“This was all inflation dependent financing. If the Federal Reserve and the rest of the world continued to inflate, cheap money would have bailed these projects out. With the Fed halting money printing, there are not enough dollars to support this debt structure.”
The Greeks are in a real pickle, but it is one they will have to sort out themselves – and not expect others, like Germany, to bail them out. Demanding that Germany bail them out because of WW2 damages/invasion is a sign of how desperate and ludicrous the debate down there is getting. What’s next: asking for reparations from Turkey for damages in the wars between Athens and Troy thousands of years ago?
The Greeks will have to decide who is culpable here: corrupt politicians, wealthy elites or over-paid government workers/bureaucrats. But don’t expect others to come to the rescue. Bottom line, to me, is that they got into the EU on false pretenses, hiding or fudging their debt levels. That is reason enought to expel them – and others who may be in the same boat, Italy, Portugal, Ireland, whomever.
Greece does not need an austerity program, as the Greek labor movement has eloquently argued in the course of their successful and admirable general strike last week. Greece does not need a bailout from Germany, the sinister International Monetary Fund, or from anyone else. Least of all does Greece need to accept the advice of Austrian school or Chicago schools charlatans who recommend the catharsis of a deflationary crash that would destroy an entire generation through unemployment, poverty, and despair.
Greece needs to defend itself with a 1% Tobin tax on all derivatives and other financial transactions. Greece should take the lead in outlawing credit default swaps, which amount to issuing insurance without meeting the capital requirements of being an insurance company. Greece needs to enforce EU and national antitrust laws.
If Soros and his gang succeed in breaking up the euro, Greece should make the best of it by immediately imposing heavy-duty exchange controls and capital controls to protect the new drachma, on the model of Malaysia a dozen years ago. Greece should shut down domestic zombie banks and seize its central bank and use it to issue 0% credit for industrial and agricultural hard commodity production. If the Greeks made plain what they intend to do if they are forced to fall back on the drachma, the financiers who fear such an example would have another reason to relent.
Condition Red: More Hidden Greek Debt Exposure Discovered
According to a report out last week, there is huge off-balance-sheet debt guaranteed by Greece and the other PIIGS, Portugal, Italy, Ireland and Spain. In addition to similar debt guarantees issued by other governments.
Gordon Long, founder of a private venture-capital fund, said in an investor note that there is more than $600 trillion in notational value in the global derivative market, with $437 trillion of it tied to interest rate swaps.
“Any credit event could trigger a cascading event,” Long wrote in the report, according to NyPo. “It does not have to be default; it could be a downgrade in swap contracts that would do the trick for a collateral call. Something is going to cause it to topple, whether it’s a situation in Dubai, Greece or New Jersey.”
“The next 12 months could be very dramatic for the Eurozone,” Robert Chapman, publisher of “The International Forecaster,” told NyPo. You can find the full article from Economic Policy Journal.