ATHENS, Greece (AP) — High-ranking members of Greece’s governing radical left Syriza party say they cannot accept a deal proposed by the country’s creditors during a meeting between Prime Minister Alexis Tsipras and the head of the European Union’s executive arm.
Tsipras’ meeting with Commission President Jean Claude Juncker, which ran into the early hours of Thursday, failed to yield a breakthrough in Greece’s protracted negotiations over the release of remaining bailout funds.
Things are starting to fall into place. We almost have another gold flag today. We may yet if gold turns positive by the end of the day. It is barely down.
Stocks are way down. Bonds are down hard. Dollar is tanking.
Gold is even. But oil is up.
In any case, this will all get much worse come Tuesday May 12, when Greece has to repay €775M to the IMF, but probably does not have the money to do so. According to Zerohedge, there will be no deal by Monday, May 11. Here ZH isn’t just speculating, but quoting a source. So they’re probably right here.
Further evidence for no deal by Monday is that Tsipras and his Syriza socialist wacknutters just reversed a measure passed by the previous government to fire 15,000 useless bureaucrats. They will now be rehired, because putting human robots on the payroll of a European backed bailout is the moral thing to do, I guess.
I’m sure the IMF will be really happy about this. You have no money but you hire 15,000 people to do nothing but shuffle paper and screw up the economy. There’s no way Greece is getting any more money. Forget it.
This won’t go over well with the Germans. The Greeks are now playing the Nazi/WWII card.
Prime Minister Alexis Tsipras accused Germany on Tuesday of using legal tricks to avoid paying reparations for the Nazi occupation of Greece and said he would support parliamentary efforts to review the matter.
His comments are likely to heighten tensions between Athens and Berlin as Greece’s new, leftist government struggles to persuade its euro zone partners to renegotiate the terms of a 240 billion euro ($260 billion) bailout.
Germany last month rejected renewed calls from Greece for war compensation, saying the issue had been settled at world power talks that led to German reunification in 1990.
But Tsipras said his government approved plans to revive a parliamentary commission to look into the issue.
Forget whether the Germans owe anything. Maybe they do. Maybe they don’t. Legally, I have no idea, as legalism are made up by the victors. Morally, maybe, I’m not God. But clearly, this is a soured attempt by the Greeks to actually pathetically bully the Germans into giving them more money, and it is so plainly obvious it won’t work that you have to wonder if Tsipras is such a dark red commie that maybe he’s actually insane.
You don’t bully a country that’s bailing you out to the tune of $240B. It’s just nuts. If Greece is daring Germany to kick it out of the Eurozone, this pissant move might actually accomplish that.
I love this guy, but I don’t understand him. He’s got some things so right, and others so wrong. Yanis Varoufakis was just interviewed on Bloomberg about what should be done in Greece. He’s a pleasure to listen to because unlike other smug econometrician academic weasels, you can tell Varoufakis is sincere and has some sort of moral drive. The problem is, he’s confused. He understands Greece is bankrupt. He doesn’t seem to understand that the politicians he is joining do not understand that that essentially means they can no longer spend money.
In his latest interview with Bloomberg, Varoufakis made some pretty frank comments. Among the most frank was his answer to the question “Do you know for sure if the bailout will be renegotiated, or if SYRIZA will make a U-turn?” meaning, will SYRIZA cave and just keep going with the bailout in order not to get kicked out of the Eurozone in a so-called Grexit.
His answer reminded me of what Ron Paul said to the question “Will the Federal Government default?”
“The government will default. It’s just a question of how, through outright default or inflation.”
Varoufakis answered this question the same way. The bailout will be renegotiated, simply because the current bailout makes no damn freaking sense. How can a bailout from debt put you more in debt? How is that even a bailout? That’s just doing CPR on a corpse. (My words, not his.)
Dealing with the issue of a Grexit, Varoufakis said that in “brushing off” a Grexit as containable, the sponsoring Eurozone countries were basically making up bullshit. They have no idea what the consequences will be, because nobody knows who holds how many bonds where, and what the systemic effects will be, whether other bond runs will ensue, it’s like trying to predict exact weather patterns 2 years in advance.
In short, there can be no Grexit without severe consequences for everyone, and those brushing it off have no idea what they’re talking about.
So much he gets. What he doesn’t get is that when Greece does default, which will absolutely happen in one form or another, his politician friends, the same nincompoops that have co-opted him as their voice of reason in SYRIZA, will want to ramp up the spending once again, because that’s all they know how to do.
He will be in the extremely uncomfortable position, likely as finance minister, of saying no. There is no money, there is nothing, stop trying to spend what doesn’t exist. If he can maintain his candor, he will end up resigning.
At the end of his interview with Bloomberg, he was asked what must be done. He said something very libertarian. Paraphrasing, entrepreneurs in Greece face one big enemy, and that is the State. The State does not let them put people back to work because it punishes them with taxes that make no sense. The economy is totally paralyzed by the State apparatus, and that is why the State is bankrupt.
In Rothbardian terms, the parasite overwhelmed the host, and now both have died.
Someone who can speak in such clear libertarian terms, I don’t know what he’s doing joining a radical left wing political movement expecting them to just sit back and relax as he recommends they shrink government. There’s going to be a big fight between him and Alexis Tzipras. They are on a collision course.
Once the bailout is renegotiated, Tzipras will want to spend more money on his projects. Varoufakis will tell him there is no money. Tzipras will then want to print Drachmas until they have no value, which will happen very quickly if he tries to print them.
There is nothing SYRIZA or New Democracy, or Pasok can do to get money. There just isn’t any. They will all come flying at a brick wall of bankruptcy, because there is no one left to steal from. It’s all gone. Only Varoufakis understands that. He won’t be able to explain it to the politicos. They don’t get it. They never will.
I’ve written about Yanis Varoufakis a few times. I check him out whenever there’s a flare up in Greece. There’s one now, so I headed over to his blog and found that he’ll be running on the SYRIZA ticket. He seems a genuine guy, with some really whacked out ideas on centralizing the entire European banking system with a bunch of bonds he made up in his head.
If I remember correctly, he wants Greece to default on the debt, liquidate it, and stay in the Eurozone nonetheless. If this is what he really wants, he won’t be able to accomplish it in SYRIZA. SYRIZA wants an end to the bailout scheme, which is doing nothing but putting Greece into even more debt (it’s debt to GDP has not fallen contrary to popular perception) and at least that aspiration is a good one. But what SYRIZA wants instead is an end to austerity and a free ride to keep spending.
If Varoufakis actually wins a seat, which seems likely, he will likely start to butt heads with his pretty-boy party leader Tzipras, a far leftist who thinks prosperity is invented out of nothing by the good graces of politicians like himself.
End the bailout Varoufakis and Tzipras will agree on. What happens after that, and they’ll start fighting. Tzipras will want more spending, which if he pushes it, will end up pushing Greece out of the Euro by force because Europeans (by which I mean Germans) are not going to finance it anymore. This, Varoufakis doesn’t want. And if they do get pushed out, there will almost certainly be hyperinflation in its drachmas within weeks.
So let’s see what Yanis does. He writes:
My greatest fear, now that I have tossed my hat in the ring, is that I may turn into a politician. As an antidote to that virus I intend to write my resignation letter and keep it in my inside pocket, ready to submit it the moment I sense signs of losing the commitment to speak truth to power.
Keep that letter handy Yanis. You’re going to need it once you see that your fellow politicians are not going to want to cut their spending.
The global financial system is like a lake right before a limnic eruption. I just learned about this phenomenon from Scishow.
A limnic eruption is when a lake explodes. Carbon dioxide leaks into it for centuries from magma below, and if the lake is stagnant and the water doesn’t circulate much, any little thing can set it off. When it does, all the dissolved carbon dioxide below wells up to the surface and the whole lake blows up, together with a cloud of carbon dioxide that suffocates everything within a several mile long radius.
Anything can set off a chain reaction that will bring down the entire global sovereign bond market. I don’t know when it will happen, but the next thing in line as a candidate to light the fuse is, once again, Greece.
I just read a particularly horrendous article in The Guardian about this. The situation is like so. Two years ago or whatever it was, Greece agreed to a giant bailout in return for cutting its budget. Unemployment is above 25% in Greece and poverty is in the 40% range.
The point of cutting its budget is obviously to lower its debt, for the government to spend what it takes in only, and – a totally radical idea – run surpluses to actually pay some of it back, like normal people in debt do. Instead of Ponzi Scheming your way into “rolling over” the debt, meaning paying back old debt with new debt.
So here’s what the “Austerity” in Greece from “draconian” government budget cuts looks like since 2012.
Since “Austerity” began, the debt went up.
The problem now is that Greece is having trouble naming a president. There is one final round to do this on December 29, and if their politicians fail to name a head politician, a party called Syriza will likely come to power in snap elections (like the ones here in Israel on March 17). Syriza wants no more “Austerity”. Meaning, they want to spend more.
Well that’s nice, but more of what, exactly? Euros? You’re being cut off. Drachmas? Who the hell is going to trust that piece of paper when you can’t pay back a damn bond? Look for money, you ain’t got none. Comb the desert like they did in Spaceballs, and “We ain’t found S$*T.”
I will pick apart the worst parts of this guy Owen’s gross follies, but in a general sense, his problem is that throughout the whole piece of garbage, he equates prosperity with government spending. Because the government cut its budget, that’s why people are poor.
Prosperity is proportionate to economic freedom, not government spending. Greece has very little of the first, and a LOT of the second.
Real government austerity would be cutting the bureaucracy down to bare bones nothing. Let businesses start up with no papers, no permits, no nothing. Let people work with no documents, no restrictions, no rules except no slavery. Open up your borders to all imports, all exports, lower taxes to almost nothing except to keep courts and an army running. Default on all bonds and let the bondholders take the losses. Let money arise organically and stop printing it. That’s all you have to do. Greeks are not idiots. They know how to produce things. They have simply grown accustomed to government handouts and now that the pig trough has run dry, they want more but there is nothing left.
Here are some of the worst lines from the article:
What misery has been inflicted on Greece. One in four of its people are out of work; poverty has surged from 23% before the crash to 40.5%; and research has demonstrated how key services such as health have been hammered by cuts, even as demand has risen.
Owen doesn’t understand supply and demand and monopolies, while he probably opposes the latter in word, but not in deed. When a single entity is in charge of providing a service and others forbidden by government from competing, or if one single entity is heavily favored and subsidized by government over potential competitors, that is a monopoly. In a monopoly, supply and demand do not work because the price mechanism is broken. So the monopoly, like a health services monopoly, can cut services even when demand rises, and make the same amount of money because it can charge whatever it wants. There are no competitors. This is what happens in monopolies. The solution is to get rid of the monopoly, end government health services completely, and let anyone treat anyone however they choose.
This though, is the worst:
Syriza’s manifesto proposes that repayment of debt could come through economic growth, rather than from budget cuts. It wants a European new deal backed up by an investment bank; an all-out war against the tax avoidance endemic in Greek society; an emergency employment programme; a raised minimum wage; and the restoration of collective bargaining.
How in hell are you going to pay back 175% of your entire economy through “growth” while at the same time supporting a massive-sized government that got you bankrupt in the first place?! Even worse, if you’re complaining about 40% poverty, how is an “all-out war against tax avoidance” going to make anyone richer?! They’re in poverty as it is, and you want to end tax avoidance? Meaning that if these poor poverty-stricken people pay more taxes to YOU, Syriza, everyone will be richer?
An “emergency employment programme”. That sounds terrifying, especially when it comes just before “a raised minimum wage”. When 25% of the entire country is unemployed, you want to make it even harder for people to get a job?! Here’s my “emergency employment programme”. Zero taxes or regulations on starting a company. Zero restrictions or regulations on hiring people. That’s it. I have a better idea than increasing minimum wage. Make it a law that employers must keep hiring until unemployment reaches 0%, or else they go to jail. How about that?
Here’s just wacky psychobabble:
That’s why Greece desperately needs solidarity. Firstly, there’s a point of principle: to defend sovereignty and democracy from attack, whether from within or without. But a Syriza government could spur on other anti-austerity forces across the continent.
Can anyone extract any meaning from these sentences? Greece needs solidarity. OK. Sounds all nice and cheerleadery. “Defend sovereignty and democracy from attack from within or without” – do these words say ANYTHING? What do they mean? They mean nothing. It’s just meaningless pep talk from a sophist. “Anti-Austerity forces across the continent” – WHAT austerity? THIS?
Austerity is when spending goes down, not stays the same.
Is it THIS?
Isn’t debt supposed to go DOWN when you’re being “austere”? Isn’t that the DEFINITION of austerity?
So how could Greece be a limnic explosion? If Syriza is elected, they will try to increase government spending with money that does not exist, and get kicked out of the Euro for trying. Greek bonds will default, banks holding those bonds will need bailouts or crash, and the bonds of other weak Eurozone governments like Italy and Portugal will plummet, pushing yields up to the point where the Ponzi Scheme no longer works because there are no new suckers to buy the new bonds and roll over the debt.
From there, once a country the size of Italy goes down, that’s a LOT of bonds, and the whole global financial system could explode, suffocating all those who have not insulated themselves from the explosion.
Will this happen? Yes, eventually and soon. Will it necessarily happen this way? No. But we’ll see.