"Europe as it is, is already over. Everything from here on in is a mere death rattle."

[Caretaker]

Best summary I've seen so far of what most imagine to be a tragedy confined to Greece.

My hunch is the contagion may well spread far beyond the Euro region, possibly engulfing the entire world. This is the type of ugliness that breeds world wars.

The spark Germany has struck with its hard as flint approach is landing on the dry tinder of a whole host of mid-east countries virtually destroyed by US aggression and meddling (Palestine, Iran, Iraq, Afghanistan, Pakistan, Yemen, Egypt, Libya, Syria) and a Russian state faced with its version of the Cuban missile crisis perpetrated this time by the US in the Ukraine, as well as an economic and militarily ascendant China.

The balance of world power is shifting. The risks are very, very great.

http://www.theautomaticearth.com/2015/07/the-troika-and-the-five-families/

 

[James Is Back]

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Thread closed for staff review.

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[James Is Back]

Mod Hat On

Thread reopened and has undergone a cleanup due to off topic posts so if your post is gone that is the reason or you quoted someone that did. Since all posts but the OP and my original Mod Hat are gone we are going to start over with this thread which means stick to the topic at hand and not veer off of it please.

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[bhsmte]

Best summary I've seen so far of what most imagine to be a tragedy confined to Greece.

My hunch is the contagion may well spread far beyond the Euro region, possibly engulfing the entire world. This is the type of ugliness that breeds world wars.

The spark Germany has struck with its hard as flint approach is landing on the dry tinder of a whole host of mid-east countries virtually destroyed by US aggression and meddling (Palestine, Iran, Iraq, Afghanistan, Pakistan, Yemen, Egypt, Libya, Syria) and a Russian state faced with its version of the Cuban missile crisis perpetrated this time by the US in the Ukraine, as well as an economic and militarily ascendant China.

The balance of world power is shifting. The risks are very, very great.

http://www.theautomaticearth.com/2015/07/the-troika-and-the-five-families/

What do you think should be done about your conclusions?

 

[Paradoxum]

I think Europe will be okay, but I do agree that Germany is probably being too harsh on Greece.

 

[Caretaker]

What do you think should be done about your conclusions?

It's useless and fruitless to discuss potential remedies unless/until the problem is clearly identified and broadly understood.

 

[Caretaker]

I think Europe will be okay, but I do agree that Germany is probably being too harsh on Greece.

The IMF agrees (with regard to the agreement being "too harsh" on Greece). As much as it has tried to resist the obvious problems with the Greek "agreement" with the EU by relaxing its definitions of how manageable debt is defined, the IMF, to its credit, is stating the obvious when it says that the agreement only guarantees Greek economic failure.

The IMF is threatening to withdraw its participation (which the EU desperately needs) because the agreement does not lead to a viable economic state in Greece, which prerequisite is legally required by the IMF's by-laws for its participation.

http://www.marketwatch.com/story/imf-says-greece-needs-more-debt-restructuring-2015-07-14

 

[NightHawkeye]

The IMF agrees (with regard to the agreement being "too harsh" on Greece). As much as it has tried to resist the obvious problems with the Greek "agreement" with the EU by relaxing its definitions of how manageable debt is defined, the IMF, to its credit, is stating the obvious when it says that the agreement only guarantees Greek economic failure.

The IMF is threatening to withdraw its participation (which the EU desperately needs) because the agreement does not lead to a viable economic state in Greece, which prerequisite is legally required by the IMF's by-laws for its participation.

http://www.marketwatch.com/story/imf-says-greece-needs-more-debt-restructuring-2015-07-14

It would be enlightening to know whether forestalling the inevitable bankruptcy is more because of Tsipras ... or because of Germany and the EU.

Perhaps it doesn't really matter. The inability of either to come to terms with reality does not bode well for the EU's future.

 

[Caretaker]

It would be enlightening to know whether forestalling the inevitable bankruptcy is more because of Tsipras ... or because of Germany and the EU.

Perhaps it doesn't really matter. The inability of either to come to terms with reality does not bode well for the EU's future.

It's pretty easy to suppose that Merkel and the EU central bankers are stone cold idiots. David Stockman suggests as much:
*************
As it happened, however, Merkel was hoodwinked into believing that the original bond sell-off was the work of the same malevolent Anglo-Saxon “speculators” who purportedly caused the great financial crisis of 2008. So the EU superstate, she was told, had to take on the job of “banker” to the fiscally weaker members of the monetary union in order to buy time, defeat the speculators and preserve the financial stability of the Eurozone.

Unfortunately, Merkel and her coterie are monetary ignoramuses and therefore bought this tommyrot hook, line and sinker. -- http://davidstockmanscontracorner.com/the-curse-of-the-euro-money-corrupted-democracy-busted/
***********************

Somehow, though, I have a very hard time swallowing that. Let's speculate for a moment on other possibilities.

What if the EU and its central bankers are convinced that the wild expansion of central bank balance sheets since 2008 guarantee eventual high inflation rates? http://www.bis.org/publ/bppdf/bispap66b.pdf

What if all they're doing is keeping Greece afloat until the "white knight" of high inflation rides to Greece's rescue, turning what looks like it will be a debt of close to 250% of GDP into a much more manageable percentage?

Indeed, most of the world's governments (including the US) could not pay the debt they currently owe under a normal interest rate scenario. Virtually all world governments are "banking" on fairly high future inflation rates to save them.

And, sooner or later, rates MUST rise to more normal levels.

 

[rambot]

I wouldn't assume Merkel and the bankers are idiots. I'd be more inclined ot think they are just terribly desperate to keep the EU together.

It does seem to be delaying the inevitable. I mean, the Greece parliament has to vote and approve this. I simply CANNOT imagine they will do that.

 

[NightHawkeye]

Somehow, though, I have a very hard time swallowing that.

Yep. I don't think they're idiots either.

Merkel especially is characterized as a very rational individual and her background and education underscores that.

Let's speculate for a moment on other possibilities.

What if the EU and its central bankers are convinced that the wild expansion of central bank balance sheets since 2008 guarantee eventual high inflation rates? http://www.bis.org/publ/bppdf/bispap66b.pdf

What if all they're doing is keeping Greece afloat until the "white knight" of high inflation rides to Greece's rescue, turning what looks like it will be a debt of close to 250% of GDP into a much more manageable percentage?

Indeed, most of the world's governments (including the US) could not pay the debt they currently owe under a normal interest rate scenario. Virtually all world governments are "banking" on fairly high future inflation rates to save them.

And, sooner or later, rates MUST rise to more normal levels.

Others have reached similar conclusions. The big question seems to be about what form the impending calamity will manifest itself. The only thing seemingly certain is that corrections tend to happen quickly, very quickly.

 

[Caretaker]

FYI, here's what the Greek debt exposure by EU nation

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/06/Barc explosure table.jpg

 

[rambot]

That is some significant fiscal mismanagement by Greece. It's hard to feel a lot of compassion if that's what they've been digging themselves into.
ps...looks like the greek parliament accepted it. Seems a bit nuts.

 

[Dave RP]

I wouldn't assume Merkel and the bankers are idiots. I'd be more inclined ot think they are just terribly desperate to keep the EU together.

It does seem to be delaying the inevitable. I mean, the Greece parliament has to vote and approve this. I simply CANNOT imagine they will do that.

Firstly please don't confuse the EU (European Union) with the Euro (Single European Currency). All the decisions made regarding Greece have been made to keep the Euro CURRENCY together, this is a political decision flying in the face of all economic logic. The best thing long term for Greece (and possible for the EU) would be for Greece to default, leave the Euro, set up its own currency which will be devalued against the Euro therefore helping tourism and whatever exports Greece can muster. Whilst painful in the short term it would give Greece a chance of creating a competitive economy but the myth of a viable European single currency must be maintained.

I just that our lucky stars that the UK never joined the lunacy that is the Euro.

Secondly, the Greek parliament did vote the package through, but it will fail unless there is major debt write downs, which the German parliament will not sanction (yet!)

 

[Caretaker]

That is some significant fiscal mismanagement by Greece. It's hard to feel a lot of compassion if that's what they've been digging themselves into.
ps...looks like the greek parliament accepted it. Seems a bit nuts.

Ummmmm .... "fiscal mismanagement by Greece"?????

Getting into debt requires two parties - a borrower and a lender. How are those who lent so irresponsibly to Greece not also at least as much at fault as Greece if not more so?

Why are so many on Shylock's side? What about Antonio? What about the "quality of mercy"?

Note that Japan is right up there with Greece in terms of gross public debt as a percentage of GDP, and that the United States is not far from the top of the debtors list.

https://en.wikipedia.org/wiki/List_of_countries_by_public_debt

(Sort by Gross Public Debt as a percentage of GDP by by clicking on that column - click twice to get it into descending order)

 

[Paradoxum]

The IMF agrees (with regard to the agreement being "too harsh" on Greece). As much as it has tried to resist the obvious problems with the Greek "agreement" with the EU by relaxing its definitions of how manageable debt is defined, the IMF, to its credit, is stating the obvious when it says that the agreement only guarantees Greek economic failure.

The IMF is threatening to withdraw its participation (which the EU desperately needs) because the agreement does not lead to a viable economic state in Greece, which prerequisite is legally required by the IMF's by-laws for its participation.

http://www.marketwatch.com/story/imf-says-greece-needs-more-debt-restructuring-2015-07-14

Sadly, misplaced German power is wreaking Greece. Hopefully, Merkel can change her mind, but it seems unlikely. :s

I wouldn't assume Merkel and the bankers are idiots. I'd be more inclined ot think they are just terribly desperate to keep the EU together.

I think the problem is that Merkel cares more about German politics than the good of the EU. Plus she probably thinks what she's going is right.

It does seem to be delaying the inevitable. I mean, the Greece parliament has to vote and approve this. I simply CANNOT imagine they will do that.

I don't think Greece leaving is inevitable. Debt forgiveness and focus on growth, rather than austerity, could help the whole EU in the medium and long term.

That's my understanding anyway.