"Act As If" - Greece vs America Edition

Tyler Durden's picture

The most memorable scene from the movie Boiler Room is when the
character of Ben Afleck tells the room full of wannabe brokers to "Act As If"
(and in the tangent regarding male genitalia, the head of the IMF would
have been wise to take the advice instead of opening his fly and
disproving it). Who would have thought that a few short years later, it
would be none other than insolvent countries taking this advice: specifically,
America acting as if it wasn't insolvent, and Greece acting as if it was
beyond saving. The irony, as William Buckler observes in his latest
edition of the Privateer, is that while US debt continues to trade (if
no longer be accepted) as the "Rock of Gibraltar" and Greek paper is
trading with a certainty of bankruptcy, it is Greece that has taken
proactive steps in taxing and spending policy, while the US has merely
retrenched its profligate ways, and while much political theater takes
place, nothing ever really changes. For some of the more perverse
consequences of this bizarro world inversion, read below.

“Let’s Pretend” Has Run Amok, from Bill Buckler

In Greece, which has been subject to the not so tender ministrations of the US debt ratings agencies and the global “risk” markets for the past eighteen months, government two-year rates soared above 25 percent this week. The rate for two-year US Treasury paper is hovering just above the 0.50 percent level. Plug these two numbers into the “algorithms” by which computers control  most financial trading these days and the result is obvious. The Greek government will be seen as a financial pariah and treated accordingly. The US government will be seen as the fiscal Rock of Gibraltar. But even the US would pale in comparison to Japan, where two-year rates on government debt are below 0.20 percent.

In terms of funded debt, Japan has by far the biggest government debt to GDP ratio in the world. Greece is ahead of the US in that respect, but not by much. On the “markets”, Greek rates indicate a HUGE perceived risk in holding their paper. US and Japanese rates indicate no risk whatsoever.

Of the three nations in question here, only one has made any discernible change in their taxing and spending policies over recent years. That nation is Greece, the European pariah. As a reward, anyone in Greece who is NOT a debtor is sitting pretty, pulling in a HUGE return on investment. The plight of genuine savers in the US and Japan is horrible to contemplate. There is no return on savings whatsoever in either nation. In the US in particular, rates for savers are NEGATIVE to an extent never before seen. Up until the Bin Laden-induced rebound of the US Dollar, Americans were losing quickly in terms of international purchasing power and watching REAL price rises outstrip the “earnings” on their savings by HUGE multiples. Everyone “knows” that in the international financial scheme of things, the US (and Japan) are too big to fail while Greece is not. As a result, anyone in the US or Japan who produces more than he consumes and saves the difference is being skinned alive while his Greek counterpart is reaping an interest rate bonanza. The real risks are not being taken by Greek investors, they are being taken by US and Japanese investors desperate to offset their inability to earn a rate of return from savings.

All this to pretend that US (and Japanese) full faith and credit can still be relied on. The damage mounts.

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ursus.peracto's picture

We aren't Greece yet....


10 more years and then......

Rynak's picture

Actually, the US is a few hundred times greece already...... but it's a bit like that saying "kill a man and it is a tragedy. Kill one million men, and it is a statistic".... or alternatively "Fuckup little and you're broke, fuckup big and you're too-big-to-fail".

topcallingtroll's picture

FYI...that saying has always been attributed to Stalin.

DonutBoy's picture

10 Years!  Oh no my friend, no longer than through the next presidential election cycle.  There's no one left to take the debt; not Japan, not the EU, not the IMF, and China has had it's fill.  The BRICS are not stupid and the few Americans who are saving are not buying treasuries.

Blank Reg's picture

I am in thunderous agreement. Our debt is growing at a frightening rate.

Weisbrot's picture


Just when I start to think that perhaps the government may be doing a better job than it get credit for, something like this pops up, and I start to think worse instead of better. Quite a ping pong game of information, disinformation, and misinformation.

LudwigVon's picture

a better job than it get credit for

If all of the conflicting information makes it hard to decide where you think the US is at... just focus on the deficit. And GDP growth ex-government spending.

Luke 21's picture

you must have got the memo from kyle bass

hognutz's picture

Theres nothing to see here folks ,,,, move on..

Dan The Man's picture


How is the world still turning?

gkm's picture

From Reuters:  "Republican leaders, who have said they agree the limit must be raised, say they will not approve a further increase in borrowing authority without steps to keep debt under control."

So what exactly was the debt limit meant to control?  Let's circumvent a control once there's another curb in place?  I think I split a gut laughing - seriously.

rocker's picture

Grand Theater.  Welcome to the Greatest Show on Earth.  LOL   My spending O.K.    Your spending Bad.   WAF Joke.

Al Gorerhythm's picture

From Reuters:  "Republican leaders, who have said they agree the limit must be raised, say they will not approve a further increase in borrowing authority without steps to keep debt under control."

At a press conference today, a White House spokesman stated; "We have the authority to raise the debt ceiling beyond our last agreement, as long as we spend within our budget. Raising the debt limit ensures that we pay our creditors on time. This is no way that we will jeopardize the integrity of the government, or the strength of the dollar through default."

The spokesman added, "Congress has the authority to raise the debt limit, but we won't raise it unless it is absolutely necessary to do so. As a further measure of budgetary innovation, one that ensures the safety of the tax payers money, we will not raise the debt limit until there is an authority that has the backing of the law, which will oversee that each government department operates within budgetary constraints.'

He parroted: "Congress needs to establish a committee to investigate the formation of this board, that will have the authority to regulate the Budgetary Oversight Committee. This added level of vigilance will overcome the lack of oversight currently missing and this should promote confidence in the dollar and demonstrate to our creditors that we can be trusted with the safe keeping of their loans. We will, however, need to raise the debt limit in order to fund to this new authority, but it will be money well spent because the the ability to constrain debt is paramount."

He blathered: 'These cost saving measures should ensure that we don't go beyond our debt limit again, unless it is absolutely necessary. We are confident that the new authority will pursue an agenda that will keep the dollar strong and thereby create a strong America. We are confident that the will of congress will be implemented with this oversight committee and we can categorically state that more jobs will be created because of it."

The press gallery was assured that the press release was sound in logic and hurried to meet their deadlines.




knukles's picture

Is this from pseudo-Psalms or Parables?

Al Gorerhythm's picture

I believe I found it in the Book of Job. That's the one that describes pure evil.

Caviar Emptor's picture

The trend is intact: crushing the buying power of the USD and USD denominated securities (stocks, bonds). Wealth and savings are being confiscated, earned income is being degraded. And unfortunately, the trend can't be reversed without years of economic retrenchment ('austerity') or, put less politely, years of economic depression and deflation. 

The magnitude of monetary policy mistakes of the last 40 years can;t be easily erased and the Fed and TPTB know it. So they're going on, "acting as if" and pretending that they can reflate a bubble the size of the moon. But what they're producing is worse than if they just let nature take its course through creative destruction which would reset the economy and allow new competitors, new ideas and new corporations to take root. And the byproduct of their work is the new monster: biflation, of which they deny the very existence. And yet all the facts are there for everyone to see: deflating real incomes, real estate values and individual net worth, retirement benefits, corporate and government revenues and the entire real economy aka Main Street. The only thing inflating are things that excessive dollars can chase aka The Paper Economy aka Wall Street. However that also means that all those increasingly numerous and worthless dollars are being exchanged for commodities, gold and PMs. And since there's an ocean of dollars in foreign hands and in countries that are thirsty for growth and resources, the process will accelerate. There will be an impending risk of a run on the dollar hanging over the global economy for as far as the eye can see. No wonder people seek gold. Any temporary rises in the dollar will be fleeting and so far have not reversed the trend in place since 1971, the year the gold window was shut and dollar printing became a substitute for debt repayment and organic growth. 

topcallingtroll's picture

To sum up your first paragraph "pick your poison."  We will go through a lot of pain no matter which choice we make.  However one choice is perhaps less cynical and less disincentivizing of productivity.

Caviar Emptor's picture

If we go the rout of letting nature take its course and letting things that failed fail, there would be pain. But there would be a huge opportunity for growth in the future as new entrants reinvigorate the economy. And free market capitalism would have a chance to survive. The other way, ie the way we;re going now, there's only one choice: increasingly centralized control over the economy. It's already started: QE is intervention in the bond market. And a side-deal has been intervention in the stock market. And now we have intervention in commodities markets. The next steps are just around the corner: wage and price controls, protective tariffs and trade control, capital adn currency control. It can go all the way to a China-style economy. Ironic. 

akak's picture

What the mass of zombified sheep refuse to acknowledge, and will NEVER accept, is that there is NO "no-pain" possible outcome left to us ---- the choice lies only in some pain now, or greater pain down the road.  Given the terminally short-term mentality prevailing in the USA and most of the Western world today, it is abundantly clear that the latter option will be chosen, as irrational and counterproductive as it may be.

Muir's picture


Very well thought out and written.



rocker's picture

+2   In the 70's we had a Dow high of 1047 followed by a low of 577. Went back to over a 1000 again followed by a low in the 700s think of that for volatility.  Market broke out in the 80s and never looked back. But the volatility remained with swings as much as 900 points.

My point is I think we may be in for the same kind of ride again.  Just much more extreme. TPTB will rape most investors.  How low can they go and how high can they go.  TBTF are TPTB.

quantum dines's picture

owe the bank a million dollars and you have a problem, owe the bank a billion dollars and its their problem

Monedas's picture

I went to a Greek buffet ! How exotic the menu....stuffed grape leaves ? Soggy, unsalted rice steamed in a soggy grape leaf ! I hope Greece, Bernanke and O'bama fail ! Monedas 2011 Let them eat Corfu !

rocker's picture

It won't matter. Look at the entrails. Bernanke is a hangover from the Bush and Paulson era. The pukes are defending the TBTFs already. Great, nobody to break them up. It's a disease I tell you. TPTB are for the elite Billion dollar club. That's how they think now. Billions, a million is chump change to them.

BlackholeDivestment's picture

Everyone just sounds either corrupt or delusional at this point. 10 Years? We will not make it past another 5 years without a massive big badda boom. http://www.youtube.com/watch?v=CLamhmCYwX4

silvertrain's picture

I think 5 years is very generous..The boat is taking on water now, its a big boat and will be awhile before the folks on the upper deck know that we are sinking..It will take a bit longer but it is a guarantee to go down..There are a few of us{all of zerohedge} that know whats going on and are preparing or are prepared, for the ones that are not it will be epic and tragic....

Caviar Emptor's picture

You're mistaken sir. This ship is unsinkable!

KinorSensase's picture

I've got ZH bias.  It boggles the mind to talk to anyone about this stuff and find out how far behind the times they are...and the information is everywhere! 

I managed to convince a few of my friends to pick up physical on the premise of the collapsing dollar.  They are my only source of solace regarding these events, but even most of them don't see beyond the horizon of a simple currency collapse.  No thoughts on global collapse, MENA, EU debt crisis, Fukushima, midwest flooding and most definitely no thoughts on post-peak oil cultural and paradigm shifts...nada.

I have no solid data to support this but my gut tells me shit hits the fan this summer.  There's been so much pressure building up since the beginning of the year, it just feels like it's gonna pop soon, and then a real chain reaction begins.

samsara's picture

Yes, Timing is everything.  I know how you feel about friends only being able to see only so far.  No Post Peak Oil reality world views at all....

Careful with the predictions. 

Love these quotes from Doug Casey.

 "Just because something is inevitable doesn’t make it imminent”?


"The nasty things that you think are coming always take longer to arrive than you think they will, but once they get here, they make up for their tardiness by being worse than you thought they’d be."

Good Luck. 


rocker's picture

The sheeple are sleeping well. Stock market is back up. Bin Laden gone. It's all good. (sarcasm intended) Hell, even Robo thinks retails going up another 100% with AMZN, PCLN and ANF leading the way. Buy, Buy, Buy. LOL

DollarDive's picture

The time has come for the USA to stop kicking the can down the road.  We're broke as a nation.  Let's start to face up to the facts by dealing with the problem.  How about we start by reducing the headcount of the goverment by 20%.   That would be a good start.  Then we can talk more about raising the debt ceiling.

Citzens should demand an immediate 20% across the board cut before they agree to any rise in the debt ceiling.  The cuts must be finalized by June 1st.  The 20% cut will be followed by an additional 10% cut by August 31st.  

We should seek to impeach any politicians that vote to raise the debt ceiling.  (how about it Tyler ? )

It's wrong and as a nation we should demand that our politicians hold the line.





Diatribe's picture

No protesting yet, we haven't found out who wins Season 10 of American Idol...

Vic Vinegar's picture

The end of Idol rolls nicely into the start of Big Brother.  After that, it's fall and football might be back.  So maybe the protests can start in Feb 2012?

cosmictrainwreck's picture

I thought the NFL/players were in contract dispute; what's up with dat, btw? Or, I guess you mean HS & college... yeah, that'll lull 'em all right - they just luv that shit; can't get enough (besides-it's "patriotic")

silvertrain's picture

I say we should have 2 year term limits across the fucking board for everybody including the Prez..These life longers have fucked the system up..

Vic Vinegar's picture

On a somewhat serious note, I think that if we are actually going to try and have a government, then it should be mandated that public servants kill themselves after serving.  Coupled with term limits, that's the best way to assure the people they don't sell out.

samsara's picture

If it's still between the two pseudo parties(ie one party, two faces),  it still won't matter.

Vic Vinegar's picture

Carroll Quigley, bitches:

The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can "throw the rascals out" at any election without leading to any profound or extreme shifts in policy.

samsara's picture

Very good.  and great avatar

Carroll Quiqley on the Two Party System

-- Carroll Quigley, "Tragedy and Hope", 1966, p. 1247-48

samsara's picture

We should seek to impeach any politicians that vote to raise the debt ceiling.

A few years ago,  I thought it would be good to impeach a president that knowingly Lied to a whole nation to commit our sons and daughters to war claiming that we had to 'Preemptively'  striking a country that 'we'  KNOW has Weapons of Mass Destruction.  (using for example forged  10 year old documents by the Mossad, funneled thru Italian boys about some bogus yellow cake)

"Ah, but I was so much older then,  I am younger than that now. "

Vic Vinegar's picture

Agreed.  Those words from Bobby D are eternnally relevant.

Diatribe's picture

When in Rome...

Al Gorerhythm's picture

I can't seem to scroll down.... or up, for that matter.

sabra1's picture



Tim Geithner just admitted in writing that there is no trust fund - there is no money - the Government in fact blew every last penny of it. 

You, America, have been serially lied to about these so-called "trust funds."


Anyone - and I repeat anyone - who believes there is a "trust fund" or that there is one thin dime set aside by the government to cover Social Security and Medicare after you were just told, in black ink by the Secretary of the Treasury that there is not deserves exactly what they get.

You, the American people, have been robbed.  I and a few others have been trying to warn you of this for years and have been laughed at. 

Tim Geithner has now admitted in black letters that what I've been saying for years is, in fact, correct.