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Greece Gets "Corzined" In Its Fruitless Pursuit of Euro Unity, Sans Its Own Sovereignty As Simple Arithmetic Sets In Again

Reggie Middleton's picture




 

stock-footage-hands-with-a-golden-euro-sign

Go to 1:45 in this video and listen carefully for at least 5 minutes (you'd probably want to watch more if you have an interest in truth in reporting, competent analysis, or simply the truth). Keep in mind that this interview was done in February, no crystal balls, just spreadsheets and common sense. Independent news has truly come into its own.

Remember, I warned readers to Beware The Overly Optimistic Greek Speculators As Icarus Comes Crashing Down To Earth! I gave subscribers (click here to subscribe) explicit proof that another Greek default was right around the corner. That's right! Direcly after the Greek default in March of this year!!!! Subscribers, see Greek debt restructuring maturity extension blog - March 2012 (Global Macro, Trades & Strategy). And in today's MSM fare: Greece Warns of Going Broke as Tax Proceeds Dry Up

As European leaders grapple with how to preserve their monetary union, Greece is rapidly running out of money

Nikos Lekkas, a government official, said banks had hindered his efforts to collect back taxes. 
Government coffers could be empty as soon as July, shortly after this month’s pivotal elections. In the worst case, Athens might have to temporarily stop paying for salaries and pensions, along with imports of fuel, food and pharmaceuticals.

Officials, scrambling for solutions, have considered dipping into funds that are supposed to be for Greece’s troubled banks. Some are even suggesting doling out i.o.u.’s.

Greek leaders said that despite their latest bailout of 130 billion euros, or $161.7 billion, they face a shortfall of 1.7 billion euros because tax revenue and other sources of potential income are drying up. A wrenching recession and harsh budget cuts have left businesses and individuals with less and less to give for taxes — and growing incentive to avoid paying what they owe.''

 But...but... but didn't I warn everybody of this as far back as 2010 and as recently as last February?

Government expenditures have outstripped revenues ever since 2007 and have gotten worse nearly every year since, despite 3 bailouts a restructuring, austerity and a default!

Greece_Primary_deficit_copy

The budget gap is widening as the so-called troika of lenders — the International Monetary Fund, the European Central Bank and the European Commission — withholds 1 billion euros in bailout money earmarked for government financing while it waits to see whether new leaders elected June 17 will honor Greece’s commitments.

Even if the troika delivers that money, Greece will struggle to cover its obligations. It underscored a harsh reality that is playing out in other troubled euro zone economies. Prolonged austerity is making it harder, not easier, for governments like Greece to become self-reliant again.

 Go figure! As excerpted from Beware The Overly Optimistic Greek Speculators As Icarus Comes Crashing Down To Earth!

Despite extensive, self-defeating, harsh and punitive austerity measures that have combined with a lack of true economic stimulus, Greece has (to date) failed to achieve Primary Balance. For the non-economists in the audience, primary balance is the elimination of a primary deficit, yet the absence of a primary surplus, ex. the midpoint between deficit and surplus before taking into consideration interest payments.

Greece_Primary_balance

The primary balance looks at the structural issues a country may have. The best analogy I’ve heard for the Grecian situation is the highly indebted family that has binged on credit cards creating huge interest and debt service payments. They then lose the earning power of one of the parents at the same time that a spike in medical bills and household repairs (ex. Murphy’s law) dig deeper into family finances. The family is then forced to continue spending via credit cards to meet these unforeseen expenses.

In short, the main reason for Greece requiring additional funding is its primary deficit but the main reason why this latest (as well as the two rounds before this latest) round of bailout funding won’t work is Greece’s primary deficit.

A top Spanish official acknowledged on Tuesday that Spain could not readily return to the markets to raise money because investors are demanding such high rates, highlighting how the debt crisis is spreading to larger economies in Europe.

 Again, BoomBustBlog made this clear early in 2010. Surprise you should be not! Be sure to note the date on the articles below...

  1. The Coming Pan-European Sovereign Debt Crisis – introduces the crisis and identified it as a pan-European problem, not a localized one... As a matter of fact, I directly and explicitly compared the plights of Greece vs Spain 2 years and 4 months ago, yes before anyone even publicly admitted Greece would have to default, not to mention Spain!!!
  2. spain_vs_greece.pngspain_vs_greece.pngspain_vs_gre

  3. The Coming Pan-European Soverign Debt Crisis, Pt 4: The Spread to Western European Countries
  4. The Depression is Already Here for Some Members of Europe, and It Just Might Be Contagious!

Fastforward to years, and as luck will have it - The Economic Bloodstain From Spain's Pain Will Cause European Tears To Rain

Oh, and here comes that Grecian Circular Argument again. What circular argument you query? Well simply read How Greece Killed Its Own Banks! and remember that this article was written in the beginning of 2010, when the bonds were trading for much more then they were right before they defaulted! then reference Greece Reports: "Circular Reasoning Works Because Circular Reasoning Works" - Or - Here Comes That Default!!!

That has left a caretaker government scrambling for a Plan B. One thought is to take billions of euros reserved for recapitalizing Greek banks, which have suffered from a flight of deposits amid political uncertainty and fears that Greece may abandon the euro for its own currency.

But using that money would require the troika’s approval. Other notions, like i.o.u.’s and scrip, so far are only that — ideas.

Next up I will consider releasing my research on what wil probably be the most profitable (US) CRE short of the year - GGP part 2!

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Thu, 06/07/2012 - 04:13 | 2502580 cranky-old-geezer
cranky-old-geezer's picture

 

 

I don't think the "Corzined" analogy fits Greece's situation.  They weren't suddenly looted with no warning. 

They spent more than they produced, over a long period of time, to get where they are now, up to their eyeballs in debt, maybe over their head in debt now.

There's just not enough credit available in normal credit markets to keep Greece (and Italy and Spain) going.

So printing euros is the only option.  But printing euros to fund more sovereign debt debases the euro.

So it's Greece collapse (and Italy and Spain) or euro collapse, one or the other.

Wed, 06/06/2012 - 20:44 | 2501654 Goldilocks
Goldilocks's picture

Published on Apr 25, 2012 by CapitalAccount
ZeroHedge Blogger Bob English outlines how Bernanke and the Fed could finally go Bankrupt!
http://www.youtube.com/watch?v=ENA7jtCt0Vw (27:52)

Published on May 21, 2012 by CapitalAccount
JP Morgan's Regulatory Arbitrage of turning Financial Loss into Political Profit
http://www.youtube.com/watch?v=WYw0Ibz-hi8 (28:05)

Published on May 25, 2012 by CapitalAccount
Reggie Middleton breaks down "Muppetology," Face Ripping IPO's, and the Chinese Wall!
http://www.youtube.com/watch?v=kSyPP_1PeWE (28:04)

Wed, 06/06/2012 - 16:20 | 2500761 Titan Uranus
Titan Uranus's picture

Back about 2001 I told my buddy in Munich it wouldn't work.  He's a blue sky leftist, and could see only roses and moonlight in the adoption of the Euro and benevolent co-operation of all concerned.  I said the Germans were crazy to hitch their wagon to any of the med countries, and now they have been and will continue to be 'greased' regardless of what happens from here on.  Unless the Chinese buy a LOT more BMWs, the Deutschlanders will be feeling the aftershocks for quite some time.  Look before you leap, or as Red Foxx said, "That face over the cocktail looks oh so sweet, but it's not quite as glamorous over shredded wheat."

Wed, 06/06/2012 - 15:49 | 2500661 LULZBank
LULZBank's picture

I would bother to read, if you would bother to write a bit more clearly and well organised.

You are good at explaining things in simple words, as in that clip, so I think you write like this on purpose trying to make it look too complex that it actually is.

Wed, 06/06/2012 - 15:37 | 2500621 semperfi
semperfi's picture

Corzined sounds like corn-holed.

Wed, 06/06/2012 - 15:17 | 2500540 boogerbently
boogerbently's picture

Reggie, Is your arm OK......from trying to pat yourself on the back?

ANYONE can make a prediction (see the "broken clock theory).

But did you tell us how to PROFIT from it ??

Arrogant little SPAMMER. At least Yahoo let's me "Ignore" the pests.

Wed, 06/06/2012 - 16:24 | 2500781 Reggie Middleton
Reggie Middleton's picture

Actually, I told my subscribers many ways to profit from it. Are you asking me if I will tell you tell you how to profit from my hard earned research for free? You probably know the answer to that already...

Wed, 06/06/2012 - 16:56 | 2500945 derek_vineyard
derek_vineyard's picture

cnbc stock draft kool aid drinking is a great way to profit

Wed, 06/06/2012 - 14:44 | 2500415 roadhazard
roadhazard's picture

Tell Lauren I said, Hi.

Wed, 06/06/2012 - 13:57 | 2500191 CustomersMan
CustomersMan's picture

 

Reggie,

 

I saw a story recently that said there are now 140 Countries in the BRIC block. Do they offer a way for Greece to abandon the EU Bank vultures and join the BRIC's?

 

Is there a viable option for them restructuring and joining with the BRIC Nations?

Wed, 06/06/2012 - 13:47 | 2500133 CustomersMan
CustomersMan's picture

 

Reggie,

Thanks. My impression is this and I may be way off.

The whole situation stinks to high heavens. the idea that the "derivatives and swaps association" can rule on what is a default or not, to the vulture capitalists waiting, actually hoping that Greece will be forced to sell it's most valuable and highest income producing assets. It becomes clearer by the day, that the system was/is designed to asset strip the economies that they knew would fail. Goldman Sachs, is part of that power block, a primary dealer and FED member. etc., so their derivatives play back at the time of the Olympics, was an investment that they now are hoping to collect on,.... again (as if they didn't already make a fortune on the custom made CDS and counter-party bets).

 

It seems that war will expand as countries refuse to give up the family jewels and others try to lay claim/take them, and as push comes to shove (we're long past that point already).

Wed, 06/06/2012 - 13:41 | 2500092 Whalley World
Whalley World's picture

Instead of PIIGS, can we call it what they will all be in the near future, GIPSI's

Wed, 06/06/2012 - 13:38 | 2500070 TJ00
TJ00's picture

Reggie, you and Lauren need to get a room.

Wed, 06/06/2012 - 13:37 | 2500061 MeanReversion
MeanReversion's picture

That chart showing primary deficit is wrong.  Greece's deficit is around 1% of GDP at the moment.  Where the F are you getting your numbers from?

Wed, 06/06/2012 - 13:19 | 2499977 Peter Pan
Peter Pan's picture

Greece will be stripped by lenders and also by unfriendly neighbours. Once upon a time her only enemy was the Ottoman Empire. She now has every international institution against her as well as Turkey, Albania and the former Yugoslav republic of Macedonia.

The Red Cross will be moving in with the army by the end of the year.

Wed, 06/06/2012 - 12:50 | 2499861 GeneMarchbanks
GeneMarchbanks's picture

Arithmetic matters considerably less than some would have us believe. Today is a good example.

What is this noise about 'Greece' again?

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