July 2, 2015

Don't underestimate the damage of a 'small' failure like Greece

Posted in Irish Independent · 106 comments ·
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Havana is a strange place from which to write about Greece. Cuba has been cut off for years, access to information is limited, people can’t travel and the Party is so paranoid that the Internet is barely available. However, what happens next in Greece and in Europe is less a matter of news and more a matter of analysis about what happens when people feel the world and their assumptions have changed forever.

 

Perhaps the fact of being in Cuba, so far away from everything, offers a degree of clarity. (Interestingly, today Greece is about to join Cuba as one of only four countries to have defaulted on the IMF.)

 

One relevant way to look at what is happening in Greece is through the kaleidoscope of symbolism. Symbols are important. Many commentators and politicians are discounting the Greek crisis as being specific to Greece. They argue that Greece is only 2pc of European GDP, but the plug is also only 2pc of the bath and we know what happens when you pull the plug.

Even taking the “Greece is too small to matter” angle, this is a real problem for the EU’s politicians because if they admit they can’t find a political solution for such a small problem, what’s to happen when they encounter a big one?

What happens if contagion from Greece spreads not because there are identical problems in other countries, but because by allowing the Greek situation to become so acute, the EU has shown itself to be extremely fragile?

Fragility is the key here. Greece is a symbol of the EU’s fragility. If an institution is fragile and untested it can implode under the most innocuous of circumstances. This is what happened with the Soviet Union. It was so brittle that the smallest challenges exposed it as a chimera. Consider even the difference between Italian and British political institutions. For years, the British have laughed at Italian politics with its interminable coalitions, crises and North versus South squabbles. Yet which country now is on the verge of dissolution? Not Italy, but Britain. Why is this? It is because years of doing deals, finding last-minute compromises and pulling back from the brink has made Italian institutions surprisingly robust in the face of challenges. Whereas British institutions, which are used to “all or nothing”, “first past the post” solutions are the ones facing “yes or no” referendums.

Now consider the EU. Is it robust or fragile? Is it practical or dogmatic? Could the stitching which ties this multi-national quilt together unravel?

In the case of Greece, the issue for most Irish people is whether our preconceptions about the EU are wrong and need to be reassessed. In short, we know that Greece is broken but is the EU broken and, more importantly, is EU or eurozone membership conditional?

If Greece does leave, and that exit causes minimal disruption (outside Greece), the pro-EU argument will be one of:”See, we told you Greece was not that important.”

But the path paved by Greece implies that such an exit path exists where before it did not. And if it exits, it can be prepared again for some troublesome country. What happens the next time other countries get into trouble, such as Spain and Portugal? Or what about debt-laden Ireland, in the future, when interest rates go up?

And then, if exit is possible, what about countries that may want to leave the EU, such as the UK? And what happens in Ireland if (1) the UK leaves and (2) interest rates rise at the same time?

This would mean that political pressure on Ireland because of our close trading links to the UK and financial pressure because of our membership of the euro arrive simultaneously. By the way, this is a highly likely scenario because (1) rates will rise in Europe and (2) Britain will have a vote.

If such a path is being prepared following Greece, the only question is, who’s next?

Into this toxic political mix we must add the instability of global financial markets. Far from making the world a more stable place, the free movement of capital makes the world highly unstable. This is because in “good times” too much capital comes into a country and asks no questions.

This is precisely what happened to Greece when it could borrow what it wanted and was lent whatever it asked for. Once uncertainty arrived, capital high-tailed out of the country leaving it stricken. Since 2008, the world has become more, not less, unstable.

We have seen a huge build-up of debts all around the world. Central banks cut interest rates in response to the financial crisis and this encouraged companies and corporations – particularly in emerging markets like Brazil, Turkey and large parts of Asia – to borrow heavily. Money borrowed at very low rates from the central banks has gushed into every nook and cranny of the global economy.

All these debts are yet to be paid. If interest rates rise and growth slows, the Greek crisis has the potential to be a second ‘Lehmans’ moment for international markets.

For example, think about what has happened in Ireland, Spain, Portugal and Italy since 2011. Our Government has made great play out of telling everyone that the interest rate at which the Irish Government can borrow has fallen to the lowest ever.

Have you ever stopped to think about what that actually means? It means that someone has been prepared to lend to Ireland at very low rates. They have lent us money in return for Irish IOUs.

Those people who have been lending to Ireland are hedge funds and investment funds with pretty short term horizons. They have been encouraged to lend to Ireland because the European Central Bank has promised to lend to Ireland. The ECB was credible.

What happens to ECB credibility if Greece goes?

Obviously, the ECB’s failure to keep the Greeks in the euro will make its promises look less binding, more equivocal and more conditional.

In this case, the hedge funds would try to get out of Irish, Spanish and Portuguese IOUs not only because they are worried about the risk in the peripheral countries but also because the politically unstable euro will be falling against the politically coherent dollar.

Most of the funds are American.

Now consider what would be happening to the balance sheets of these funds.

They start losing money on their Irish IOUs because the value of these IOUs is falling as people reassess the risk after a Greek exit. As the euro falls against the dollar, these losses amplify.

Their balance sheets start to register huge losses. The funds panic and all run for the door; but there is no liquidity as no one is willing to buy from them. They then have to sell “good” assets to make up for the losses on their “bad” assets because their balance sheets have to balance every day.

The investors in these funds panic and they take money out of the funds, exacerbating their losses.

Financial contagion takes hold and it is a strange and frightening thing that has the potential to amplify shocks like Greece far beyond the shores of the Aegean.

As you can see, a relatively small failure has the potential to change everyone’s assumptions about the way the economy works.

This is now the risk. Wouldn’t it be weird if a supposedly permanent and powerful euro currency frayed quicker than the isolated and fractured communist Cuba!


  1. Harve

    Interesting perspective David.

    I agree that potential financial contagion is closer than most people think. I also believe that there are other factors at play here. Establishment Europe fears the far left and wants to knock the stuffing out of the current Greek government before similar administrations gain ground elsewhere (e.g. Spain). It is a dangerous game of brinkmanship which the Greek government is also contributing to. I still think that an 11th hr 59th minute compromise deal will be patched together. Will it be sufficient? Unlikely.

    • StephenKenny

      Whatever happens, it can’t be sufficient.
      Almost the whole world has two problems – their accumulated debt pile, and their annual budget deficit.

      The first is a problem as the other side of a borrower is a lender, and the lenders are always, in one way or another, pensions funds (including state pension liabilities) . Which means pensioners, and future pensioners. If any loan gets written off, then there’s a pensioner, in some way or another (and there are a number of routes) who’ll get a bit less than they thought they would. Or indeed, a lot less.
      The second is all about the public sector, and those in receipt of state largesse – banks, etc.

      Our debt piles are too large to be paid off – so pensioners are going to be significantly poorer than we’d all thought, a lot poorer; and the annual deficits are too high, so people in receipt of taxpayer funds are going to get less. A lot less.

      The EU countries are in trouble, but so is the US – it borrowed many many $trillions to pay off the nonsense that culminated in 2008, but haven’t fixed anything, in fact all that cheap money has made it all much worse.

      My money’s on a war. The usual thing – a false flag operation, an almost brainless media whipping up the appropriate anti-whoever-probably-Russia fear, and bingo, we’re off to the races again: rations, hardships, blaming everyone else for everything, and popular support for a police state. In this environment, it’s politically ok to just make everyone poor again. It’s just an unfortunate route.

  2. michaelcoughlan

    Hi,

    Britain isnt fuck&d because of it’s political system per se it is finished because its banks have been given carte blanch to rape it.

    It was a powerhouse when it had a manufacturing base.

    Michael.

    • Deco

      Britain has been slowly rebuilding in certain manufacturing sectors. Of course the glory days are gone and will never return. It seems that outside capital, and outside management are helping matters. The fact that local capital ends up in real estate and other forms of speculation is a massive hindrance to Britain.

      Britain has a serious debt problem. Actually most EU countries have a debt problem. I don’t see anybody taking debt seriously….

      except

      in Athens !!!

  3. Pat Flannery

    Watch Michael Wilson and William Black put this in proper perspective.

    http://michael-hudson.com/2015/06/greece-on-behalf-of-europe/

    Those who were bailed out were not the Greek people nor the Irish people they were the European banks, mainly German and French. Now the ones who are being bailed out are the hedge funds, mainly American, who bought up the European bank debt at a discount.

    You don’t hear that analysis from Enda Kenny. He wants to blame it all on a Syriza/Sinn Féin misunderstanding of global finance. It seems that this Mayo County Councilor knows international finance better than Professor Yanis Varoufakis.

    • Deco

      Kenny is only as good as the speech that is written on paper in front of him.

      Kenny and Noonan are about to get found out.

      Do not let yourself be a casualty of the type of morons that get propped up by the Irish media in such a manner that they look competent. They are not.

  4. Deco

    Given everything that we have seen to date, it is becoming increasingly evident that the Greeks could run a currency better than the ECB. The main achievements of the ECB to date has been a series of Ponzi scheme runs in the PIGIS, followed by a crash, followed by a Ponzi scheme run in DE, NL, FI. In fact I don’t find any evidence that the ECB is trying to do anything except create absurd asset bubbles followed by lethal asset crashes.

    Apart from anything else Greece would be able to put the people first, and the lobbyists in Frankfurt, Brussels, etc.. where lobbyists belong – outside the political process.

    Ireland is more indebted than Greece. And just like Greek GDP figures are misleading, so too are Irish GDP figures.

    The current government were appointed to solve a problem, and they have made it worse, by ramping up debts, and avoiding the economic constraints within the economy.

    Once we had Bertie the Ditherer. Well, now we have an entire cabinet of dithering Berties.

    The national debt is 75 Billion higher than it was when they took power. It is still increasing. And the best hope that they can offer is rising house prices, and participation in yet another Nasdaq bubble (that is soon going to burst).

    Of course, when the clowns running the show here get found out they will blame Syriza, short sellers, unions, pensioners, Wall Street, the tooth fairy, the RCC, the Brits, etc… and whomever else is in view. It is entirely predictable. They will be baffled at how the whole thing fell apart so quickly.

    Ireland has FIXED NOTHING !!!!

    All Ireland has done is participate in a Nasdaq Social media boom that is based on profit margins that do not justify the valuations or the investment – and definitely not the hype.

    ICEBERG !!! Starboard side.

  5. DB4545

    Deco

    I note that Brian Cowen accepts “full responsibility” for his part in the crisis yet I also note that he hasn’t stopped collecting his 142,000 a year pension. Bertie hasn’t accepted responsibility for anything that happened but at least he has the good sense not to be walking the streets because every time he does one of his former constituents wants to thump him. Maybe Brain Cowen could actively demonstrate his “full responsibility” by signing over his unearned pension to the taxpayers he betrayed. He might just be able to get by on his non-executive directorships of Topaz and the Beacon Clinic. It’s still a hell of a lot more than most families have to live on.

    DB

  6. Mike Lucey

    DMcW could be right on a lot but when he says,

    ‘Have you ever stopped to think about what that actually means? It means that someone has been prepared to lend to Ireland at very low rates. They have lent us money in return for Irish IOUs.’

    Have we (Ireland) really been lent ‘Money’? There are quite a few definitions for ‘money’. Check them out here, http://www.thefreedictionary.com/money The one that makes most sense to me is number three,

    ’3. Assets and property considered in terms of monetary value; wealth’.

    What ‘wealth’ has Ireland been loaned? I think it about time DMcW digs deep on this fundamental because we are going around in circles otherwise.

    Two important things I’ve learned in the last 24 hours that relate to Greece and Ireland and for that matter the whole world.

    In the case of Greece. From ‘Marketing the ‘Russian Threat’
    http://www.paulcraigroberts.org/2015/07/01/marketing-russian-threat/

    “In the deluge of Western media reportage on the Greek debt crisis, one key aspect remains strangely hidden. That is, the fact that Greece’s debt burden of $320 billion has largely been incurred from decades of exorbitant militarism. Some estimates put at least half of the total Greek debt pile – more than $150 billion – down to military spending”

    If this is truly the case maybe a more appropriate heading would be, ‘US-led NATO protection racket?’

    So! Maybe its not the case of the lazy, early retiring Greeks and more like a ‘protection racket’ by the arms manufactures. Dwight D’s parting words of solid advise come to mind!

    To this end Ireland’s case looks like this,

    ‘The military budget was €1.005 Billion in 2007 (estimated) and €1.354 Billion in 2010.[1] By 2015 the budget had been cut to €885 Million and is projected to stay at that level until 2017 according to the latest Department of Finance report’

    Mmmmm, I wonder if we got the Banks to provide their own ‘armed’ security escorts instead of using Irish soldiers could this figure be cut back even more?

    The other important thing I learned was that there possibly exists a so called ‘Financial Black Hole’. If this is the case it explains a lot to me and I am no longer looking for the Wizard behind the curtain. The problem is just a basic human trait that has been allowed to run away with itself.

    To cast some light on this possible phenomenon check out Dimitry Orlov’s
    ‘The Care and Feeding of a Financial Black Hole’. He explains it extremely well in a style not unlike DMcW’s, here,

    http://cluborlov.blogspot.co.uk/2015/06/the-care-and-feeding-of-financial-black.html

    To get things back on a straight path ‘we the people’ need to take a more direct involvement in governing ourselves instead of electing mostly well intentioned people that for the most part have not a clue about what to do when in ‘power’ and end up drawning us further into the ‘Financial Black Hole’.

    As Dimitry says, we need to get rid of the ‘fear’ and starve the ‘greed’ at the center of the financial black hole so it shrivels up and dies otherwise we will all be consumed even the fat cat enticers that cling steadfastly to its core rim. They will be that last to be consumed but consumed they will be unless …….

  7. Mike Lucey

    DMcW is right on a lot but when he says,

    ‘Have you ever stopped to think about what that actually means? It means that someone has been prepared to lend to Ireland at very low rates. They have lent us money in return for Irish IOUs.’

    I don’t ‘get it’.

    Have we (Ireland) really been lent ‘Money’? There are quite a few definitions for ‘money’. Check them out here, http://www.thefreedictionary.com/money The one that makes most sense to me is number three,

    ’3. Assets and property considered in terms of monetary value; wealth’.

    What ‘wealth’ has Ireland been loaned? I think it about time DMcW digs deep on this fundamental because we are going around in circles otherwise. ‘Paper’ or computer ‘digits’ is not wealth. Where are the blood, sweat and tears involved in its creation?

    Two important things I’ve learned in the last 24 hours that relate to Greece and Ireland and for that matter the whole world.

    In the case of Greece. From ‘Marketing the Russian Threat’
    http://www.paulcraigroberts.org/2015/07/01/marketing-russian-threat/

    “In the deluge of Western media reportage on the Greek debt crisis, one key aspect remains strangely hidden. That is, the fact that Greece’s debt burden of $320 billion has largely been incurred from decades of exorbitant militarism. Some estimates put at least half of the total Greek debt pile – more than $150 billion – down to military spending”

    If this is truly the case maybe a more appropriate heading would be, ‘US-led NATO protection racket?’

    So! Maybe its not the case of the lazy, early retiring Greeks and more like a ‘protection racket’ by the NATO arms manufactures. Dwight D’s parting words of solid advice come to mind!

    To this end Ireland’s case looks like this,

    ‘The military budget was €1.005 Billion in 2007 (estimated) and €1.354 Billion in 2010.[1] By 2015 the budget had been cut to €885 Million and is projected to stay at that level until 2017 according to the latest Department of Finance report’

    Mmmmm, I wonder if we got the Banks to provide their own ‘armed’ security escorts instead of using Irish soldiers could this figure be cut back even more?

    The other important thing I learned was that there possibly exists a so called ‘Financial Black Hole’. If this is the case it explains a lot to me and I will no longer be looking for the Wizard behind the curtain. The problem could be just a basic natural human trait that has been allowed to run away with itself.

    To cast some light on this possible phenomenon check out Dimitry Orlov’s
    ‘The Care and Feeding of a Financial Black Hole’. He explains it extremely well in a style not unlike DMcW’s, here,

    http://cluborlov.blogspot.co.uk/2015/06/the-care-and-feeding-of-financial-black.html

    To get things back on a straight path ‘we the people’ need to take a more ongoing direct involvement in governing ourselves instead of electing (mostly) well intentioned people that for the most part have not a clue about what to do when in ‘power’ and end up drawing us further into the ‘Financial Black Hole’.

    As Dimitry says, we need to get rid of the ‘fear’ that feeds the ‘greed’ at the center of the financial black hole so it shrivels up and dies otherwise we will all be consumed even the fat cat enticers that cling steadfastly to its core rim. They will be that last to be consumed but consumed they will be unless …….

    • Deco

      You are correct about greed. Greed has become the engine of the entire asset bubble mania.

      The Ponzi-economy is driven by greed, and the elevation of “something for nothing” as the highest form of cultural achievement in our society.

      “Something for nothing” is what you see in the IFSC, and no bank bondholder left behind. The idea that something for nothing is anything other than a form of theft has been steadily discounted by the centre right, and the centre left.

      The Western world has spent two decades at least (depending on your location) believing in “something for nothing”.

      All that there is to show for it now, is debt…everywhere.

  8. Mike Marketing

    We all fell for the line sold by the Political Party “Snake Oil Salesman”?
    “If you pay peanuts all you will get is monkeys.”

    So now that we see how the illusion works what has been done to ensure the Taxpayer is not cheated again? What politicians have it as a new policy in their General Election manifesto?

    Yes. We are deafened by the silence.

    History is destined to repeat itself. And the taxpayer must brace themselves for another kick in the goolies!

    • Deco

      We pay a marginal tax rate of 52%, 23% VAT, expensive excise rates…..we pay a lot….and we still get dumb Orangutans like Noonan and Kenny playing with mobile phones, and grunting about Feta cheese.

    • DB4545

      Mike Marketing

      “If you pay peanuts all you will get is monkeys”. Mike we’re paying nearly 300,000 Euros salary to Etna and 142,000 Euros salary to Brain and christ knows how much to the rest of these wasters. I’m certain that if taxpayers were to recruit ministers from the primate enclosure in Dublin Zoo they would not see a reduction in the calibre of minister employed based on the results that they’ve delivered for taxpayers. I’m certain given the deal negotiated with the IMF that the troika thought likewise. This really comes in to focus when viewed by the manner in which Iceland played its hand and the way in which Greece is currently playing hard ball. I certainly wish no insult or offence to the venerable and esteemed residents in the primate section of Dublin Zoo by making those comments. Furthermore I don’t resent paying for their food and accommodation in contrast to the lesser apes collecting ministerial pensions.

      DB

  9. Yanis, telling it how it is. Check the embedded video in the link posters.

    http://www.theguardian.com/business/2015/jul/02/yanis-varoufakis-id-rather-cut-off-my-arm-than-accept-yes-vote

    At last – someone with some backbone. Enough is enough.

    • “As the campaign heats up, the Greek economy has ground to a halt, with spending withering as a result of the imposed €60 (£40) withdrawal limit at banks. Shops have closed, assembly lines have stopped and staple foods are disappearing from supermarket shelves amid panic-buying.”

      Hi Adam, good attachment.
      The above caught my attention.
      Which way people will vote may depend on how worried and hungry they are which affects thinking. A yes vote may be coming and then the negotiations have to wait as the Greek government may resign and force another election.

      The above scenario has long been forecast by those who see the failure of the current money system The fact that all money is issued as debt and interest is specifically designed to do what it has to Greece and every other country too.

      The above is coming to a “place near you” sometime soon and it will be a sudden arrival. Beware the offering of a new international currency of special drawing rights from the same banksters who operate the current fiat system.

      As no one will contemplate the adoption of an honest money system we will suffer a total collapse of this one.

      It is imperative that we return to an honest system of money in order to return to stable economies and cohesive society.

      The current vote is being cast in the role of a vote on the Euro by the central bankers. This is a scare tactic by the central bankers as nothing said by the Greek government has indicated a desire to leave the EURO or the EEU. The contrary is stated. A desire to remain has been stated.

      We will see if the population has the same backbone as the government!!????

    • Good article Adam

      This is what caught my attention

      “As the campaign heats up, the Greek economy has ground to a halt, with spending withering as a result of the imposed €60 (£40) withdrawal limit at banks. Shops have closed, assembly lines have stopped and staple foods are disappearing from supermarket shelves amid panic-buying.”

      When people start to panic they throw out the baby with the bath water. The Greeks may throw out their government at the same time with a Yes vote. Depends who is held to blame. Then they will look to the EU for salvation and a security blanket. It will fail too.

      The bank runs, shortage of food and shut down of commerce have long been forecast as the final result of the Ponzi scheme fiat central bank money. It will be a world wide contagion as David intimated.

      Debt and deficits are named as the cause but the reason has not been expressed YET.

      Ultimately the reason for the devastation is the use of our current monetary system. Unfortunately nobody will get around the assuming a proper, honest money system until we see the total failure of the current system.

      Ignorance of what works will allow assumption of yet another fiat scheme call the IMF special drawing rights. This will allow total control of the economy of all involved to the ruination of the general populations.

      A possible salvation may be the use an Asian bank lending organization that side steps the current one and the World Bank, IMF etc.

      https://www.google.ca/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=saltspring%20weather

    • paddythepig

      Yet another chancer looking for a freebie.

  10. Home Counties Girl

    Hey Troops,

    I urge you guys to sign the petition below in support of Greece. I for one am at my wits end with this whole debacle. O, and do forward it via email, post it on Facebook and tweet it – Let’s rally some support.

    To German Chancellor Angela Merkel and the Troika:

    We, citizens from around the EU, call on you to end the push for austerity on Greece, and move to hold a conference to restructure and reduce Greek debt. Austerity has failed to deal with the debt, and devastated Greece’s most vulnerable. We call on you to change course and put people before banks.

    https://secure.avaaz.org/en/stand_with_greece_loc_eu/?tvkiqjb

    Cheers :)

  11. mcsean2163

    Greeks were forgiven 160bn, now it looks like they might get another 50bn. Maybe we could learn something from them?

  12. Deco

    Concerning Cuba’s fear of the internet, we now have a former Stalinist in the ILP pushing for legislation that enables politicians to strike back at citizens for being “annoying” to a politician.

    Ireland’s politicians are useless. Can we sue them for being useless, before they start suing individuals for being a nuisance ?

    • michaelcoughlan

      which of them is the former stalinist?

    • DB4545

      Deco

      Would it be cheaper to seek a number of further referenda?

      Amendment to repeal the pension and remuneration of all elected officials Act 2015.
      1. No pension paid from public taxation to exceed the average industrial wage.
      2. No multiple pensions to be paid from public taxation under any circumstances. The pension arising from the highest office held or the highest pay grade held shall be the sole pension paid from the public purse subject to the 1. above.

      Amendment to whistleblower legislation 2015.

      1. Any public servant or elected official who reports corrupt activities to the relevant law enforcement authorities shall be permitted to retire on one pay grade above their existing pay grade.
      (The rationale is that their career and promotion prospects are finished and this may provide some financial incentive to public servants or elected officials).

      2. The first party involved in any corrupt activities(public servant or elected official or private individual) to report such corrupt activities shall be immune from prosecution providing that they have made a statement reporting such activities to a relevant authority (a judge of the High Court) PRIOR to any investigation by a law enforcement authority. Private individuals may lay claim to the pension benefits accumulated by any public servant or elected official subsequently convicted as a result of the reporting of corrupt activities.
      (The rationale is that this provides an incentive to the “first mover” to report wrongdoing at the earliest opportunity in order to avoid prosecution and provides some incentive to private individuals).

      Think of the fortunes that could be saved by avoiding the need for tribunals etc. This would provide revenue officials and other public servants real teeth to guard our tax revenues without fear of career death. The costs involved would be a fraction of tribunal costs.

      Watch the heavens fall.

      DB

    • coldblow

      I’ll have to look this up.

      From limited research of my own (ie the one and only time I read the Observer since 2011, possibly early last year) a future crime-in-the-making is internet trolling, defined as people who say unkind things in rude language which cause distress to well-known feminists or to individual women who, for whatever reason, are looked kindly upon by feminists everywhere.

    • coldblow

      I can’t find anything by Gilmore. What did he say?

  13. StephenKenny

    once it gets started……

    “The Germans and Greeks can blab, hondle, and bluff all they want. It won’t go away. According to financial services company Credit Suisse, Greece has total debt – including households, businesses, and government – equal to 353% of GDP.

    But U.S. debt is even higher at 370%. Germany, that supposed paragon of financial virtue, is at 302%. And China, with its state-controlled economy, is at 250%. All are in good shape compared to Britain. It has total debt equal to 546% of GDP. Japan is in an even worse state. Its total-debt-to-GDP is 646%. And if the Credit Suisse numbers are correct, Ireland is off the charts with total debt equal to more than 1,000 times GDP.”

    from http://bonnerandpartners.com/the-beer-theory-of-credit-quality/

  14. Wills

    The EU pre-Euro worked in a positive direction for enterprise, democracy and prosperity across Europe.

    The Euro EU is a ponzi scheme stickered onto the EU as a viable enterprise.

    I think it is important to always keep the two separate.

    Can the Euro be returned to a medium of exchange reflecting the value of an exchange fairly?

    Or,

    ….will the Euro continue to be printed by the ECB like monopoly money and loaded into the pockets of the owners of the means of production who have stolen the EU project for their own greed, avarice and vanity or will democracy in Greece hold steady against the powers at be who have hijacked the Euro and pull the plug and we can reset and go again with a Euro currency which is ponzi allergic.

  15. David,
    Respectfully, I disagree with your statement that the hedge fund will be dropping the bonds and that the interest rates will go up any time soon.

    As to the first part, the funds have already sold the Greek bond a few years back and if they try to get rid of more bonds – they have nowhere to go except treasury bills or cash. A good example was 2008 – did the funds ditch the bonds? Not on a big scale – they waited it through. Bonds, even illiquid and unsaleable can still be counted as income bearing “assets”. Fund managers get fired for holding cash.

    Interest rates cannot go up because it would probably bankrupt all government (addicted to cheap financing), most large corporations (ditto) and would instantaneously devalue almost all banking collateral (bonds and property).

    The establishment have a very tight control over the system and will not allow that! Not unless they have an alternative. I don’t thing they have an alternative, do they? Thus, interest rates have only one way to go – down, asymptotically to zero!

    I think they will most likely isolate and forget the weaker countries with cancerously overgrown government and atrophied private sector, like with ebola and let the rest of the system continue.

    Regards,
    Stan (Heretic)

    • The rates as manipulated by central banks are in massive control mode but depend on the issuance of ever more money supply as reserves to commercial banks and as funding directly to government to monetise the new government bonds issued to cover budgetary shortfalls.

      The international bond market is another thing as it is seen that the national currencies grow weaker so the demand drops and interest rates rise.

      Case in point is the US 10 year bond watched as a bell weather.

      https://ca.finance.yahoo.com/echarts?s=%5ETNX#symbol=%5ETNX;range=6m

      It was at 1.7% in Feb but is now at 2.40 on a stiff rising trend.

      Greece has a similar problem in March the 10 year bond yield was less than 9% but is now over 15%

      Already , many fingers have been burned in the bond market. Trend is rising yields and falling values despite the central bankers best efforts.

      • Tony,

        Greece yields do not count if they would never be paid.

        There is a very strong downward trend in the US treasuries yields, see the maximum span chart of the same chart that you posted:

        https://ca.finance.yahoo.com/echarts?s=%5ETNX#symbol=%5ETNX;range=my

        the current slight rise in yields looks like a small fluctuations that used to occur quite regularly throughout the last 50 years. See for example the 50 day and 200 day moving averages on the 5 year chart:

        http://chart.finance.yahoo.com/z?s=%5ETNX&t=5y&q=l&l=on&z=l&p=m50,e200

        The yield will probably top after a couple of months from the 50-200 intersection point (about now) since the current rise is smaller than the previous one in mid 2013.

        I made similar mistake regarding yields in 2008, based on logic and rational economics, that it it does not make a sense to have the cost of capital (yields) driven so low, however the control interests of the power elite and banking are so powerful that they seem to manage to overcome the rational logic. For the time being.

        Please notice that the authorities – governments, public sector, large corporations and banks, cannot allow the capital market system to naturally correct towards the higher yields while at the same time obliterating value of their personal wealth, value of the entire banking collateral and devaluing all paper “assets”! This process (towards the higher yields) will certainly be opposed by the authorities as hard as they can, because it would render them poorer and less powerful.

        Regards,
        Stan (Heretic)

        • “Greece yields do not count if they would never be paid.”

          Perhaps, but somebody bought and owns these bonds. That entity will take a bath if rates rise further and a complete bath if the value drops to zero because of default. A wipeout of assets.

          “There is a very strong downward trend in the US treasuries yields, ”
          Only since 1981 as before that from 1960-1981 the trend was up. I suggest that lower is a small percentile probability at this point compared to a 99 percentile chance that the reversal has already occurred.

          The only way interest rates on bonds can remain low or decline further is if the central bank buys all the bonds as the regular market dries up and there are no buyers. That is the central banks will monetize all the debt on the planet and in turn own all the assets as the bonds default. The debt incurred by the banks for government deficits will accrue to the debt of the taxpayer until there is not enough GDP to make the interest payments.
          The holders of that debt will now own to total output of all people on the planet. Economic serfdom it may be called.

          At some point before this the system collapses and interest rates shoot through the roof to reflect the reality of little chance of being paid.We have started that process.

          EG. http://investmentresearchdynamics.com/blackrocks-warning-get-your-money-out-of-all-mutual-funds/

          • Re: “The only way interest rates on bonds can remain low or decline further is if the central bank buys all the bonds as the regular market dries up and there are no buyers.”

            I believe, that’s exactly what is happening right now!

            Re: “At some point before this the system collapses and interest rates shoot through the roof…”

            Quite likely since the current situation is unstable, but I don’t know when it will happen. For the time being we are experiencing a classical deflationary spiral masked by the quantitative easing. Eventually it will end. If you know when it will happen please let me know so that I can start shorting the market (again).
            Regards,
            Stan (Heretic)

        • Goodday Stan.
          Enjoy the day
          Tony

    • Mike Lucey

      @Adam

      Of course they did. IMO the reason being that the US controlled IMF have been told to keep Greece in NATO at all costs. They know full well that both China and Russia are making overtures and see Greece’s possibility of leaving NATO in return for support as the start of the break up they would like which would let them push ahead with their agenda, BRICS etc.

      Mike

  16. dwalsh

    I stand with the Greek people and all Peoples who reject rule by debt and banker’s fiat.

    Austerity (imposed on the poorest among us) is not a technically legitimate or ethical solution to the global banking crisis.
    This fact is even accepted by IMF internal reports.

    Austerity is being used as an instrument of social engineering; not as a solution to the global banking crisis.

    I signed this petition in support of the Greek people
    https://secure.avaaz.org/en/stand_with_greece_loc_eu/?tryBTbb

  17. Grzegorz Kolodziej

    There is an interesting article today in Polish media written by a geopolitical analyst Krzysztof Rak whom I actually met many years ago.
    I thought I’ll share it with you because it shows divisions in Polish political debate on Greece. Sadly I am pressed on time and have to use google translate so I do not guarantee the translation is accurate (in fact I see from the first sentence it is a bit shit) but it renders the spirit of what I think is a good article:

    “This is what we have in common is peripheral. Poland and Greece are the peripheral countries of the West. And for that position, both countries are paying dearly. According to the theory of Immanuel Wallerstein relations between the center and the periphery they are never symmetrical, because it is the center is their primary beneficiary.

    The proof of this thesis is the development of the crisis in the euro zone. The single currency has proved to be a trap for the Greeks. They took her credit cheaper than before drachma and into debt to power. Borrowed euro but soon returned to the economic center since the Greeks for not buying products and services that are not produced their weak economy. As a result, the richest countries, above all Germany, thanks to exports have been registering profit and Greece – debt. Athens repay him for five years. And so they went bankrupt! Again, the Greeks went bankrupt because repay debt, and not because they bought themselves villas with swimming pool. Well understand this Polish Frankowicz who, skuszeniu cheap credit, have debt today exceeds the value of the property purchased by them.

    Should we be glad that we did not find themselves in the situation of the Greeks? Not very. We, too, we give tribute economic center – only in other forms. Large corporations operating in Poland usually do not pay taxes in our country. There is a simple way: artificially inflate the costs, which can not record profits from which would have to pay tax. But it’s very subtle way. Typically they use the so-called method. rympa?. It just so happens that with public money, our policymakers are buying the most expensive in the world toys: high-speed trains, helicopters, missiles maneuvering, gas etc. Someone will say that it is a simple corruption. Not completely. This corruption is a common phenomenon in the economic relations between the center and the periphery, where the political elite are easily prone to demoralization.

    Just as the Poles did not give consent to their looted, just as the Greeks, adopting the euro, they had no awareness of all the consequences of this step. It’s hard to blame them. EU citizens are able to control the decisions of their representatives in Brussels. National parliaments can only deal with violations of the principle of subsidiarity, that is not nothing. The deputies of the European Parliament, however, participate in the process of European law, in practice they are not in any way connected with their voters. Because you do not know what their chosen ones are doing in distant Brussels.

    From decades of European politicians complain about the “democratic deficit” in the EU, but do not take action to reduce it. It is convenient for them, when not looking at their hands. Therefore, such a decision sparked outrage Greek Prime Minister Alexis Ciprasa for a referendum on austerity policies. It will be a precedent that could threaten the sovereignty of Brussels lobbyists and bureaucrats.

    So nothing about us without us (here Mr. Rak alludes to Nihil novi nisi commune consensu – a 1505 act adopted by the Polish Sejm (parliament), meeting in the royal castle at Radom which act marked an important victory for Poland’s nobility over her kings as it forbade the king to issue laws without the consent of the nobility, represented by the Senat and Chamber of Deputies and it invalidated the Privilege of Mielnik, which had strengthened only the magnates, and it thus tipped the balance of power in favor of the Chamber of Deputies – Grzegorz).

    It’s a lesson that European citizens should be drawn from Greek tragedy. Do not blindly trust politicians, because more than good citizens, they often favor the interests of various oligarchic groups.”

    Meanwhile, I came across a different take on Greece on Fox News – they juxtaposed Greece’s bailout to Puerto Rico:

    https://www.youtube.com/watch?v=rFliUZ6g1Eo

    • I red the original article, and had a strong impression that Krzysztof Rak has ignored a proverbial “elephant” in the room.

      Factually it is correct, the borrowed euros were indeed used to pay Greeks’ public sector wages instead of being invested, then the euros of course, flew back to the countries that were producing the most goods that those Greeks public employees, that is probably nearly everybody there, needed to buy to live. The question is _who_ exactly did it and _who_ benefited.

      Krzysztof Rak forgot to mention that the biggest culprit and the biggest beneficiaries in this scheme were the political upper classes and the entire public sector! The biggest losers of this debt fraud were and are the individual people working in the private sector, who could not compete against the rising cost of doing business caused by the incessant flood of publicly borrowed euros!

      I am with the IMF and the Germans on this one. I think that a necessary precondition of any reform, with the external help or without, regardless of the currency, is to trim the public sector fat, stop paying people who don’t produce anything useful and revitalise the real economy. It is called the “Shock Therapy”. It has been done once and it does work. I am sure you must have heard of it… 8-:)

      Regards,
      Stan (Heretic)

      • “trim the public sector fat, stop paying people who don’t produce anything useful and revitalise the real economy”

        They can’t even do that in Ireland, what makes you think they can do it in Greece?

        • If they won’t do that then the circumstances will do that for them. Nature has her ways…
          Stan (Heretic)

          “If something cannot last it won’t!”

        • DB4545

          Because you have to trim the fat and not the muscle Adam and in the public sector in this State the upper echelons are comprised of 100% pure pork fat.

        • Grzegorz Kolodziej

          I always thought (perhaps deluding myself) that this can be done not as much because some reformers will get into power but rather due to lack of moolah (which would trigger some reforms).
          Of course, with euro-mechanism and QE we can forget that one.
          But then again with Greece out of that mechanism…

          By the way, I red all the posts and no one (including me) analysed what benefits and weaknesses of Greece having its own currency or being outside the EU now might be (I believe Tony posted some link skeptical of devaluation).
          Is that not the elephant on this blog?

          Waiting for few sentences from foreign travels…

          My pleonastic respectful regards ;-)

      • Grzegorz Kolodziej

        “the biggest culprit and the biggest beneficiaries in this scheme were the political upper classes and the entire public sector”
        Yes, you are spot on. The way I look at Greece is that the Greek voters were happy to sustain the crony system of insiders getting sinecures (in public sector) and (not taxed) yacht owners as long as the insiders group was relatively large and outsiders were bribed by European taxpayers (for example in form of subsidies for fake olive trees; Greece had received 3 times more such subsidies per capita than any other EU country).

        The real anger in Greece started when:
        a) Insiders also got hit and outsiders were thrown out of the system
        b) Greek governments could no longer hide their true levels of debt (incurred in conjunction with Eurostat and Goldman Sachs).

        It chimes with remarks de Tocqueville made about revolutions in general (in what is one of the best political books of all time) and civil unrest in particular (p. 214):

        https://books.google.ie/books?id=N50aibeL8BAC&pg=PA214&vq=%22most+critical+moment+for+bad+governments%22&source=gbs_search_r&hl=en#v=onepage&q=%22most%20critical%20moment%20for%20bad%20governments%22&f=false

        As to IMF and the Germans I would not say I am on their side. I made a detailed analysis on this blog of their selective memory regarding 1953 London Debt Agreement. If anything, I’d say that the IMF makes more sense as in their latest paper in the link I attached.

        I would probably summarize my stance that both Germans and Greeks are equally guilty. These things are too well known for me to repeat them (Siemens bribe to build underground, another company to build their airport, etc). The most guilty of all are the French to force Greece’s participation in euro currency against the will of everyone, including the Germans.

        “is to trim the public sector fat, stop paying people who don’t produce anything useful and revitalise the real economy. It is called the “Shock Therapy”.”

        I agree with the first three but unless we do not give Balcerowicz’s-Sachys shock-therapy as an example.
        Subsidizing the US dollars using Polish taxpayers moeny and increasing taxes is not the kind of shock therapy I would support. New Zealand or Chile would be better examples. When I was young and stupid I thought Thatcherism too, but then I red too much about her economic policies and met people too close with the Conservative Party to call it a successful shock therapy (except her last term, when she finally kicked out monetarists from her advisers inner circle).

        As to Mr. Rak, I actually happened to have spent two weeks with him and two charming girls a long, long time ago and we drank vodka for a week (this was the last time I had vodka) while discussing eidetic reduction and I am a bit surprised (probably pleasantly, I am not sure) he re-emerged where he re-emerged. Very witty person that Rak fellow.

        As political analyst he is very good – another surprise (I discussed Husserl with him).

        Regards

        • Grzegorz,

          When was young and stupid I also admired Thatcher, now that I am slightly older and stupid, I found that her privatization replaced large corporations run by corrupt state and labor officials with the same large “private” corporations run by probably even more corrupt upper class banking elites. She replaced labor socialism with banking socialism. I was naive.

          I am not sure what Balcerowicz can be blamed for but his reforms did work! Compare Poland now with Czech Republic or Hungary.
          Pozdrawiam,
          Stan (Heretic)

          • Grzegorz Kolodziej

            I would not totally agree that Balcerowicz’s reforms worked, although I would not criticise everything he has done either. There were some elements in his plan which did work, such as introducing market prices on some (not all) products which are, as it were, the bloodstream of every normal economy.
            One has to bear in mind that the goal of the Sachs-Balcerowicz plan was not so much free market state but – as Sachs himself admitted in an interview – social-democratic state.

            The predominant narrative in Poland at the time was that there was no alternative to Balcerowicz’s plan, that no one else came up with an alternative plan. In that Balcerowicz enjoyed total support of most media in Poland and whatever criticism there was, it was coming from non-professionals from the left (with their intransigent and demagogic attitudes), not from professionals (although Milton Friedman was highly critical, but Polish media glossed it over).

            The inconvenient (for Balcerowicz) truth is that opposite to what he said, there were alternative, much more free market plans, but their introduction would have jeopardized both soft landing the communists were provided with at the Round Table and particular interest of people like George Soros. The most coherent plan was proposed by prof. Beksiak – one of his favourite students was your humble servant (Beksiak said it’s been years since he met someone who actually did read Keynes). Beksiak has much more clue about economy that Balcerowicz has even now.
            The Polish tragedy was that in Solidarnosc circles Balcerowicz was one of the few who had any clue about economy – Sachs writes that he was invited by Adam Michnik to meet Jacek Kuron and when he was outlining his plan, Kuron would sometimes interrupt him saying “you are right”, “I agree”. When Sachs finished, it turned out that neither Michnik nor Kuron did not understand anything from what he said and Kuron asked him to write everything down. Sachs said that he would need two weeks to refine his plan, but Kuron insisted it has to be done now. Sachs took a piece of paper and that’s how Balcerowicz’s plan was created.

            Sachs had a reputation of a crook even before his experiments in Poland and Russia. Take the Harvard Institute of International Development scandal where he was involved in financial speculations he was an advisor to. HIID had to be dismantled and Sachs moved to Columbia University. Sachs had also f…d up Bolivian economy before he moved to Poland.

            What were main weaknesses, negligence and omissions in Sachs-Balcerowicz’s plan?

            1. No privatization – in 1990 he privatized only 15 companies.
            2. No tenders on companies privatizations of which he oversaw; as a result no price discovery (some companies were even given for free)
            3. Wealth transfer from farmers and small entrepreneurs to Wall Street due to
            3.1 Pegging zloty with dollar while
            3.2. Introducing deposit rate to 100pc and
            3.3. Rapid increase in interest rates on loans (wave of bankruptcies)
            4. Preferential treatment of western (mainly German and French) corporations (i.e. minister Lewandowski in a government of which Balcerowicz was a member exempted them from paying taxes for 5 and 10 years)
            5. Attempts to control inflation through salary increment taxes rather than money supply, which he was increasing. On the other hand his policy of issuing Polish government bonds at interest rates higher than 15pc to buy US bonds at interest rates 2-3pc is a bizarre example of Poland subsidizing the US (Poland lost $100bn as a result).
            6. What was successful (SME’s) in Polish transition from socialism to crony capitalism was not successful thanks to Balcerowicz’s plan, but despite of it (grey economy).

            In fact Sachs is quoted in Stiglitz’s book “Globalization” saying that the fall of communism presented a unique occasion to conduct an a controlled economic experiment, and that this experiment has failed in Poland (not that I value Stiglitz as an economist).
            Stiglitz further asserts that the only reason the transformation in Poland was successful, was that the implementation of Sachs/Balcerowicz plan has been aborted in 1992/93 while similar plan has been fully carried out in Russia.

            Was Poland really successful compared to Hungary and Czech Republic?
            GDP per capita is a little over $14,000 in Poland, which is comparable to Russia, though nearly 5 times as high as in the Ukraine and higher than Argentina or Mexico (but lower than Urugway which went bust). It’s similar in Hungary, but over $16,000 in Lithuania and Latvia, over $18,000 in Slovakia nearly $20,000 in Czech Republic and almost $22,000 in Greece after their 5 years of austerity. Slovenia, a former communist country with no Balcerowicz and outside the euro and the EU has GDP per capita not only almost twice as high as Poland, but also higher than Greece and Portugal: $24,000.
            Taxes for a family with one child are the second highest in OECD.

            As to Maggie Thatcher, she INCREASED public spending – 44.6pc of GDP in 1979/80 compared to 48.1 in 1982/83 (38.9 in 1988/89 and 43.3 last year…).

            Only when she started cutting public spending (throwing out monetarists who advised cutting some public spending, but also raising taxes – policy copied by Balcerowicz) the UK economy started to take off.

            Monetarism made some sense pre-1980 when money velocity (how often a unit of currency turns around) was stable but technological changes and regulatory changes in the industry increased the velocity and made bollocks of the idea.

            But as in case of Balcerowicz, not everything what Thatcher did was bad – if it was not for her, Britain might have been a second Greece, particularly with their trade union leaders on KGB payroll (surprisingly, Scargill’s views today are akin to BNP for each socialism ends up with national socialism). I met one such moron who was distributing leaflets among British workers urging them not to support Solidarnosc. Today he is active in Trotskyite circles.

            This archive video in Polish shows how clueless Jeffrey Sachs was in 1989:

            https://www.youtube.com/watch?v=z0Scg43GeE8

            After many years one influential figure in Polish government said “we all have been done by a lobbyist”

          • DB4545

            stanb

            How could anyone admire that obnoxious woman? They say she was a staunch methodist and she certained conformed with the view that the methodists like to keep the sabbath..and anything else that they can get their hands on. When her own people decided to abandon her before the electorate did she was crying with self pity as she was walked to her State car. It must have been the first time the concept of pity entered her head. She certainly showed none to the less fortunate in her society.

            DB

        • Thank you for posting a fascinating summary of Balcerowicz’s reform (below) , especially that you probably saw that all from the inside. My take on it as an outsider (I wasn’t living in Poland since 1986) was that Polish politicians seemed to have been more lucky than wise. Which I think is a better way to be 8-:) As an example – the slow pace of privatisation in 1990 turned out to have been probably a bonus rather than a hurdle. It caused a rapid disappearence of the large state “dinosaur” corporations through attrition as opposed to having been propped up artificially by a better private management like in the other former Eastern Block. That has cleared the field for a large number of new private companies formed from scratch which seemed to have worked very well in the long run. Another lucky “mistake” was the slow pace (probably deliberate?) towards an adoption of the euro.

          Sorry for digressing away from the main topic, though it may not be that far off. The present Greece’s situation and path towards the reforms will probably be quite similar to Poland in 1989. If they choose to follow it that way.

          Best regards,
          Stan (Heretic)

  18. Grzegorz Kolodziej

    The latest IMF’s analysis of Greece’s debt sustainability

    http://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf

  19. Mike Marketing

    DB4545
    July 3, 2015 at 12:11 am
    Deco

    Congratulations, you are right on target with those highly intelligent observations and comments.

    The taxpayer and provider of ALL funds has been ill-served for many decades. The Political Parties just shape the system to suit their careers and the Political Clubs they are members of.

    If action is now taken in the next few months by honest Irish ambitious men & women that want to make a difference; and leave a positive legacy behind them the heavens will NOT fall.

    1. Messers Wallace, Murphy, Murphy, Creighton, Donnelly, Higgins, Ross etc put this in your General Election Manifesto.
    2. Get elected in numbers and change the law (the pension and remuneration of elected officials Act 2015.).
    3. Let the AVERAGE INDUSTRIAL WAGE (CSO figure) be the baseline for ALL public service wages and salaries (From TDs up to the President of Ireland).
    4.Make all pensions be reflective of that, in addition to entitlement to only 1 pension, at the national retirement age and not before.
    5.Meaningful incentives to motive the bravest of the brave the ‘WHISTLEBLOWER’ who have proven themselves admirably.
    6. Those public ‘servants’ found guilty of corruption or a criminal offence in the courts should receive reduced pensions or in extreme cases no pension, other than the National Old Age Pension.

    There would be a widespread plague of “brown stains in the underpants” when that day comes.

    Over to you aspiring politicians who will shape the future of Ireland.

    • I like this quote:
      “Just fire them all!”, Dagny Taggart
      8-:)

    • DB4545

      Mike Marketing

      Thanks Mike. Although I regard “corrupt activities” or “corruption in public office” as a criminal offence I think it’s important to make a distinction because a smart lawyer and an appeal court certainly will. Let me give you an example. A public servant convicted of a criminal offence unrelated to corruption (death as a result of dangerous driving due to a road traffic accident) would forfeit a pension unless the law was clearly defined. I’m not a legislative or statutory architect and that’s why it’s so important that people who frame legislation should be!

      DB

  20. Pat Flannery

    Here’s some thoughts from one of my favorite blogs:

    http://www.golemxiv.co.uk/2015/07/greece-china-russia/

    The European hard-asses may come to regret snubbing this Greek socialist government, as the hard-ass US capitalists scorned socialist Cuba when it wanted to be friends in 1960. Back then the US did not want any socialist friends just as the EU smart-asses of today do not want a socialist government in Europe. That’s what this is really all about.

  21. For what it’s worth, Stiglitz, Krugman and Piketty all advise voting NO.

    http://www.theguardian.com/world/2015/jul/03/greek-referendum-what-the-experts-say

    So do Jeffrey Sachs and Steve Keen – I’ll copy Sachs’s concise article into the next post.

    That’s a lot of ‘top’ economists advising a NO vote – anyone know of any other ‘heavyweight’ opinions?

  22. Tomorrow’s vote on the referendum has the question twisted by the troika into a referendum on EU membership which it is not.
    This will cause a large number of people who would otherwise vote NO to vote yes.

    This will cause Tsipras and Varoufakis to resign.
    That is just what the troika want, to get rid of these miscreants who actually practice democracy.

    I anticipate fear will win and the vote will be a narrow YES. I hope I am wrong.

    Whatever the result, the daily life of the people will not be improved, the economy will continue to deteriorate until there is a return to an honest form of money. The debt based, interest bearing, Ponzi scheme money we continue to use can only end in disaster. Where is your opinion on the real problem, David?
    Why do you continue to ignore this basic tenet of economics?

  23. http://www.aljazeera.com/indepth/opinion/2015/07/political-fears-russia-greece-axis-groundless-150701055745465.html

    Good commentary on the geo-political position of Greece in Europe and its relations with Russia.

    Democracy in Greece has not been allowed to flourish in Greece since WW11 and that is the fault of the NATO/ US/Western alliance. It will not be allowed tomorrow by the look of it.

  24. Good one Pat
    It does not sound as if there will be resignations if the vote is Yes.

  25. Worth reading three times by every viewer of this blog.

    http://www.truthdig.com/report/page2/a_pope_calls_for_rethinking_the_outdated_criteria_that_rule_the_20150705

    “We have bought into this financialization scheme based on a faulty economic model, in which we have allowed money to be created privately by banks and lent to governments and people at interest. The vast majority of the circulating money supply is now created by private banks in this way, as the Bank of England recently acknowledged.”

    Greece is but the latest exhibition of this financialization, or money, policy.
    We are all headed down the same path. We need a different route or, like the lemmings we are, we will surely head over that cliff to destruction.

  26. Westword: Can you give a quick synopsis of The Republic of Conscience?

    Gary Hart: It’s a contrast between what the founders of our country envisioned and what we have become in the 21st century, especially in the field — I guess you would call it — of political ethics. To begin with, the founders created a republic, and all of the founding debate in the late 18th century used the language of the republic from ancient Athens and Greece. And one of the key qualities of the republic was resistance to corruption. Now, they did not define corruption as bribery. They defined corruption as placing special or personal interests ahead of the common good — or today what we would call national interest. And when you apply that standard to politics in America today, we are a massively corrupt republic. [This is] because of the explosive growth of the lobbying industry in Washington, including now over 400 former members of Congress…and the connection of that industry to the staggering increase in campaign-financing costs, and the amount of money that candidates for office raise from those special interests and lobbyists. And then finally, [we’re] creating a kind of closed political system in Washington, in which you have to be part of that political elite to get anything done or try to pursue what’s best for the country. And that’s my analysis in 200 pages as to why there is such frustration with a stalemated government.

    http://investmentresearchdynamics.com/happy-fourth-of-july/

  27. Please understand this, “policy” and central banks are doing whatever they can to keep investors away from the exit door because they know there isn’t one. Central banks all over the world are “buyers” of nearly all things paper, do we really have “markets”? Anywhere? –Bill Holter

    http://www.gold-eagle.com/article/what-exit-door

  28. Adelaide

    Bravo Greece! … (plus bonus: it wipes away the distasteful memory of the craven Scots)

      • Yes! I mean No! #oxi Go Greece!

        Great result, the EU fascists can shove their sadistic policies up their arse.

        Adelaide you are dead right about the cowardly Scots – the first people in history to vote against more freedom for themselves – pathetic losers.

      • DB4545

        Well done Greece. We had to return to the cradle of democracy to understand what democracy really means. It really puts the situation into perspective to reflect on the decisions of Iceland and now Greece and look at the craven incompetent corrupt a**holes we allowed to Govern and their betrayal of the people of this State. Greece elected people with a pair of balls and steady nerves and we elected drunks and political eunuchs. Greeks are prepared to risk their short term future for their children and we sold out our children for our short term future. Let’s learn the lesson, grow some f**king balls and follow suit.

        DB

  29. c.eire

    Tonight, Je suis Greek !

  30. DB4545

    The USA fought a war of Independence because they refused to submit to taxation without representation. Mike Lucey has pointed out that Christine Lagarde and the rest of her cronies in the IMF draw obscene tax-free salaries while dictating penal tax policies to Sovereign Countries. They conspire with local political elites earning vastly excessive salaries in each Country to fund their obscene tax free lifestyles while imposing penal tax rates on EU Citizens. These unelected kleptocrats are a menace to democracy and hopefully the Greeks have started the process of removing this cancer from European democracy. The Greeks have voted to ensure that austerity won’t stand and we need to get off the fence and support them.

    DB

    • StephenKenny

      Very well put.

      • DB4545

        StephenKenny

        Thanks Stephen but my intention is not to spout meaningless platitudes. This has a reality. I’m centre right politically. I object to my taxes paying for oligarch basements and mansions or traveller halting sites and pony clubs both at taxpayer expense. I respect your right to indulge in your personal pleasures (with informed consenting adults) providing you don’t expect me to pay for them. We both possible pay for unleaded petrol at 1.47 Euro a litre and maybe most products at the going rate. We have to earn 3.00 euro pre-tax income to buy petrol(and most other products)at 1.47 (heavily taxed and dutied) Euro after-tax income. Ms. Lagarde and her fellow kleptocrats have an advantage not available to the masses in that all products are available to her at half price before she even negotiates a discount. It’s exactly the same principle as Marie Antoinette’s let them eat cake. She has absolutely no concept of the pressures of everyday life because like Marie Antoinette she is financially insulated from economic reality. We can’t afford such nonsense (no Country can) unless it wants to descend into anarchy.

        DB

  31. cooldude

    Fair play to the Greek people. They have shown real bottle in standing up to the technocrats. Lets see if they go the whole way and leave the Euro. Hope so.

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