Wednesday, February 11, 2015

Greece to Repudiate Debts

February 28 is when Greece has to refinance its debts with the EU. I think Merkel of Germany has already been enlightened by Greece’s new leader when he probably told her something like; “Take a long walk off a short pier.”

Bankruptcy will not kill Greece, any more than it did Iceland. It looks as if people will start bailing out of the Greek crap starting about Friday the 13th (if you are in the know) and about 7 days later Feb 20, if you weren’t paying attention.

The basic thing about Greece, is that bankruptcy is a one time event, which makes life worth living again. The scary thing is that the rest of the world cannot see the reality of the action. Greece will leave the Euro and rise up out of the ashes like the Phoenix.

Greece does not need the Euro, the other EU nations need to keep Greece in the union to give the Euro legitimacy. The EU is offering a country drowning in debt, a cinderblock as a life preserver.

Germany is the loser if Greece packs it up. Europe is expecting Greece to kowtow to the bankers. Funny, I don't think it is in the cards. They have a choice, repudiate the debt or go back to a military dictatorship. 26 percent unemployment is a lot of frustrated people drinking beer with not much to do, other than riot.


AIM said...

Greece leaving the Eurozone would create a domino effect of many negative consequences for European banks and countries. It would be a major dynamic in the unraveling of the EU. Germany, France and Italy would suffer as most of the loans to Greece came from their banks. Do you really think they will let Greece go? I think the Troika will use EVERYTHING in its power to keep Greece in the system. These people are desperate to hold onto their power (and jobs) and will never admit that the EU was a flawed concept, destined to fail. And, I believe they will do ANYTHING to avoid a collapse of the EU. The EU will eventually unravel as it violates too many basic political and economic principles, yet I believe the EU still has a lot of fight and tricks up their sleeves at this time and won't allow the dominoes to start falling yet.

Jim in San Marcos said...


This was a hard piece to write, I felt like I was sticking my neck out on this. I wish what you said would be the way things go, but it isn't going to happen.

25 percent unemployment in Greece and the youth is facing 50% unemployment. What we wish to have happen is just that, a wish.

People who have jobs, are too busy working to riot. So I see that Greece either repudiates the debt or it will riot and the military will take over.

The old people have screwed up the country royaly and are keeping their nests feathered; their youth can see it. That's going to change, and I think the military will be the force that ends the mess.

The firm reality, is that 25% unemployment doesn't disappear overnight. A new dream and hope could give them enough time to put the country back together.

The youth of Greece are the controlling factor, not a bunch of old fart bureaucrats in at the EU. Talk is cheap and hasn't improved their future one bit.

As you suggest this is the beginning of the end for the Euro. If you look at the positive side, there is no death and destruction, just a bunch of people who made bad loans that are forced to eat the paper.

dearieme said...

Since Greece can't repay the debts nor roll them over, she will indeed have to default. The same will happen to the US when she can't roll hers over. Still, most people have never heard of the default under FDR, so there's always hope, eh?

Joseph Oppenheim said...

Greece is a corrupt country and only about 1% of the EU economy. It matters little what they do. Defaulting only underscores how untrustworthy they are. Greece is the only loser if they default. Perhaps the best tourist spot in the world, no need to go off the Euro. Plus, they import a lot from Germany, stupid to make imports more expensive.

AIM said...

I'm willing to bet you a hypothetical steak dinner Jim that there is no Grexit.

Well, we'll see what happens shortly. Greece will either run out of $, cave in and get a bailout extension or exit the EU. Things will probably blow up before their Feb 28 deadline is reached. I believe the Troika will do whatever it takes to keep them in the EU (of course the damage in that will be that Portugal, Spain and Italy will expect the same treatment and will want to renegotiate their debt).

The Greek government and people have had corruption and morality problems for decades. They have a history of ignoring the fundamentals of their economy and defaulting on their debts.

The greedy EU bankers loaned to them despite their sub-zero creditworthiness. True justice (the hand of capitalism and free markets) would be for the banks to take their loss and revise their underwriting criteria. (There might be some US banks involved in these Greek loans too. So hard to tell nowadays due to all of the complex, convoluted and shadow activities of our US banks. Our banking and financial systems are all connected together now; no escaping it.)

The IMF is a country killer, soaking up a country's assets for their banker cohorts. You can't enforce austerity policy on a country and then expect the country's economy to grow so it can pay off its debt (especially debt that is so massive in relation to its GDP that it would be impossible to pay off the debt even if Greece was in total prosperity with and economy growing at 5% annually). Any high school student in Economics 101 could grasp this concept.

These unelected technocrats aren't stupid (i.e., IMF, EC, ECB). They are "hiding in plain sight" they are in collusion to remain in power and serve the banks.

Once this all unravels, confidence in central banks, centrally controlled governments, and Socialism/Marxism will collapse and the confidence pendulum will swing from government to the private sector.

The youth on the planet are up in arms about what are governments have done and are doing as regards foreign, fiscal and monetary policy. 3rd parties are on the rise.

Things are going to get very interesting. The question is how long the powers that be can keep their momentum going. Could be just one more year, could be another ten.

Wish I had a crystal ball.

Jim in San Marcos said...

Hi "An Inquiring Mind"

I'd like to take you up on the offer (dropping the hypothetical part). I thought you were up in the Great North, in Lobster Country. That's my favorite. Congress hasn't figured out a way yet to take lobster food and turn it into ethanol. When they do, it too will cost more.

I think we are both arguing over, when it will happen not if it will happen.

Take care

AIM said...

Jim: I'm in SoCal in the Palm Springs area. Possibly relocating to Florida sometime this year (no state income tax). I think one can get a pretty good lobster dinner down in Cabo San Lucas. Yet, as you say, Maine lobster is tops.

Yes, the whole bloody mess of attorneys and politicians working for the banks, their own self interests, joined with the unworkability of false isms such as: Keynesianism, Marxism, Socialism and Fascism, is going to collapse... BIG TIME The average citizen will be a deer in the headlights wondering what happened.

You are right... we are just debating WHEN it will happen.

Have a good rest of the week.

AIM said...

Well Jim, Greece didn't leave the EU. You owe me a hypothetical lobster and steak dinner. Yum, it was very tasty. Thank you.

As I said in my earlier post, the Troika would do EVERYTHING to keep Greece in. These people will illogically and destructively do everything they can to keep the EU from falling apart (i.e. their jobs, power and importance from disappearing).

We'll see how things go now in Greece. Maybe they'll exit in 4 months, maybe the pols will still be able to kick the can down the proverbial road.

All this over-debtedness has to implode one of these days. It's amazing how the pols and banks can keep all the plates spinning.

Jim in San Marcos said...


I still have a week. Let's wait until March First. Europe can pretend that it believes in the tooth fairy, but reality is in the delivery of the goods.

This last agreement is kind of like the Greeks stealing the tires off of your car and charging you for the privilege of doing it. The solution to their problem makes it your problem.

dearieme said...

I have tried this argument elsewhere: let me try it on you.

People of a conservative disposition are often good at spotting the direction of change, but are prone to exaggerating its speed. (Ironically that is because they underestimate how conservative people, and institutions, are.)

So you are probably going to prove right about Greece, but it will probably take longer than you expect.

AIM said...

One possibility is that this new Greek government goes to its people and says... "the people elected us because they wanted to stay in the EU, BUT stop the austerity program. That was our mandate. As you now can see, the EU won't allow that. So, it's either Greece stays in the EU with austerity, or Greece leaves the EU and throws off the austerity program and our debt. Let's have a referendum."

AIM said...

I forgot to add the other part of the strategy...
Greece will take the extra bailout money and use the 4 months to prepare better for a Grexit.

If they don't do this, then the EU wins and keeps Greece as a debt slave nation.

Yet, it won't go on for too long as the EU is a doomed proposition and will ball apart sooner or later.

Jim in San Marcos said...

Hi dearieme

I think what you suggest is part of Greece's modus operandi. The rest of the EU wants the game to continue at all cost. And Greece will laugh at their jokes as long as the Euros flow.

You could be right, it could take more time.

Jim in San Marcos said...


At first, I had sympathy for Greece and how the big boys had taken them to the cleaners.

After reading between the lines, I get the feeling that the Greeks would steal from the widows and orphan funds if given the chance. Corruption is everywhere and they have nothing to lose by pushing The EU harder.

IMHO a military takeover of Greece is the only broom that will sweep this mess clean.

I don't see grexit in 4 months, I foresee tires burning in the streets in a week or two. The Greek government is like a collapsed outhouse, it stinks and you can't use it.

AIM said...

Corrupt governments; unworkable fiscal and monetary policies; debt far beyond any ability or wherewithal to be paid back; Socialism fighting to maintain its hold; potential for war; the global youth being battered by unemployment; global economy slowing; commodity prices dropping; bubbles expanding everywhere; global deflation rearing its head; uneducated and unconcerned citizenry; etc.

What a cake our leaders have baked. I don't think that it will be used for anyone's birthday