What The Pundits Missed (Grexit)

[threegee]

The Leaders Debate didn't really tell anybody anything new, except... well, I might just go into that on another thread, but I think I possibly picked something up from David Cameron that the political pundits completely missed.

 

In touting his careful stewardship of the economy he quipped that he'd been careful not to expose us the Greek debt. He was implying that practically all the other EU governments are heavily exposed, and that he fully expected that both Miliband and Clegg would surely have gone there. It could be that he's even had cabinet rows with the LDs about this.  But it was a strange thing to offer in a point scoring debate, because Greece has not defaulted, so how could it be relevant to a voting public?

 

Well my guess is this. It's on his mind because he's recently been involved in Treasury meetings that have been planning for a mega default in the Euro and to limit the fallout for the UK.  He can't say what he knows, but I think that behind closed doors the European banks are currently in panic mode.  They've been so profligate in doling out money to prop up the failing EU that they fear a second global financial meltdown triggered by a Greek default.  That the Euro has been so volatile in recent weeks, and losing out to the dollar and Sterling, backs this thought - people in the know have surely been moving vast sums around.

 

If I'm right - and that Dave knows a lot more than he's currently saying, or can say - then we'll all know fairly soon too.  Watch this space (and don't be in any hurry to buy those Euros for your holidays)!

[Malcolm Robinson]

Been looking like that for ages, but with careful manipulation....it all has to crash at some point and we reset to basic fundamentals.

[threegee]

Been looking like that for ages, but with careful manipulation....it all has to crash at some point and we reset to basic fundamentals.

 

The world financial system is now a ponzi scheme, but how long can it keep going? I think that there's so much vested interest in it that it will likely last beyond the lifetimes of most people here, but the Euro is a different matter.  To borrow from Churchill, I think what we are about to see is not the demise of the Euro but the end of the beginning of the demise of the Euro.  You could argue that this might trigger bigger things, and that wouldn't be an unreasonable suggestion, but I think there are now enough stops in place to limit the damage of a Greek default this year.  However, there has never been a default on an IMF loan before, so we are into uncharted territory.

[mercuryg]

There have been several defaults on IMF loans, 3G, just not in Europe as far as I know.

[threegee]

There have been several defaults on IMF loans, 3G, just not in Europe as far as I know.

 

Not arguing Merc, but I'm sure I read that claim somewhere prominent.  Maybe the get-out would be to include the word outright?

 

Anyway, the Beeb reports that the Greek finance minister has just said that Greece intends to meet all its debts, and that sweeping and necessary reforms will be introduced. Suspiciously contrite that!  Maybe he's going to place emphasis on the word intends.  I must look up the justification Harold Wilson deployed. The "public interest" defence?

[Malcolm Robinson]

Like backing a football club manager...........

[mercuryg]

Argentina, and a number of African nations, 3G. Probably shoddy journalism!

[threegee]

From a senior source in Berlin, Thursday night:
 

Difficult to see how a Greek default can be prevented now. But we'll make damned sure German fingers are not on the trigger when it does so.

This is why things are painfully drawn out.  When the finger pointing starts no one wants to be seen as responsible for what everyone now accepts is an inevitability.
 

Greece will be unable to find the €1.6bn (£1.1bn) sum it is due to hand the International Monetary Fund (IMF) next month, one of the country's ministers has admitted.

 

Nikos Voutsis, the Greek minister of the interior, said that "this money will not be given and is not there to be given”, speaking on Mega TV.

 

June then, as all sides are clearly resolved not to blink.

[Malcolm Robinson]

Just in time for the hols........if they do exit bet we are all heading for Greece for our hols soon!

[Andy Millne]

Just in time for the hols........if they do exit bet we are all heading for Greece for our hols soon!

 

Bring your own plates.

[Malcolm Robinson]

Sod the plates GGGG its gonna be that cheap you will buy them with your 3 course meal for a couple of Drachmas.

[threegee]

The Greek government is due to pay back €305m (£218.3m) of rescue loans on June 5, but a spokesman for leftist party Syriza said it would miss this deadline if there was no prospect of an agreement being reached.

 

"If there is no prospect of a deal by Friday or Monday ... we will not pay," said Nikos Filis told Mega TV.

 

Which could be the excuse Schauble needs to assume a default.  There are several more payments due this month so it makes no sense for the Greeks to pay up this time (even assuming they have any cash left), and then default on a later unaffordable one.

[threegee]

Money the Greek government has to find this year:

 

 

You'll note the small lull after May before many more big bills start to become due.

 

My bet is that Putin is lending a hand by secretly printing a new currency for Greece right now!  If they went to the regular sources the cat would be out of the bag in no time.  Are the Greeks imaginative enough to call this something slightly more political than the Drachma?

 

That would be the sensible thing to do; but there are alternatives here, and there's no doubt Greece wants to cling to the Euro as long as possible, have banks receive every Euro in ECB liquidly assistance they can, then actually be seen to be ejected from the EuroZone - mainly by Germany.  So, if there is such a currency printing arrangement, it would be billed purely as a contingency plan, even if the truth were slightly different.  It wouldn't be at all surprising if Greece were to unofficially adopt the Rouble as a temporary measure though, having been given a nod and wink on this score by Putin. Those talks weren't entirely about oil pipelines!  Interesting times.

 

Greek Prime Minister Alexis Tsipras and Russian President Vladimir Putin have discussed energy cooperation between the two countries and the Greek prime minister's participation in the forthcoming Economic Forum in St. Petersburg on June 18-20 as well as Greece's cooperation with the BRICS bank. The telephone conversation passed in a friendly atmosphere,”

 

BRICS New Development Bank Threatens Hegemony Of U.S. Dollar

[threegee]

[threegee]

 There's a secret fear gripping the powerful across Europe.

 

It has policy honchos lying awake at nights in Brussels. It has bankers in Berlin tossing feverishly on their silken sheets. It has eurocrats muttering into their claret.

 

The fear?

 

It isn't that if Greece leaves the euro, the Greeks will then suffer a terrible economic meltdown.

 

The fear is that if Greece leaves the euro, the country will return to prosperity — and then other countries might follow suit.

Take a look at the chart, above.

 

As you can see, Greece with the bad old drachma had double the economic growth of Greece under the euro. Double. And it wasn't alone.

 

Italy, Spain and Portugal tell similar stories. Their economic growth back in the 1980s and 1990s, when they were "struggling” with the lira, the peseta, and the escudo, makes a mockery of their performance under the German-dominated euro.

 

Apparently having control of your own national currency and your own monetary policy works well with having your own government and your own national sovereignty.

 

Who knew?

 

Full article: http://www.marketwatch.com/story/europe-knows-greece-will-be-better-off-exiting-the-eurozone-2015-06-16/

 

One to recall when the EU propaganda machine goes into full swing for the referendum!  And.. we all know it's true because the UK is consistently outperforming the EuroZone; this contrary to all those scare stories about what would happen to us if we didn't abandon the pound.  Just think how much better we'd be off if we didn't have all the drag of the EU bureaucracy, and weren't consistently paying out huge sums to prop up the failing EuroZone!

[threegee]

[Malcolm Robinson]

They might get away with it again for a while...............why would any elected democracy put up with the demands the EU are insisting on?  

[threegee]

Not with this government Malc  Varofakis is a smart cookie, I've been reading all his stuff for a while now, and he's into "game theory".  If the (b|w)ankers had read it they'd not be allowing themselves to be strung along whilst the ECB pours more billions out.  On the other hand it's not "in the manual", which makes it impossible tor the Germans to come up with a counter.

 

The only way for Greece is default.  Even the IMF seems to be able to see that they are simply digging a deeper hole, but the Fourth Reich is back to Teutonic bunker mentality.  It's easy to see how the whole EU political project will end: tears, hostility, and recriminations all around. Rather than unite Europe it's going to reinforce traditional suspicions and downright hatreds.

 

Other trading areas around the world are doing far better, because they had the good sense to dispense with most of the political baggage.  Centralist command driven economies don't work, and essentially that's what the EU is.  It's simply not possible to "reform" it; we need to start again with a clean slate, or simply commit ourselves fully to the WTO!

 

"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe.” ― Mikhail Gorbachev

[pilgrim]

I was in Yugoslavia when their currency crashed when Tito died - don't ask -- a place I used to eat at couldn't put prices on the menu as they didn't know what they could buy and at what price from day to day. the world is too wrapped up in 'money' which if you think about it is an abstract concept and is worth nothing. now I am not advocating going back to a barter system and living in caves, but a little bit of - step back - take a deep breath and lets think this through --- would it really make all that difference if ALL debts in the Eurozone were wiped out and we started again?? of course not - the people would still be there, the countries would be, and life would go on -- probably for the better on a more level playing field. think it through -- all the debt from various countries goes to ??? and then gets ploughed back into ?? hate to say it but its actually a very good argument to justify the single currency if all debts were wiped and we started afresh. (loss of points for repetition!!)

[threegee]

Hi pilgrim!  I'm not sure what you are saying here.  You ask "would it really make all that difference if ALL debts in the Eurozone were wiped out and we started again??"  And you go on to say it wouldn't.  Then - somehow - that's an argument for a single currency!

 

Greece is fine on a day to day basis.  They can pay their way.  It's the crippling interest and debt payment they can't afford.  They are paying interest on interest on interest...  and they are borrowing to pay interest from the very people they owe to.  Go try that one on your bank manager.  In fact go visit wonga.com (that ultra responsible lender! ) and what will you see on their homepage:  You shouldn't use our loans to manage existing debt.  Hey, great advice IMF and ECB; contract Wonga to vet your loan book, they sound a lot more responsible people than your astronomically-paid international bankers!

 

Most of the other Southern Eurozone countries are in the same boat, and Italy's relatively giant economy is in an irrecoverable debt spiral, where they will certainly be in the same position as Greece in three or four years, unless they drop out of the Euro before then.  Italian PM Silvio Berlusconi arrived at this conclusion in late 2011, and the Eurocrats immediately had him replaced with an unelected Brussels puppet!

 

Does all this still sound like "a very good argument to justify the single currency" to you?  It sounds like a total surrender of democracy, and subjugation to a foreign power to me.  The Greeks aren't going there, and, whether they are nominally communists, or fascists, or Martians, they should have the support of every freedom-loving person on the planet!

[pilgrim]

My point was that 'money' is an abstract concept which has become the driving force rather than the convenience it was developed for. We are moving towards a 'cashless' society and the money only exists in the ether. It's not as though you can trot along to your bank and ask to see your money and it's in a neat pile of notes in the vault with a post-it with your name on it. The 'debt' only exists on paper/and many banking servers and would anyone actually suffer if it was written off?

A Ponzi scheme was mentioned earlier and to some extent that is right. I was questioning how someone's money can be worth a different amount to someone else's. The exchange rates have been manipulated for years for profit and not profit of the members of the EU. I would go back to the concept of the 'Common Market' with a single currency and not the monster that the EU has become.

Products do cost different amounts to produce in different countries and the GDP differs, as does employment levels and social care funding, but, we live in the UK, made up of four regions. Each produces and prints their own money (notes) and the only difference is the picture on each, and each is honoured in each of the regions (although a Scottish £50 takes some explaining) without any differential exchange rate, a system that dates to well before any European involvement, to me that sounds very much like a single currency, So if it has worked here for centuries why not on a broader scale? The political persuasions/systems/beliefs of any country should make no difference.

[Malcolm Robinson]

"The political persuasions/systems/beliefs of any country should make no difference."

 

That's where we are going to differ pilgrim.  As far as I can see the political elite in the EU wanted closer political union and they tried to force that through on the back of a single currency.  Like the NCC economic strategy (in my view!) that's the wrong way around.  Fiscal union comes after political union for some of the very reasons you state.  

[pilgrim]

The fiscal union was achievable, but of course as you say certain countries saw it as a way to enforce their controls in the political sphere and euro-wide laws (some of which were required) the whole thing was hi-jacked for political purposes -- blackmail comes to mind !!

I think it would have worked in a free market but only without any 'political' interference.

[Malcolm Robinson]

I dont think it could work......?????  Is there anywhere it has worked?  

[pilgrim]

not quite sure - is there anywhere that isn't subject to political interference profiteering??? (maybe that's the issue that needs to be addressed)