Why Greece Is The Precursor To The Next Global Debt Crisis

The one undeniable truth about the debt drama in Greece is that each of the conventional narratives - financial, political and historical - has some claim of legitimacy. These facts matter not only because contagion from Greek debt defaults may ripple in dangerous ways through the financial system, but because they are also true for many other members of the Eurozone. The Euro is a fatally-flawed monetary concept and what we now seeing playing out was eminently predictable from the start.

The Purge Begins: Tsipras To Expel Hard Core Left Wingers, Including Energy And Deputy Labor Ministers

The first targets of Tsipras purge of "party rebels opposed to an austerity package that will have to go through parliament within days" include the most prominent rebels, Energy Minister Panagiotis Lafazanis, leader of the so-called "Left Platform" within Syriza and Deputy Labour Minister Dimitris Stratoulis, a former unionist and a fierce opponent of pension cuts. The next scalp Tsipras would love to have is that of the "uncompromising speaker of parliament, Zoe Constantopoulou, who also defied Tsipras and abstained from the vote" although she would require a no confidence vote to be replaced "but the other rebels would be expected to resign their seats, the same people say."

'Greek' Finance In America: Pensions, Medicaid, & Entitlements Will Bankrupt State And Local Governments

If you can't print money or slash expenses, you have to borrow more money. That's the template not just for Greece, but for many state and local governments in the U.S who share key characteristics with Greece: they have soaring pension, Medicaid and employee healthcare obligations, but their tax revenues are either stagnant or prone to boom and bust cycles--and the current boom cycle is now entering the inevitable bust phase, when tax revenues plummet but the obligations just keep piling up. The template of over-indebtedness as a response to soaring obligations is scale-invariant, and it always ends the same way: default, more financial tricks to mask the default, and eventually, insolvency, bankruptcy and massive losses being distributed to everyone foolish enough to choose financial trickery over dealing with reality back when the pain would have been bearable.

Germany's Most Noted Euroskeptic Is Now In Control

This weekend's events in Europe have clarified who is really running the show across the 'union'. Hans-Werner Sinn, Chairman of the Ifo Institute for Economic Research, vehemnt euroskeptic, and head of the so-called 'five wise men' advising the German government and specifically Angela Merkel, confirmed his call from 2012 for a "temporary grexit from the euro." The right wing economist previously explained "Greece and Portugal have to become 30-40% less expensive to be competitive again. This is being attempted through excessive austerity measures within the euro zone, but it won't work. It will drive these countries to the brink of civil war before it succeeds. Temporary exits would very quickly stabilize these countries, create new jobs and free the population from the yoke of the euro." Anyone positioning for more centrist union-supporting rhetoric, hope is no longer a strategy as the hardest conservatives are now in charge.

EUR Indicated 100 Pips Lower After Tsipras "Mental Waterboarding"

After ramping gloriously on Thursday and Friday, basking in the warm after-glow of an assured done-deal, the FX market appears to be deja-vu-ing all over again as EU leaders throw up all over Greek proposals. EURUSD is indicated 1.1085/1.1056 in pre-market - down around 100 pips from the Friday close - following what one official called "extensive mental waterboarding" of Greek PM Alexis Tsipras.

Similarities Between China's Stock Market Crash And 1929 Are Eerie

For students of history, the China stock market crash looks eerily familiar. It’s playing out much like the Wall Street stock market crash of 1929. One of the factors fueling the soaring stock market of the 1920s was an influx of new, financially unsophisticated investors who saw the rising numbers and saw an opportunity for quick and easy profits. And that’s exactly what’s happened in China over the past year or so.

Greece May Sue Goldman Over Bank's Role In Greek Collapse

Former Goldmanite George Jabbour thinks Greece should take legal action against Goldman for the bank's role in helping the country hide its debt. We can only hope that if Greece does indeed decide to take Mr. Jabbour up on his offer to help clawback some of the half billion euros the bank reportedly pocketed from the deal, that the discovery process will help shed some light on whether the man now in charge of the ECB personally oversaw and endorsed the perpetuation of the Greek lie.  

Guest Post: Why Donald Trump Surged in the Polls (And Why It Matters)

Donald Trump is not a pleasant man. He is egotistical, vain, bombastic, often mean-spirited. He revels in his financial superiority, which he conflates with human goodness. When he contorts his mouth into a kind of tube as he talks, you brace yourself for something outrageous—and it nearly always emerges as expected. His likability quotient, at least in terms of his public persona, is down somewhere in single digits. And yet he has just taken hold of the American political system by the neck and doesn’t seem inclined to let go anytime soon.

Why The NYSE Debacle Mattered

On Thursday this past week there were a few attempts at crisis management that should go into textbooks (as well as history books) everywhere in years to come as: Crisis Management 101.a – Lessons in Ineptitude. The responses as to settle the angst in an ever-more-skeptical, as well as frightened investing class was not only inane as demonstrated by the responses (or better yet; lack there of) given at the NYSE by way of “answering” as to why it halted its operation for nearly 4 hours. Was only outdone by what many view as the near insane when one views the steps taken in China to “calm” their markets. Is that how one instills confidence? It instills something – however the term isn’t anything resembling “confidence.”

Eurogroup Fails To Reach Deal, Gives Greece 24 Hours To Accept Draconian Terms

After a day-long meeting of the Eurogroup, the European FinMins were unable to reach a conclusion on the third Greek bailout and instead once again punted the revised term sheet, this time with absolutely draconian terms, back to Tsipras, and told him he has until tomorrow to agree to the terms, and until Wednesday to pass them into law, for talks to even begin!

Leaked Eurogroup Statement Demands Much More From Greece, Keeps "Temporary Grexit" Option

While there is "hope" in the unforgettable words of France's Moscovici, it is once again up to Greece to convince Europe it really wants to stay in the Union. According to Reuters, the Eurogroup is about to release a statement, whose draft it has seen, which will demand much more from the tiny country caught in a state of permanent depression. To wit: Greece will not be able to start negotiations on a third bailout until it makes changes to its sales tax and pension systems and strengthens the independence of its statistics office, a draft statement of euro zone finance ministers said on Sunday.

Someone Told Merkel...

€10-14 billion was bad enough, but €25 billion may have been simply too much to bear...

Guest Post: A Coming Era Of Civil Disobedience?

If a family disagreed as broadly as we Americans do on issues so fundamental as right and wrong, good and evil, the family would fall apart, the couple would divorce, and the children would go their separate ways. Something like that is happening in the country. A secession of the heart has already taken place in America, and a secession, not of states, but of people from one another, caused by divisions on social, moral, cultural, and political views and values, is taking place. America is disuniting.

 

Schauble Proposes "5 Year Grexit With Humanitarian Support"

Here is the punchline from Greek nemesis #1, Schauble: SCHAEUBLE PROPOSES TIME-LIMITED `GREXIT': FAZ; SCHAEUBLE SUGGESTS 5-YR GREXIT, HUMANITARIAN SUPPORT: FAZ

In other words, Germany just said kick Greece out, conditionally, for 5 years (it is not quite clear what Greece would use for currency in the meantime), quarantine it, and treat it as a third-world country until 2020. Somehow we doubt global stocks expected this outcome when they soared on Friday...