his parent’s debit card in his pocket saying “I’ll move out if you don’t stop treating me like a child”.
Nice analysis. Kicker is the ripple effect on the global economy and already unstable situations on the Russian periphery, the Middle East, and the neighborhood of a blustering China.
You wrote “other deadbeats”
I don’t think so far there is no one remotely as arrogant and delusional as the new commie government of Greece.
There are governments left of center, but commies having power is unique.
the article also states that the u s treasury has sent a group to athens to try to work it out. obama trying to preserve the globalist bankers.
i say go greece. screw legarde, soros, and the rest of the control obsessed
madmen who are not, in my opinion, are not much different than hitler and stalin.
They would have to deport ALL their illegal immigrants, as they can't afford to keep them on welfare. nor have them take jobs that native Greeks would need.
Then they would have to fire 75% of their government employees, who would have to then get real jobs in the private sector.
I think a lot of blood would flow if they tried either, much less both.
“Since there is no way in this reality that Greece will ever make good on their loans, then it seems to me the best thing in the long run is for Greece to formally default, get out of the Euro, and allow their currency to fall to the abysmal level it deserves.”
The only way Greece can keep its socialism is by remaining on the EU’s teat. They won’t exit as then they’d have no money to give away the wildly out of kilter benefits. The present government was voted in to keep the milk pouring.
Europe either keeps pouring or they give up their visions of a new empire run by unelected serve-for-life socialists who would rather spend the money on themselves than Greece. The EU will give in so the elite can keep their milk pouring. Germany will suffer as their elites aren’t ready to give up their expected payout.
The Greeks politicians have no incentive to give in. If they stay on their imposed diet they’ll be lynched. If they kill the cow that gives them milk they’ll be lynched. Europe, like always, will give in to blackmail.
Indeed. Non-membership in the EU has its benefits, such as independence and sovereignty especially in fiscal policy. They did the right thing in cutting off talks to join the EU 1½ years ago.
They ought to get out of the Schengen Area too before they get a flood of pro-EU “immigrants” too.
If Greece collapses....look for Golden Dawn to pick up the pieces.
Hey Europe, Greece will continue to double down until they are slapped down.
We see it here all the time.
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