Will Germany Shoot Down the Greek Proposal And Force Grexit?

The thing that really annoys me about all this elitist bull where the media constantly reports about vague snippets about “proposals” and “negotiations” and “give and take” with absolutely no specifics about what is being negotiated is..well, just that. We have no idea what the politicos are really talking about behind closed doors, and nothing is clear.

Greece made a proposal. What’s in it? How is it different from past agreements? What are the hard numbers? What are the objections? What the hell is going on? Nobody can give a clear answer. Only talk in vague generalities about “concessions” and “compromise” but never about what!

So Greece made some kind of deal with Germany. What was it? The only place that tells you anything even meager is Zerohedge, and you never know when the guys over there are being totally crazy or they have real info. So, here’s what they’re reporting.

Greece is demanding that private residences in mortgage default be protected from foreclosure, which will of course clog and paralyze the banking system. Also a gradual raise of minimum wage, which will clog and paralyze the labor market. As well as restoration of collective bargaining rights for unions, which will constrict the labor supply and increase unemployment. As well as wage hikes for the bureaucrat sector. Which will increase the debt load that Germany is paying for.

And Germany, apparently, is going to say nein, according to Zerohedge, tonight.

Let’s see what happens.

Greece Caves, Varoufakis Fails, He Should Resign Immediately

Oh well. I was wrong. I thought I was on to something with Varoufakis but apparently a grasp of basic economics (which Yanis Varoufakis does not quite have) is a necessary condition for having a spine. I thought that maybe it didn’t have to be that way, but he caved to a bailout extension of 4 months, and once you let the door open a crack like that, that’s it. There’s no going back. He’s a politician now. It’s over.

Zerohedge is reporting that Varoufakis actually sent a letter to the Germans sticking to his guns, with Tsipras then overriding that letter when the Germans said no deal. Varoufakis is denying there was ever any wrong letter. Who knows, now that he’s caved and won’t admit it, no one can trust anything he says anymore.

So four months from now this whole thing will repeat again.

Eventually though, reality will express itself with full force and the Eurozone will collapse. We just can’t count on anyone to be honest enough to get the ball rolling voluntarily. It will have to happen by some surprise event now.

The reality is, Greece still cannot pay back its debt, and the Syriza government sure won’t allow the economy to grow by getting out of the damn way. It looks like more debt slavery for the average Greek now. For four more months at least.

If Varoufakis were honest, he’d explain publicly why he has reversed himself from saying “no extension” to “four month extension”. But he won’t. He’s descended into the realm of the politician.

What a Greek Default Means in Simple English

A Greek default, or any government default for that matter, is heavily misunderstood. I’m not speaking in terms of chain reactions here or what it may cause, just essentially what it is.

If a private person defaults, say if I go bankrupt, that means anyone who I owe money to, loses that money that I would have paid them. That’s it. Not one person who did not loan me anything will suffer at all. People who have no financial connection to me couldn’t care less if I default since it has nothing to do with them.

It gets a bit more complicated if I own a business. If I go bankrupt, my business will be sold by force for lack of payment of my debts, someone else will get the business and do what he wants with it, and the cash I got for the sale will go to my creditors in order of liens. All the capital I control, whatever it is, goes to someone else, and the cash goes to my creditors. That’s what happens. No capital is destroyed, nothing changes physically, just ownership titles.

So, if a government goes bankrupt, what SHOULD happen by that example is they stop paying their debts, which are their bonds. Then, by the example of myself going bankrupt and my assets being liquidated and transferring title to some other owner, what should happen and what WOULD solve the entire garbage situation in Greece is for the entire government to liquidate ALL of its asset, everything it owns, and sell it ALL for cash, in this case Euros.

Entire Greek government departments should be sold to whoever wants them for however much is offered. If someone wants the Greek Bureau of Regulation Whatever and to employ all its pointless bureaucrats, then they can. But you know what the problem is here?

If I go bankrupt but I own a business, my business probably makes money, just not enough to cover my debts. It has employees etc. So somebody buys it, maybe lays off a few people, ships up the outfit and makes it profitable

But who the HELL wants a piece of crap bureaucracy? It makes no money, it only obstructs business! So bidding for it would go through the floor and be equivalent to whatever hard assets the Bureau has like computers and real estate and cars and whatever, and all the dumb bureaucrats would be laid off and that’s it. 

The other problem is the government owns the roads, and for some reason everyone is brainwashed into thinking that roads cannot be privately owned because then 1,250,000 people would die on the roads globally every year. But wait, no, that’s how it is now.

So the government owns assets that people don’t believe can be sold, when of course they can and should.

But the worst part of government default is that the government owns the money itselfbecause money is a government monopoly.  So when a government defaults, anyone who holds government money is in serious, serious trouble. They will lose everything. Holding government money is like being a government employee when your employer goes bankrupt. It is bad. That’s why people own gold and silver.

The unique problem with Greece, however, is that the government there does not own the money supply. And that’s why they can’t print the currency to death and need bailouts. Germany and Brussels and the ECB own the money supply.

If this default were honest, everything the Greek government owned or controlled would be liquidated and sold, including the Hellenic Parliament building itself and all the roads and all the military equipment, absolutely everything, with cash raised to pay the bonds. All the bureaucrats would be laid off to find something to do in the economy. All the regulation enforcers would be unemployed. The economy would be freed.

A true, honest government default would be an absolutely great thing for the private citizen, if not for the fact that the government, instead of honestly going bankrupt like any private person and starting over at zero, will immediately set itself up another monetary monopoly, force everyone to use it, and inflate it to death, stealing from everyone just to stay in business.

If Greece starts printing drachmas, they will hyperinflate very quickly. If I were a Greek, I would buy real assets and hide them under the Parthenon. That, or sell all paper assets short now.

When a private person or company goes bankrupt, assets are liquidated and sold to new owners. Employees are let go and must find new jobs. Some stay.

When a government goes bankrupt, they destroy everyone else’s money so they can pay back their debts through theft. Greece is just a tiny little thing, a tiny domino in a line of ever increasing bankrupt dominoes.

When the US goes bankrupt, now that will be a sight to see.

Varoufakis Holding his Own, Germans want him replaced!

The Greek talks with the Eurozone just broke down again. There currently is no way forward. Greek bank runs may start as early as tomorrow. If they do, the Eurozone will disintegrate fast. Most people did not see this coming and thought Greece would cave. But I did. I felt Greece would not cave, at least strongly suspected it. Here’s why.

I don’t have much investment in Yanis Varoufakis other than fascination and an inkling he can hold his own. He’s showing the Eurozone leaders that he’s not a yes man, not a politician, but a guy with principles that won’t break.

Most commentators on my side of the spectrum, the libertarians, armageddonists, preppers and those folk simply assumed that Greece will cave to Troika demands sooner or later, but that’s because they haven’t been following Varoufakis for three years like I have. Or maybe it’s just a 6th sense I have or something that I recognized with Ron Paul and Feiglin, and to a certain extent with Varoufakis. This harks back to my Ron Paul article about soul.

Varoufakis is wrong about a lot of stuff, even about basic stuff, but he has a soul. And he will not break from what he sees as right. Tsipras and the rest of Syriza are all a bunch of politician monkeys and they’ll cave. But Yanis Varoufakis won’t. Interestingly, Varoufakis is not even a Syriza party member.

Bob Wenzel recently quoted Tyler Cowen, a mainstream economist, as saying this:

The Greek government will cave so cravenly on the substance that they want to have it on the record books that they supplied some expressive goods for a few weeks’ time, namely insulting the Germans and claiming that the Troika is dead and buried.

See, that would be true of any Greek politician except Varoufakis. He won’t cave on anything, unless absolutely ordered to do so, in which case he will resign, as he has said explicitly that he keeps his resignation letter in his inside pocket and will submit it the moment he feels he can no longer speak truth to power. Or his version of it anyway.

Even the bloggers on my side of the aisle like Wenzel simply don’t understand this. I covered this in my column two weeks ago at CalvinAyre, where I said the following:

In a nutshell, it’s like this. If just another politician occupied the Greek FinMin seat, eventually he’d be bought off by the Troika, that trifecta of acronyms like ESM and EFSF that hold all the bailout funds, and the proverbial can would be kicked down the road again. But Varoufakis is not just another politician, and that’s what political mainstreamers, as well as Eurozone leaders themselves, just don’t understand. He’s serious. He wants to default, he’s been saying it for years, and he is the only one with the guts and independence to mean what he says and do it.

Varoufakis still may cave. I don’t have as much faith in his strength of character than I do of Ron Paul or Moshe Feiglin, but so far he has been holding up. How much longer I don’t know. But we can safely assume that since he has not yet resigned, he has not caved.

Now, at the prospect of Greece being kicked out of the Euro, Varoufakis could get fired. Once he’s out, if that happens, you can be sure Greece will cave. Tsipras is a nobody, that I’m sure of. Zerohedge is reporting now that the Germans want Varoufakis out. Why? Because he literally is the only obstacle in the way of continuing this disgusting bailout. There is no one else in the way. Just him. Quoting Keeptalkinggreece:

An SPD politician from Merkels’ social-democrat coalition suggested s that Prime Minister Alexis Tsipras should replaces Finance Minister Yanis Varoufakis as he apparently creates lots of confusion, German politicians cannot understand.

SPD executive board member, Joachim Poß, wrote in an e-mail for his party colleagues:

“Greek Finance Minister Varoufakis has best demonstrated with his performance  until now, that he is not up to the demands of such an office. In the interest of the Greek people and in view of the difficult situation, Prime Minister Tsipras should consider to replace Mr Varoufakis with a political experienced, realistic-efficient person.”

Let me take that last bold paragraph out of Orwellian Newspeak and translate it into Human:

“Greek Finance Minister Varoufakis has best demonstrated with his performance until now that he is not up to simply caving to our demands for fear of being kicked out of the Euro. In the interest of the German government oligarchy and in view of the difficult situation, Prime Minister Tripras should consider to replace Mr. Varoufakis with a politician.”

Watch Greek capital flight tomorrow. It could get intense.

Another Domino to be Added to the List of Catastrophic Catalysts

I’ve known this for a while, but never saw it in graphic detail. Bob Wenzel of Economicpolicyjournal, a blog I visit every day, had this infographic up on his site today.

Top Holders of US Debt

I’ve always known China is the largest holder of US treasury debt in the world. I didn’t know that Japan was right behind.

Japan is the only country on the planet that is more into Keynesian economics than the US. As I mentioned in my last post about the bonobo chimpanzee behaving former IMF head Dominique Strauss Kahn who only attended 4 sex parties a year, Japan is somewhere between 240% and 500% in debt to GDP. Whichever number you want to pick, it’s the highest debt to GDP ratio on the planet. And Japan holds $1.24T in face value of US treasury debt.

If this isn’t a highly unstable house of cards, I really don’t know what is. The situation is just beyond any scope of reason, while the media makes you blissfully unaware of any of it or its meaning. The most indebted country in the world is being propped up by the country with the highest debt concentration in the world.

These are aftereffects of a country that destroys another with two nuclear bombs and then proceeds to nurse it back to health. How would you feel if someone beat the living crap out of you to within an inch of death and then put you on life support until you sort of recovered? You’d feel indebted. $1.24T of indebtedness.

Sooner or later some tiny domino is going to fall. If you feel like you have to sneeze, duck and cover.


How Many Sex Parties a Year is Too Many? Apparently, It’s Five.

Dominique Strauss-Kahn is that former International Monetary Fund head guy who was arrested for raping some girl in a hotel some years back, but it turned out he was only sleeping with a prostitute so it was fine.

The IMF, if you Google it, will be puffed up with flowery language about how it “fosters economic cooperation” between nations and creates peace on Earth and good will towards politicians and so forth. If it were a voluntary organization pooling together voluntary contributions then indeed it would be a pretty cool thing. But all it is, is a bunch of heads of State pooling together piles of tax loot in case one of its members spends too much of its own. It is a huge money pit worth something like $800B that was made to bail out governments after they borrow too much money and can’t pay it back.

The IMF has bailed out 41 countries as of 2013, and the two top contributors to the fund are the United States and Japan. The US is $18,000,000,000,000 in debt. Japan takes the record for highest debt to GDP in the world at somewhere between 240% and 500%, depending on which source you want to believe. Who knows.

Something is seriously wrong with global finance when two of the most indebted countries in the history of the planet are funding the world’s biggest bailout fund.

Klein BottleIt’s like a Klein Bottle of finance, wrapping in on itself and flipping anyone who goes through it 4th dimensionally.

Enough about the IMF. What about Dominique Strauss Kahn, who once oversaw the world’s biggest pile of pirate booty? This is really great stuff. He is now being charged with “Aggravated Pimping”. Aside from being a good name for a band, aggravated pimping is when somebody buys you a prostitute and you have sex with said prostitute.

This, apparently, is illegal in France, where the venerated head of the largest bailout fund in the world was participating in a libertine (not libertarian) sex party at the time. Prostitution is legal, but aggravated pimping is not, so you can pay for the girl yourself, but once you accept a girl as a gift you’re a criminal.

Hey, it makes about as much sense as prostitution being illegal but pornography being fine. A third party can pay two people to have sex with each other in public, but once you pay for someone to have sex with you, you’re a criminal.

This is what DSK said in court:

“When one reads about this, one gets the impression that this was frenetic activities, the dates are so mixed up. It was four times a year for three years, nothing more.”

Three or four times a year, not frenetic. Just an orgy every now and then, give me a break.

I’m not judging DSK on moral grounds here for taking part in a sex fest. I’m judging him for being head of the IMF. Does it surprise you that a 65 year old man in charge of the largest taxpayer funded bailout pile in world history would act like a bonobo chimpanzee?

Bonobos do not form permanent monogamous sexual relationships with individual partners. They also do not seem to discriminate in their sexual behavior by sex or age, with the possible exception of abstaining from sexual activity between mothers and their adult sons. When bonobos come upon a new food source or feeding ground, the increased excitement will usually lead to communal sexual activity, presumably decreasing tension and encouraging peaceful feeding.

But not frenetically.

By the way, DSK’s business partner Thierry Leyne is the guy that committed suicide right here in Tel Aviv last October, jumping off the 23rd floor of a building my wife once taught private English lessons in. There’s a makeshift dirt parking lot right by that building, free if you can find a spot. Highly recommend it.

GREEK INSANITY Tsipras’ Solution to Insolvency is More Free Stuff

We’re headed for default in Greece. Varoufakis may have human guts, but he’s still clueless, still doesn’t understand that the Everlasting Gobstopper doesn’t actually exist. That the government cannot simply supply endless resources at a whim. Just doesn’t get it.

Tsipras of course doesn’t get it. So it’s funny I should be reading this headline on Ynet first, in Hebrew. The other headlines to the same story do not catch the punchline. But the Israeli headline does. For example, Reuters:

“Defiant Greek PM sets up EU clash with bailout rejection, austerity rollback”

Ah, but the Jews get it. They get that you can’t solve an insolvency problem by handing out free stuff. Ynet, on the same story:

ר”מ יוון מציג: חשמל ומזון חינם לעניים

Greek Prime Minister Lays Out Plan: Free Electricity and Food for the Poor

Yeah, that’ll do it. That should put you right back on the road to financial stability. Hand out more free crap. Suck on the Everlasting Gobstopper that is government money.

What’s happening here, from what I can see, is a crazy angry Prime Minister with extreme Greek pride is combining with a confused Finance Minister with the guts to push Europe to the brink and over, with neither realizing at all the meaning of their “solutions”.

We’re on our way to default. The eurozone is going down folks, in weeks to months. Brace yourselves.