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Thread: Greece, etc

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    Greece, etc

    Somehow, it seems much like someone else's problem, far far away. But it has the potential to come home to just about everywhere. Greece voted on July 2 to tell the IMF & EU To go to hell.

    Isn't it odd? Corporations declare bankruptcy, defaulting on loans, pension funds, etc, and they walk away Scot free. But let a "sovereign citizen", or country do the same, and its cońsidered a shameful dishonor. Gee, makes you wonder just who really is sovereign, in this rigged game, huh?

    Currently, between the EU and IMF, Greece owes about $250b in what are "unsecured loans". After all, other than being self-imposed debt serfs, they are a sovereign country. All they have to do is tell folk To go to hell and take the consequences.

    Who's on the hook for all this? Well, the "financial depts" of the member nations of the EU, IMF, and ultimately the taxpayers of the member nations:
    Germany: $56b, plus $36b in "quiet deals", trying to bolster the deal where they are owed the $56b.
    France: $42b.
    Italy: $37b. And Italy's current situation stands such that debt is currently 130% of GDP.
    Etc.

    David Stockman has written an article on the implications of Greece's vote today, here:
    https://www.lewrockwell.com/2015/07/...on-you-greece/

    Now, this is serious money to these countries, and the EU, in general. But more than that is the reflection on the credibility of the two organizations. After all,both of them violated their own guidelines on creditworthiness to make these loans to Greece and done so again to throw good money after bad thereafter.

    What's to-do? I mean the loans really are unsecured, in the normal sense. Is the EU going to invade Greece, while its still a member of the org? Too wierd, too dangerous. Seize assets? Useless. The money theyd generate would never be the kind of money needed to recover the loans. Greece, and everyone else knows this.

    The US is only on the hook for about $6b of the $250b total, and that's is well shielded by its favorite predatory animal, the IMF. But there lies a problem, as well.

    The predatory corporations who normally benefit from the " privatization of assets" that secure IMF loans have all dumped their involvement in the Greek venture. That leaves the IMF, and US gov on the hook. So now this screw up falls in the perview of confessional oversight. LoL!!!!

    Here is where Stockman and I part company. While I agree that all the potential ruckus this COULD spell the possible end, or at least threaten the future of both IMF & EU financial dealings, he also predicts majo policy changes to the dealings of, and the nature of US participation in the IMF. Not likely, says I.

    After all, these are the same Republicans, and Democrats who papered over the biggest banking swindle in US history ('07-'09).

    No, the bigger picture here is, the IMF & EU coming out of all this with egg on their faces at the worst of times... The creation of the new Sino-Soviet competitor to the IMF & EU financial orgs. Strange how all the major EU countries joined that deal at the last minute, huh?

    For more on that, see:
    http://universalspectrum.org/forum/s...-except-the-US
    Fred
    Last edited by Fredkc; 07-03-2015 at 11:28 AM.
    "Life IS mystical! Its just that we're used to it." - Wolf, the movie
    "Dad, if God is everywhere then, when he's in a piece of paper, is he squished?" - My daughter, age 7

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    Re: Greece, etc

    PS: I posted this from my tablet, which still seems smarter than I. Oh for a REŔL keyboard!
    "Life IS mystical! Its just that we're used to it." - Wolf, the movie
    "Dad, if God is everywhere then, when he's in a piece of paper, is he squished?" - My daughter, age 7

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    Re: Greece, etc

    So, they have defaulted on loans, interest on loans that is...joining Zimbabwe and Sudan.

    They, The Greek government is fiercely campaigning for a “no” vote, believing rejecting the bailout conditions would strengthen its hand in negotiations with creditors. Negotiations from creditors that insist on deeper austerity measures, effecting the general citizen further than the current austerity already in place.

    Many want to walk away altogether, ditch the Euro and go it alone, which would mean a return to the Greek drachmas, however:

    With speculation swirling that Greece might be forced out of the euro and have to print its own money after a weekend referendum, Mr Varoufakis said the country no longer has the presses to make drachmas, its currency before it converted to the euro.

    “We don’t have the capacity,” Mr Varoufakis told ABC on Thursday.

    In 2000, the year before Greece joined the eurozone, “one of the things we had to do was get rid of all our printing presses” as part of the bloc’s assertion that “this monetary union is irreversible”, he said.

    “We smashed the printing presses - we have no printing presses,” he said.
    Interesting article today:

    Greece handed Germany an ‘economic miracle’ after WWII, and now the roles have reversed
    FORGIVING debt, if done right, can get an economy back on its feet.

    The International Monetary Fund certainly thinks so, according to a new report in which it argues Greece should get help.

    But Germany, another major creditor to Greece, is resisting — even though it knows better than most what debt relief can achieve.

    After the hell of World War II, the Federal Republic of Germany — commonly known as West Germany — got a massive helping hand with its debt from former enemies.

    And who was among its creditors then? Greece.

    The 1953 agreement, in which Greece and about 20 other countries effectively wrote off a large chunk of Germany’s loans and restructured the rest, is a landmark case that shows how effective debt relief can be. It helped spark what became known as the German economic miracle.

    So it’s perhaps ironic that Germany is now among the countries resisting Greece’s requests for debt relief.

    Greek Finance Minister Yanis Varoufakis claims debt relief is the key issue that held up a deal with creditors last week and says he’d rather cut off his arm than sign anything that doesn’t tackle the country’s borrowings.

    The IMF backed the call to make Greece’s debt manageable with a wideranging report on Thursday that also blames the Greek government for being slow with reforms.

    Despite years of budget cuts, Greece’s debt burden is higher than when its bailout began in 2010 — over AU$479 billion, or 180 per cent of annual GDP — because the economy has shrunk by a quarter.

    Here’s a look at when Germany got debt relief, and if such action might help Greece.

    FORGIVE US OUR DEBTS

    1953’s London Agreement, hammered out over months, was generous to West Germany. It cut the amount owed, extended the repayment schedule and granted low interest rates.

    And crucially, it linked West Germany’s debt repayment schedule to its ability to pay — tying repayments to the trade surplus it was running and expected to run. That created an incentive for trading partners to buy German goods.

    The deal effectively blocked claims for reparations for the destruction the Nazis inflicted on others.

    But it wasn’t a one-way street.

    “The London Agreement gave Germany sweeping debt forgiveness and protection from creditors, in exchange for pro-market reforms,” said Professor Albrecht Ritschl of the London School of Economics.

    West Germany was able to borrow on international markets again, and, free of onerous debt payments, saw its economy grow strongly.

    Development activists cite that case when arguing for easier terms for troubled countries today.

    “The same opportunity should be given to Greece that was given to Germany in 1953,” said Eric LeCompte, executive director of debt relief organisation Jubilee USA.

    Greece has had some relief. Private sector bondholders lost 53 per cent of face value in a 2012 restructuring, and remaining debts have been stretched out.

    Now most of Greece’s debt is owed to bailout creditors. While they, notably the IMF, have indicated that the debt load should be made more manageable, little has been done of late.

    NOT CHARITY

    The German debt forgiveness was driven by the United States, which pressed others to get a deal — British creditors gave up two-thirds of what they were owed.

    It wasn’t charity. The U.S. needed a strong West Germany as an ally against the perceived threat of the Soviet Union.

    Yale University Professor Timothy Guinnane warns against making too many comparisons, partly because Germany was so much more important geopolitically than Greece today.

    And Germany had economic pedigree, being a big exporter. Greece, on the other hand, hasn’t, and isn’t. That’s partly why Germany in particular is insisting on reforms to make Greece more competitive — if they are enacted, then it’s indicated it would be open to help out on the debt front.

    “The U.S. was basically the last man standing after the war and essentially decided to cut Germany’s debt in half,” Guinnane said. “It was a hard-nosed decision ..... it’s wrong to say it was an act of generosity.”

    LESSONS LEARNED

    Still, there are echoes from the German case that are relevant to Greece today.

    The deal to help Germany was based on a realistic way for the country to pay its debts — Greece’s Varoufakis has suggested debt repayments be linked to growth. Over the bailout years, Greece has had to meet debt commitments even though its economy was in a depression.

    Germany’s deal also acknowledged that mistakes after World War I in imposing punitive conditions helped boost extremists. In its misery, Greece has seen votes go to radical parties of left and right, including Nazi-inspired Golden Dawn.

    “It’s deeply ironic that it’s forcing Greece into a position that’s prompting the rise of extremist parties,” said Guinnane.

    CHANGE AHEAD?

    One of the reasons why relations between Greece and European creditors deteriorated is the disagreement over what to do about the country’s debts. It’s difficult for anyone, especially those that have endured austerity too, to accept a lower return.

    But there are signs of movement as Sunday’s referendum nears in Greece on recent reform proposals from the country’s creditors.

    Cyprus has said it could consider writing off 330 million euros ($370 million) in rescue loans to Greece. The U.S., while not directly involved, has consistently advocated debt relief.

    The IMF came out most forcefully on Thursday, arguing in a report that Greece needs large-scale debt relief alongside more than 60 billion euros ($67 billion) in financing between June 2015 and the end of 2018. Given the recent economic shock related to the capital controls and the referendum uncertainty, Greece’s needs will likely be significantly higher, the IMF said.

    It blamed the current government for being slow on reforms and privatisation, but said it was clear the debt needed to be made more manageable.

    “A significant haircut could possibly do it,” an IMF official said, on condition of anonymity in line with department rules. “So could an extension, so Greece would not have to go back to the markets for a very long time.”

    One option the IMF mentioned was doubling the grace period on Greece’s loans from EU countries to 20 years and the subsequent repayment period to 40.

    “Greece needs a sort of breathing space,” the IMF official said.

    http://www.news.com.au/finance/econo...-1227426403594

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    Re: Greece, etc

    Hey Ross. Long time now see. Yes, I know, my fault
    .It blamed the current government for being slow on reforms and privatisation, but said it was clear the debt needed to be made more manageable.
    No matter how accurate, it makes my skin crawl when I see IMF boiler plate quotes like this. Translated this means, "We object to a shortage of privatized utilities, and other assets, which can be sold off to our client multi-nationals, who will run off with renue generated, leaving the initial debt to be paid for by local citizenry."

    Yes, Greece has a social support system, so out of control that government expenditures now outstrip GDP by 180%. As the article says. So far the citizens have been unwilling to part with a penny of this. Even the most wide-eyed, unapologetic socialist hs to realize no government can continue to outspend what the nation produce by nearly a factor of 2, decade after decade, without winding up in this position.

    The Greeks have dug this hole for themselves, but the solutions of the int'l bankers are designed to produce perpetual debt, and serfdom for their people. What they need to do is break the debt bottle AND fix their wagon... And do it on their own. That or become a province of some other country, fool enough to think this kind to debt to revenue practice will never have a down side.
    Last edited by Fredkc; 07-03-2015 at 02:37 PM.
    "Life IS mystical! Its just that we're used to it." - Wolf, the movie
    "Dad, if God is everywhere then, when he's in a piece of paper, is he squished?" - My daughter, age 7

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    Re: Greece, etc

    Hi:

    FredKC asked me to comment on this thread that he began, and it is the first post I have made outside of my section, but for dear FredKC, what he wants, he gets.

    Just yesterday at Avalon, I was writing about an interview with John Perkins, a self-confessed "economic hit man" on what is happening in Greece. Perkins' memoirs only confirmed what had been written for many years about the IMF and other neocolonial institutions. Brian O's buddy John Rappoport wrote that banking was one of the seven cartels that run the planet, and from what I have seen, I will not deny it.

    Normally, I think that whatever happens in any election is meaningless, as retail politics is not where the important decisions are carried out. The sitting American president is a lackey and he knows it. I have little doubt that Greece has been getting played how Perkins noted, and the bankers are trying to bring Greece to its knees. Seeing Greece stand up to them has been amazing to witness, and we will see how the upcoming referendum plays out.

    As FredKC noted in his post, the game is generally rigged on behalf of those who control it, but if Greece tells the EU to stick it, there are going to be some big short-term effects, including the Euro possibly tanking, "contagion" to other marginal EU nations, and the USA will likely not escape unscathed. Somebody is going to end up holding that bag when the music stops. Greece will never pay off that debt.

    Back in 2008-2009, as Wall Street and friends got bailed out instead of going to prison, those who saw it all coming (I was one of them) said that what was done was shifting the corporate losses to the governments, and that the next crisis would not be corporate debt, but government debt (socializing losses and privatizing profits, which is why the rich get richer). We may well be seeing the beginning of it.

    The international banking shenanigans, with that Asian international banking consortium being set up, to challenge the USA-centric banking world, are following the trajectory that all reserve currencies for the Columbian phase of world history have, in that the currencies follow the imperial trajectories, and the USA's has been on the downward slope since it hit peak oil back in the 1970s, as China's rises. With all of the geopolitical mayhem happening these days, which may one day be looked at as the early stages of World War III, what is happening in Greece could be considered nothing but a blip on the radar, but I have been following the developments with interest, and will continue to.

    Best,

    Wade

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    Re: Greece, etc

    From Karl Denninger's site, re Greece, and financials in general:
    Note that when you start spending in deficit there's a little "belly" between GDP and debt which appears to hold up for the first 20 or so years. This is why people do it; it feels like you're getting ahead.

    But you're not -- just a few years later debt is accelerating away from GDP and it's not that long before it's more than three times your economic output. Long before it gets there you wind up with negative "growth" because the expense of financing that debt exceeds your economic surplus and you inevitably go bankrupt.

    This is math, not politics and it happens every single time.
    "Life IS mystical! Its just that we're used to it." - Wolf, the movie
    "Dad, if God is everywhere then, when he's in a piece of paper, is he squished?" - My daughter, age 7

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    Re: Greece, etc

    Latest on Greece......


    THE Greek people have just done something historic - and potentially disastrous.

    By using their referendum to emphatically reject a bailout deal containing tough austerity measures, they have once again raised the prospect of an exit from the eurozone.

    Greek Prime Minister Alexis Tsipras has indicated he wants to return to the negotiating table with Europe, but a deal without those rejected austerity measures may not be possible.

    So, what happens if Greece’s belligerence leads to it being kicked off the euro?

    CURRENCY CHAOS

    If Greece does exit the euro, it would either need a new currency, or a reversion to its old one, the drachma. But the transition would be long and legally complex.

    Economists say the value of the drachma might be about half that of the euro so the savings of Greek citizens could be worth half what they are today, even if they keep repaying debts in euros.

    No country has ever left the eurozone, and there were never any plans put into place for such an event to occur. It is uncharted territory. In the event that Greece does leave, the government would need to pay its bills by printing IOUs, which would become a parallel currency.

    There is a precedent for this. In 2009, a bankrupt California began printing IOUs to pay taxpayers, vendors and local governments in lieu of cash.

    How Greece would go about determining a rate of exchange for the new currency is entirely unclear. “If I had 100 euro in the bank when I went to sleep, I might wake up with 100 drachmas,” University of Sydney senior economics lecturer Mark Melatos said.

    The problem, obviously, is those drachmas would be worth much less in real terms than euros — hence ordinary Greeks’ desperation to pull cash out while it’s still worth something.

    About five billion euros ($A7.32 billion) were reportedly withdrawn in May alone.

    Greece households are already stuffed full of cash, hidden in any place people can find. Euro notes are spent sparingly, and barter systems have begun cropping up in many communities.

    “If a new currency was introduced, it would surely be worth much less than half the euro. The person in the best position is someone with a whole heap of euros sitting in their pocket,” Dr Melatos said.

    How long it would take the real exchange rate to stabilise is again unclear, as there are very few precedents. “This doesn’t happen very often, and that’s part of the problem. It’s very rare that a country switches currencies, which is what’s causing all the fear.”

    There is also the risk of inflation of the new currency. Petrol, for example, would become very expensive due to the cost of oil imports. However, the lower exchange rate could also help to restart the country’s economy.

    “There would be a short-term shock but it could actually be quite good for Greece, it would suddenly become a very low-cost place and that would be good for its shipping and tourism,” UNSW economist Tim Harcourt said.

    In the long term, many economists agree that moving to its own currency would be the best thing for Greece. But the process would be extremely painful.

    “All the options are bad, but the best option is probably to leave and have their own currency,” Dr Melatos said.

    “As far as I can tell, the debt can’t be repaid, at least not in full, so they may as well default as you would in a normal bankruptcy.

    “Sure it will be a lot of pain in the short term, but the alternative would have required other euro countries to give even more money to Greece in perpetuity.”



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    Re: Greece, etc

    Hi:

    In the wake of the vote in Greece, all manner of pundit has been weighing in. One of the more colorful is Kunstler, and he is a good representative of the Peak Oil faction of financial analysts (of which there are many – 1, 2, 3). Here is his take. Peak Oilers are systems thinkers and students of collapsed civilizations. They have it right, as far as the energy of fossil fuels being the source of humanity's industrial party for the past few centuries, and the end is nigh. The punchbowl is going dry.

    Greece is an example of how the more marginal economic actors suffer first and most. Other marginal nations will be lining up behind them. The decline and collapse of industrial civilization will take time. The USA has been in decline since the first oil crisis, a few years after it hit Peak Oil. When a civilization uses up its primary resource a million times as fast as it was created, it is the economic equivalent of a mayfly. Of course, with free energy and other suppressed technologies, it can be an entirely different ballgame, but while humanity relentlessly plunders fossil fuels (and we are mining the dregs today, with fracking, tar sands, and the like) the future looks increasingly grim. National bankruptcies, which is essentially what Greece is experiencing (but virtually all industrial nations are effectively bankrupt today, and they are all madly printing money to forestall the inevitable), are going to proliferate, and the usual outcome of the kind of economic mayhem that is about to engulf humanity is warfare, but humanity cannot afford a war between industrialized nations. World War II was the last time that happened, and there is far more than one nuclear power today. World War III (which arguably began on September 11, 2001), will be a short one, if industrialized nations begin trading blows.

    The trajectory of Greece may be seen as a prelude what the West, and all nations, will be undergoing in the near future, unless we make free energy happen ( ).

    Recently, I was made aware that, just as China built a city for Yull Brown, they are considering building a city for FE R&D. I'll watch that development with interest, if we really get to see what happens.

    Best,

    Wade
    Last edited by Wade Frazier; 07-06-2015 at 04:48 PM.

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    Re: Greece, etc

    Quote Originally Posted by Wade Frazier View Post
    The trajectory of Greece may be seen as a prelude what the West, and all nations, will be undergoing in the near future, unless we make free energy happen
    Hi Wade,

    One would 'think' that suppressed FE tech would have to be made available, at least to the extent of avoiding world wide calamity. I'm sure you have been keeping an eye on China here: http://universalspectrum.org/forum/s...8475#post18475 which I agree with below.


    Quote Originally Posted by Wade Frazier View Post
    National bankruptcies, which is essentially what Greece is experiencing (but virtually all industrial nations are effectively bankrupt today, and they are all madly printing money to forestall the inevitable), are going to proliferate, and the usual outcome of the kind of economic mayhem that is about to engulf humanity is warfare
    Commonsense, which severely eludes Human/planetary survival, has to prevail...FE tech released and implemented for the sake of survival...one would 'think'.

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    Senior Member Wade Frazier's Avatar
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    Re: Greece, etc

    Hi Ross:

    I don't to drag FredKC's thread too far afield here, but yes indeed, I have been following events in China. I read the financial happenings daily (not much from the mainstream – Zero Hedge is usually how I start my day of such reading, including several on their blogroll), and I think that what I predicted a little over a year ago may finally be rearing its head.

    If Godzilla was sane, FE would have come out long ago, but he is still working on sanity. Even a lefty like Noam Chomsky has stated that elite ideology ranks hegemony over survival, and in my circles, it is known that Godzilla has been thinking of terraforming Mars as his ultimate survival enclave, in case his game makes Earth uninhabitable. That is way up there on the crazy scale, but cooler heads may prevail, and that is an area of my work where I offer some optimism.

    Political-economic dynasties in a world of scarcity have always been amassed by bloodshed and dirty tricks, even in something as "innocent" as high tech, and heredity has always been a primary qualification for membership on those clubs (even at the lower levels, as a relative nearly tried to recruit me into the "club" – which operated at a level or two below Godzilla's). The problem is that no matter how evil-minded and accomplished such empire-builders can seem, they cannot choose the souls that come through their offspring. Over my lifetime, there has been growing dissention in Godzilla's ranks, as it is becoming increasingly obvious that our current energy practices are going to render Earth uninhabitable before long, or the few bedraggled survivors will live in a world that makes Mad Max's seem paradisiacal. The younger members aren’t as crazy, do not want to live on Mars or underground, and want to see their grandchildren live in a healthy world.

    I am virtually certain that it was members of that growing disenchanted faction that gave my pal a little show long ago. I don't have deep insider connections to Godzilla's councils, but I hear enough from my close circle, that is privy to some of it.

    In China, for instance, there are various competing factions (called "dragons" sometimes), and choosing the right color dragon is not easy. Those planning on building a free energy city in China are obviously treading perilous ground, and I wish them the best.

    Best,

    Wade
    Last edited by Wade Frazier; 07-07-2015 at 07:58 AM.

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