Thursday, September 22, 2011

The Fall and Rise of Greece

Greece is in the middle of political turmoil. It has to move in 4 different directions at once; cut spending, cut benefits, increase taxes, and borrow from the IMF.

The population as a whole has nowhere to turn with all of the political rhetoric, and posturing. Any faith they have had in their Democratic institutions, is gone. In the coming weeks, look for a military takeover of the country.

This would solve all of their problems. Repudiate the debt, go off the Euro, and eliminate any government obligations to present retirees. They will get Greece back to work. The youth will be employed in the military, and since the debts will be gone, reasonable life can begin anew. It’s a little like Iceland, but in this case, it will revolve around military, not civilian rule. With control of the currency, they would be able to offer some sort of retirement benefits to the old, but don’t look for those sacred government pensions of before. You can be nice to old people, but they are too old to do any real harm without the right to vote. Greece will solve its problems and the outside world will not like it.

The IMF and the Federal Reserve think that they can increase world debt and solve the world’s financial problems. They have tied the hands of the politicians; elected officials will be the scape goats for the public anger.

No European country is paying any real money to fix this mess. A dictator will clear out the smoke and mirrors and offer immediate results. For a Greek to wake up and find out that all of their debts are gone, now that’s a bank holiday! Look for a new Greece; it’s a solution that will work for their country. Meanwhile Tim and Ben (the unofficial heads of the IMF) will be prescribing Epsom salt enemas for the rest of the PIIGS and moving them closer to the fan.


Ralph Musgrave said...

The Greek philosopher Plato will turning in his grave and saying “told you so”. Didn’t he predict that countries are condemned to a cycle of democracy – dictatorship – democracy? Reason is that under democracy, the electorate gets more and more irresponsible: voting itself goodies that the country cannot afford. Eventually a strong man steps in and stops the rot. Then everyone gets sick of dictatorship and tries democracy again.

frakrak said...

I guess the question is: Where is Greece in Plato's philosophical model now? The peasants are revolting, or seem to be at the moment:)

frakrak said...

I guess the average Greek would have a vastly different opinion as to what went wrong with their economy! And ....., why would French (private) banks lend Greece ridiculous amounts of money anyway? There's another problem right there, the average French citizen would have had absolutely no idea their banks were lending so much money, and by all intents and purposes will pay very dearly for this along with the German citizen and so on and so on.....
The trickle down effect only seems to work with the liabilities of big banks (we get the bill) and it would seem the Greek people get the blame:)

dearieme said...

"Any faith they have had in their Democratic institutions, is gone": have you known many Greeks who had such a faith? Or Italians, come to that? said...

"In the coming weeks, look for a military takeover of the country." Dang- you managed to get my attention with that prediction. That's the first time I've heard that potential outcome for Greece and her ongoing economic misery.

Jim in San Marcos said...

Hi Ralph

Plato's cycle may come to be. I've been accused of being a little early on some of my calls so it may be a while.

Greece is a special case. The Germans and the French were selling the Greeks anything and everything, nothing down, and it kept their economies going. It's kind of like what the banks in California did to Mexicans; they sold everyone of them, one or two homes no money down. The guy cutting our lawn gave the homes back to the bank, he wasn't out much.

The change of leadership in Greece will expose the IMF as being the "Emperor with no clothes." You can't force someone to eat turnips and like it.

Jim in San Marcos said...

Hi Frakrak

Your comments point out one thing I hadn't though much about. Everyone in Europe sees the same thing but it is subject to a different interpretation.

Nationalism will destroy the Euro, not the "spendthrift Greeks."

Jim in San Marcos said...

Hi Dearieme

I'm not sure, the closest I get to Greek or Italian is in a restaurant. You're probably right.

Both countries can cook up a good meal. It's their politics that that need to simmer a while over a hot stove.

Jim in San Marcos said...

Hi Survival

The thing to look at is this, when they cut pensions in Greece by 50 percent and the people riot, do you as an army officer go out and shoot the rioters or arrest the legislature and take over the government?

The people in the streets you will be shooting are sons and daughters or grandparents. Why not go after the people everyone is mad at?

There is no argument in Greece as to whether or not Democracy has failed. Their frustration level is very high.

Democracy is great, but if you are broke and unemployed, it matters little. Push the shopping cart and look for cans to recycle.

People forget to realize that you need money to enjoy freedom (by todays standards).

AIM said...

I'd like to see your prediction come true quickly Jim. Yet, with the IMF and other power elite manipulators on the case pushing their agenda, I think it will be a slow and painful process before Greece frees itself from its shackles... and the European Union is reconfigured (or maybe gone).

dearieme said...

This is to the point.

Jim in San Marcos said...

Hi Dearieme

Thank you for the link.

I guess it goes to show, If offered a second opportunity, they will do it too you again.

It lends some perspective to the current dilemma in Greece.

Jim in San Marcos said...


I stuck my neck out and as you suggest, my time line could be way off.

It's a little like raising teenagers. Too much restriction and they run away from home. It's an option the parents can't comprehend until it happens.

The parents in this case (France and Germany), don't fully comprehend the dynamics of how they got to this situation. Mix that with Nationalism and you get a statement like "By god you'll be home by 10 pm and never date that guy again."

Analogies tend to be a tad miss-leading, but in this case, it may offer a perspective that offers credibility to other options like I have suggested.

Anonymous said...

Found this comment reading through an AP story titled "Obama says GOP would 'cripple' America."

Art P says:

Why S&P Downgraded the US:
U.S. Tax revenue: $2,170,000,000,000
Federal budget: $3,820,000,000,000
New debt: $1,650,000,000,000
National debt: $14,271,000,000,000
Recent (April) budget cuts: $38,500,000,000

Let's remove 8 zeros and pretend it's a household budget:
Annual family income: $21,700
Money the family spent: $38,200
New debt (this year) on the credit card: $16,500
Outstanding balance on credit card: $142,710
Budget cuts: $385

Now do you get it? Uncontrolled spending is KILLING us!

ATP says:

Doesn't require a Mathmetician or a Politcal Scientist to understand that unsustanable debt will lead to bankruptcy. With numbers like these, The United states doesn't appear far behind Greece.

Jim in San Marcos said...

Hi Angry Tax Payer

I quite agree. But look at it from the perspective of that fictitious family; "Why stop now if it still works as good as it did yesterday?"

The spending will end, you and I know that for a fact. We are just not quite sure of the "how" part.

Nobody stopped buying homes when I warned people that it was a bubble, I got laughed at. The country is at the same sort of predicament today, warning them only creates more laughter.

Keep away from long term bonds and keep your powder dry. Opportunity may lie just around the corner.

frakrak said...

Jim it is all about the last man standing!! Whoever survives a second or two beyond economic annihilation gets the "safe haven" status, and the capital inflows. The EU is out of the game, lets hope that China is next:)

prepster411 said...

Unless the Greeks want to be speaking French or German in a few years they better pull an Iceland and default. Start over without the damned and doomed Euro.

Jim in San Marcos said...

Hi Frakrak

I don't see a clear field on this. The collapse of one currency will affect all of them.

In the back of my mind i tend to think that there is some line of governments to fail and we could be the last one standing, but I don't see how we would have much left to buy with our dollars. We import everything. And if we do export it, foreign wouldn't be able to pay us.

What we are looking at is the possible forgiveness of all government debt. It will kind of suck if you are retired and counting on the interest and principle from government bonds

Jim in San Marcos said...

Hi Prepster411

I think Greece will follow your suggestion (given time). They will get there. And they are not going to like it one bit.

Anonymous said...

Jim --

Could you elaborate on the following statement
"What we are looking at is the possible forgiveness of all government debt. It will kind of suck if you are retired and counting on the interest and principle from government bonds."

thank you

Anonymous said...

the continuing catastrophes, endless money suck, social unrest, will eventually create enough pressure to blow the high priests away who have the misguided thoughts "we must protect the euro, the euro is europe". it is just a new currency is all. just a currency. it doesn't work. it can't work. face it. the EU will break up or get smaller or disappear. stop holding on to an idea that is causing so much loss and suffering and yet as so little importance.

frakrak said...

Hi Jim, who knows for sure anymore? If you read the fine print on Germany's new funding of Greek debt it shouldn't equate to any upside in the markets!

Debt forgiveness may seem to be about the only answer at this point, but how will this happen? Governments are one thing, large international banks are another! No one knows how much toxic debt these institutions are holding.

Perhaps sovereign governments can work something out with each other, then outlaw derivatives and let the banks sort that one out amongst themselves!

Here's a link on China and their banking problems:

aim said...

they are just kicking the can further down the road. throwing good money after bad just as our government and the fed is doing. whether hard or soft... now or a bit later... greece will default. the other PIIGS will follow suit.

our banks, thus the taxpayers, will suffer collateral damage from the european collapse.

we are already in recession (msm won't call it what it really is... depression). we are in for a long long correction. fed and gov can't not inflate as the deflationary pressure is too strong domestically and globally.

look at the usd trend for the last 3 months. it's deflation folks and cash will be king despite bernanke and all the other clowns.


Jim in San Marcos said...

Hi Frakrak

Thank you for the link

Jim in San Marcos said...

H Anon 4:17

What I was referring to was the national debt. It is almost to the point to where we cannot afford to pay the interest on it.

When an individual can make payments on a loan, the assumption is that they will pay it off. When all you do is make interest payments on the loan, that says that the borrower is a dead beat.

If in the future the US government can't pay the interest on the debt, where does the money come from to pay off the bonds when they mature?