Letting Greece Twist In The Wind

Wolf Richter's picture

Wolf Richter   www.testosteronepit.com

With impeccable timing, it seeped to the surface that a group of ten experts at the German Finance Ministry is studying ways to deal with a Greek exit from the Eurozone. Though rumors about a “Plan-B” had been circulating for months, the leak provided details. A Finance Ministry spokesperson clarified helpfully on Friday, rather than denying it, that the group has been in existence for over a year. Impeccable timing because it happened as Greek Prime Minister Antonis Samaras was arriving in Berlin for his begging and charm expedition. German Chancellor Angela Merkel must have smiled. The heat was on.

They should be soul mates, Samaras and Merkel, both belonging to conservative parties. But during the prior government when he led the opposition, he fought tooth and nail against her sacrosanct structural reforms. So their schmooze on Friday must have been quite something. But at the press conference, she said, “I want Greece to remain part of the Eurozone.” And she knew of “no one in the governing parties who doesn’t want that.”

Yes, she said that! Despite the onslaught of politicians in her government who over the past months promoted Greece’s exit—even hours before the meeting, on ZDF’s morning TV show. Maybe Merkel didn’t watch it. “We cannot provide more money,” Volker Kauder, Chairman of her CDU/CSU parliamentary group, told Germans nationwide. And Greece’s exit, he added, would be “no problem for the euro.”

Nevertheless, she soldiered on: “Commitments must be kept.” And warned, “Words must be followed by deeds.” She was “deeply convinced” that the Samaras government would do “everything” to solve the problems, but any decision would have to wait “for the Troika report.”

Ah-ha. Inspectors the EU, the ECB, and the IMF will spend much of September combing through Greece with a fine-toothed comb to come up with a report, the big report, the one that would determine if Greece deserved more bailout billions. The report would be so big that every politician, even Merkel, could hide behind it. No one would want to be the one to kick Greece out. But the faceless Troika report issued by a triple-layered, non-democratic bureaucracy could take the heat [read.... Greece Prints Euros To Stay Afloat, The ECB Approves, The Bundesbank Nods, No One Wants To Get Blamed For Kicking Greece Out].

She laced her speech with meaningless expressions of support but didn’t commit to anything. It was a good beginning, she said, but much work remained to be done—sounding like a broken record.

But she can’t change her tune easily. In a poll released on Friday, 72% of Germans were against giving Greece the third bailout package that would be required if Greece were given more time to implement its reforms; 67% were against giving Greece more time, and 61% thought Greece should return to the drachma. So a switcheroo would be costly for her.

“We’re a very proud people, and we don’t want to be dependent on borrowed money,” Samaras said when it was his turn. “We don’t want more money. We need time to breathe.” Then he lamented the “toxic declarations” by a “high-ranking politician”—a jab at vice-Chancellor Philipp Rösler, Volker Kauder, or any of the others. How could they publicly discuss that Greece would revert to the drachma? That’s why no one wanted to invest in Greece. It was rendering the privatization of state-owned enterprises impossible. Greece needed investment, not austerity, he said.

So Merkel grabbed his balls and yanked: She’d been reading the Greek tabloids..., she said—the papers that had been depicting her with Hitler mustache and Nazi uniform—as if to say, look, this is politics ... tit for tat. Then she jabbered about “two realities” in Germany and Greece that would have to be brought back together.

He deemed the discussion “especially constructive.” For Merkel, it was “intensive.” In other words, they hadn’t agreed on anything. Samaras packed up his bags empty-handed. Nothing would happen before the Troika report. And then Merkel could hide behind it. She has been on record from day one that she wanted Greece to remain in the Eurozone. No one could blame her. Greece would run out of money, default, and revert to the drachma on its own. And voters couldn’t blame her for throwing more of their money at Greece to keep it in the Eurozone another year or two. So maybe she’d hang on to power, something almost no head of state has been able to do in the debt crisis.

Yet, hope is once again gushing through the system that the debt crisis could be wished away by a nod from Merkel, a wink from the Bundesbank, or a click of the mouse at the ECB. But in Greece there has been an incident.... Euro Optimism Surges, A Greek Tax Revolt Flares Up: It’s Decision Time, Again.

And here is.... The Eurozone Crisis Between Euro-Morons And Zombie-Bankers by George Dorgan.

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supermaxedout's picture

Greece declares bankruptcy but why should they go back to Drachma. The people there like the Euro and anyhow they have no other money. The Greek government is anyhow not capable to organize something like going back to the Drachma.

So the banks go bust. But there is a solution. There are two players which always boast that their currencies are superior to the Euro because they can just print as muchg as they want no matter what happens to the value. These two player UK and US can now show how fast there presses can run. Full speed and overtime 24/7 that is needed to save the systemic important banks all over the world. Its their system anyhow owned by the US and UK. So the two have to take care if they want to continue with their bullshit system.


Buck Johnson's picture

You see the German banks may have not invested that much money into the Greek economy and/or have divested enough to protect the German economy.  But what about the UK, Spain, Italy, etc. etc..  You see that is the issue, they either can't or haven't and that is why they are running to Germany all the time.  Because those countries are insolvent.

supermaxedout's picture

I dont know what are the mechanisms Europe is planning to save itself. But Im convinced that Greece goes bust and this means there is chaos to be expected.

Politically it is very unpopular to save the banks again. Thats why most probably its not going to happen again. But what is important is, that the savers do not loose much. This is going to be guaranteed by the governments and of course the ECB is backing this too.  Otherwise all the capital of Europe, the combined savings of generations would go bust and this is something what has to be avoided by all means. Since otherwise Europe would depend in the future on foreign investment because it lacks its own capital.

UK and US are different. The savings rate is low overthere and a high inflation is the desired outcome by the ruling class.  There the policy is easy to describe: Fuck the savers, fuck the pensioners. Once the debt is gone UK/US have still their military power ensuring a grip on a big part of the worlds commodities. And as we all know, commodities are allways valuable no matter what the paper money does.  This is the underlying reason why we have currency wars and hot wars and economic wars all over the world. Be it Sudan, Lybia, Georgia, Syria, Iran, Iraq, Afghanistan, etc etc its all the same reason.

The US and UK have to maintain their firm grip on the commodities for the time when the Dollar is bust. This is giving them a head start while Europe especially Germany has to start begging again in order to receive enough energy and raw materials to run its economy.  But what happens mostly unnoticed is the fact, that Germany is now trying to make its own energy policy. They are working on many new projects. One of them is the production of Diesel out of wind and solar power. This is the so called Third Generation of biofuels.  Its working quite well and a pilot plant is presently build for 30 million Euros. Its a process which may become over time  (5 - 10 years) as important as the famous Haber Bosch technology from BASF which enabled mankind to produce fertilizer nitrogen out of the air. Thus making it possible to feed the overpopulated world. 

This technology has the potential to become a similar gamechanger.



flacorps's picture

Those planning to cut Greece loose ... would do well to study the history of what happened *after* the Bank of the United States was allowed to fail...

KingTut's picture

The list of German leaders who have tired to fuse Europe into one entity (by various methods) is a long one, starting with Charlemagne in 800AD.  They all failed for essentially the same reason: these people are culturally incompatible.  We all harbor "nice" fantasies about how "nice" a unified Europe would be.  Over there they call it their "European Dream".  Fantasy ... Dream ... whatever. 

Americans can understand this by imagining the US unifying with Canada.  Although the Canadians would be horrified, in reality you would barely notice anything had happened.  Now try the same stunt with Mexico.  No offense to Mexicans, but it would be a total disaster.  No one is stupid enough to even suggest such a thing.  The USA will never attempt either, because we don't need to.  Things are fine the way they are.

However, in Europe -mostly Germany- they are desperate to become a super-power, and have all the power, wealth, prestige and influence that goes with that designation.  Their bureaucratic leaders assume they deserve it, certainly more  than the USA.  So in reality, they aren't intersted in the "nice" European Dream, they are power hungry and want unification for all the wrong reasons.  So they will build their frankenstein country even though they don't even speak the same languages.  They claim to be able to understand each other, but evidence is to the contrary.

In this context the way Germany is destroying Greece makes perfect sense; this isn't about unification of equals, but just a continuation of the ill-fated "Power Dream".

FeralSerf's picture

Charlemagne was more French than German.

Germans only fairly recently -- in the 19th Century -- became unified themselves.   Politicians want bigger empires.  That's not solely a German philosophy by any means.   The English and the French -- and now the Americans -- were historically more agressive and successful at that than the Germans.

KingTut's picture

Actually, Charlemagne was the "King of the Franks", a Germanic tribe that invaded Gaul after Rome retreated. However, Napoleon was just as guilty as anyone at trying to unfiy EUrope, and he was French, well Coriscan, actually.

I'm not trying to single out the Germans in being aggressive in building the EU in their image.  I think everybody wants the increase in power that comes with that level of scale.  My point is that they have all been trying to reunify Europe since the Roman Empire fell, mostly unsuccessfully.  The reason it fails apart is always the same, they can't resolve disputes peacefully. Perhaps, because they can't talk to each other.

The US is nowhere near as aggressive as previous empire builders, read more history.

Emperor's picture

German politicians are already openly calling Greece should leave the Euro.

Nachdenken's picture

Greek debt is covered by Derivatives a la Goldman, JPM and every  other major swap artist. 

So where is the risk ?

Right.    Not in Greece.

CustomersMan's picture


....And now force Greece to sell some of its most prized assets, even while they have HUGE natural gas holdings off the coast of Cyprus, and elsewhere, it makes NO sense. These oil and gas resources could go a long way in bringing them back from the brink, are in waters that can be developed and near markets that are easier to transport to.


The plan by the oligarchs is the same as for Ireland, force them to sell / trade their wealth in oil and gas at the most inopportune time. The PTB made sure the situation is as it is; it was all part of the plan.

CustomersMan's picture


Why oh Why has Greece NOT followed the path of Iceland.

The writing has been on the wall for all to see. They could also more closely align themselves with the BRIC Nations and find their way out.

Vegetius's picture

The pressure is starting to come on, little by little. Lets see how they all like the big bill that the Spanish will give them and of course Not so Super Mario.



lolmao500's picture

But but but... Obama will lose the election if it happens.

bank guy in Brussels's picture

What is missing in the above article, as in so many others recently, is a confrontation of the thorny question of whether a Greek massive default and exit from the euro would trigger a huge, catastrophic crisis or not ...

Manageable and non-systemic like Iceland, or something that would create half a trillion in immediate losses, and then collapse the French and German banks and much of the world along with it?

The fear of systemic collapse may mean that Merkel and the Germans may ultimately agree to bailout and print ... whatever their cocky attitude for German public political consumption

Consider, for example, the superb former ZeroHedge commentator Peter Tchir:

« ... Maybe I’m wrong, but every time I look at the possibility of a Greek exit right now I see it spiraling out of control and dragging down the entire global economy. I hear and read the arguments of why it is controllable and they just don’t seem credible. ... »

'Why a Grexit Would Make Lehman Look Like Childs Play'


disabledvet's picture

Greece will collapse the world economy? Hahahahaha. That's a good one. Long before any clowns anywhere were talking about Greece...I was talking about Greece. Only Reggie picked up on it. Unfortunately for all of you I was talking about a whole lot else, too. Greece simply hasn't come to terms with the fact that it DOESN'T matter...save for as a tool for German financial interests. They're going to take the hit one way or another. "and they still won't matter" then either. The question then becomes "who won't matter next?" let's see: Spain, Italy, Belgium, France, Eastern Europe, Great Britain itself? That's what it looks like to me. Still like Sweden...but that's about it for "the little guy." And no...financially speaking it does not matter one bit to the USA.

Oldrepublic's picture

The Greeks have a big ego, refusing to admit that Greece is a small county in Europe. Witness the Greek arrogance regarding its neighbor to the North, Macedonia. Greece refuses to use that name forces the UN to call it the former Yugoslav Repubic of Macedonia, FYROM

Peter Pan's picture

Your post is irrelevant.

However perhaps you are not aware that in 1939 the Yugoslav government put out a stamp showing FYROM with the name VARDASKA. (bottom right hand side of stamp.)

In the meantime feel free to fill your country with statues of Alexander the Great  so that the Russians and the Bulgarians along with the Greek people and the scholars of this world will continue to be amused.

Please keep in mind that all of the ancient inscriptions found in FYROM are in Classical Greek and not in your language which arrived in the region centuries later.

I will not be junking you as you are one of the many unfortunate FYROMITES that have fallen for your president leader's propaganda. By the way your previous Prime Minister Georgievski has admitted that your current PM is caricaturing your history and feeding his people lies.

falak pema's picture

we all know without a shadow of a doubt that the Oligarchs have their money in the WS/City concoction of financialised capitalism. THe banks are their instruments and the politicians work for them, as no politician, even slightly honest, likes to stare in the abyss of first world financial Armageddon.

Its now one intricate, corrupted beyond resolution, power structure of money, MIC, Oil and food lobbies, hi-tech companies; aka WS assets, all on the same dirty page of spending on borrowed money, milking the BRIC slave labor combines. As the banksters who are their book keepers of fudged hodge podge financilaised intricacy beyond control now are juggling with too many balls in the air, to hide their crazy derivative debts all fed on ZIRP mantra.

So the panic buttons get hit even when tiny Greece goes belly up. Its the banking assets that have  become victims of this whole dirty duck soup called electronic money game. 

Kicking the can is the only issue to those in power and they won't tolerate renegades in first world power structure. Thats the bottom line and Merkel knows it. Her ability to go it alone to save Deutschland assets is more and more smoke and mirrors. 

The more she delays the more the elastic bands of the spiders web become taught, near breaking point. That is the downside of her current play. Time is not on her side, nor on those of this Pax Americana world order. It could snap any moment.

1° The private bank debt is the real bomb in first world, not sovereigns.

2° The Oligarchs will never admit to deleveraging this construct; as it means they lose ALL. 

3° The issue is bad or worse...depression and/or war. We've been there, but not in MAD mode of today. 


monad's picture

Its not capitalism, its imperialism. Capitalism is free trade between informed, consenting parties, voluntarily acting in their own best interests. This is coersive force orchestrated by organized criminals, who cheat: lie, withhold material facts, bribe, blackmail and threaten violence, up to and including slavery, torture, murder, war, and genocide: collectivist exploitation, under the pretense of free trade. The decieved are not informed, therefore they are not consenting, even if they believe that they are acting in their own best interests.


falak pema's picture

its not christian evangelism, its the Catholic Church, all devoted to Caeser's religion of empire...

Its not Communism, its Stalinism... a perversion of the ideal...

Its not Global warming its AL Gore scam...

I only know one thing : we are what we do. I don't believe in ideology primarily, I believe in acts and facts that express human nature as exemplified by its inevitable perversions; especially when the ideal becomes unachievable.

If capitalism was what you said it SHOULD be we would be there; not where we are! 

If the return to those ideals is so obvious why is it so difficult to go there and obliterate these corrupt lobbies and psychopaths, who since time immemorial show us that human nature in all its "bestiality" has to be reckoned with...

Our future is always defined by balance between what we aspire to and what we can achieve. Its a bitch to be mortal.

The balance comes either by voluntary restraint and compromise or in violence. 

Our ability to find compromise is limited; our ability to revert to violence seems unlimited. 

Maybe we should junk the human race and invent the humanoid. 

Sorry to be so pessimistic. I am an optimist by nature, but the current downward spiral is awesome.

i-dog's picture

One of your best posts ever, Falak. (When you drop the mythology and mixed metaphors, and revert to plain, though forceful, English, you show some real perception and thinking.)

I particularly liked this contrast:

"Our ability to find compromise is limited; our ability to revert to violence seems unlimited."

If we are ever to break out of the "developmental" phase of human evolution and progress to a stable "adult" future, the human race is going to have to learn how to "live and let live".

At the moment, the children are destroying the kindergarten while fighting for the flag.

monad's picture

All I said is that you mistated capitalism when you meant imperialism. Capitalism is what I said it is, our political relationships are increasingly not arranged this way, due to the manipulation of our immediate adversaries. Freedom is a reference from which justice is possible. This our objective. Collectivism only benefits predators, and this is their objective.

Nothing Lasts. Be good to each other now. If you can laugh, you can balance. 

CustomersMan's picture


Imagine the insanity of it all.


They (the JPM's, Goldman's, MS's etc.) set-up the derivatives game. Its like an insurance company on steroids. You get to write 100's of times what you're worth insurance policies on anything and everything, then collect all the  premiums, if things go BANG, they threaten to take down the system and let the government pick up the tab on the public's back.


No regulations, a closed and NON-Transparent market,.. they can write 10's of trillions in policies, they also control the outcome because they control what the definitions mean , as in the Int'l Derivatives and Swaps Assoc. To top it all off they now have FDIC Insurance.

lotsoffun's picture

a friend of mine said recently - and i tend to believe him.  it's pretty simple.  you write insurance and collect premiums - but you never have any intention to stick around long enough and really pay out anything.  haha.  jokes on you.  and that's the way it would be, except - they all wrote to each other back and forth.  and the last time it was 80 BILLION from aig to gs.  gs says thank allah for hank paulson - they got the money back.  this time - there's no end to it.  so it's all vaporized.  the corzine plan.  anybody seen jonnie boy lately?


Ned Zeppelin's picture

With Greece, the danger is the slippery slope, and the "snap"must not be allowed to occur - one wonders indeed how it could occur if the CBs are dead set against it, and have both the power of the printers and the bully pulpits such power affords them.   Failuire is not an option, so indeed my prediction (as before) is that the ECB will print like mad through one or more alphabet city, find-the-peanut programmes, and it is quite possible we will see federalization of the Euro banking system, with Germany firmly in control, as the quid pro quo before long.  The Oligarchs have no interest in going backwards, and sovereign debt is the best debt of all, since it is funded/collaterlized by the taxing power.  If we as citizens will not borrow and become debt slaves directly, the state will do it for us.

Something like that.

GCT's picture

+1 Bank guy.  I ponder this myself.  Why?  Because I come here to learn and ZH helps with that.

Many timms here commentoers and authors have written about the French and German exposure to this.  I think they are trying to keep this from happening until most of their exposure to the debt is smallest for them.  This game is going to continue to a long time.

steve from virginia's picture


Nobody knows for sure what is going to happen.

Actions speak louder than words: people in charge behave as if any sort of restructuring/default or deleveraging will cascade. It must be assumed to be a likelihood based on how the establishment acts.

A cold-blooded analysis suggests that the amount of debt that was taken on simply to finance old debt is too large relative to 'output' or cash flow. Meanwhile, even more of this 'dead money' debt is being taken on by every single country. Samaras:

“We’re a very proud people, and we don’t want to be dependent on borrowed money,”

Samaras the fool, Merkel another fool.

Every country ... every single country, company, every single currency is, or depends upon, borrowing. Money itself is borrowed: industrial 'money' is debt. The entire enterprise of modernity exists upon a foundation of debt, the chain of which runs backwards 400 years, even before Chris Colon borrowed from the king of Spain and Florentine bankers to 'discover' the Western Hemisphere.

Modernity is capital destruction. We've borrowed to the maximum to destroy the very things we need to survive. We desire to use what little credit remains so as to destroy the last bit of capital that remains.

After 400 years of this foolishness we're broke. There are no more loans to be had (except for a dribble here and there). Not enough to make any difference.


Basically, we are all fucked.


Peter Pan's picture

Greece's problems are much more deep seated and numerous than any politician has admitted to publicly. The ingrained attitudes, the lacklustre performance of the tax collectors, the overly large and unproductive public service, the aging demographic, the economic downturn, the corrupt and inept politicians, the general downturn in the economy, the high unemployment, the lack of manufacturing base, the gutted ship building and repair industry, the reduction in tourism, poor productivity, the raft of new taxes, the reduction of private remuneration levels and a debt level that is mathematically impossible to deal with are just SOME of the problems.

The demands of the TROIKA on Greece are ingenuous to the point of being dishonest. An ex-German shadow finance minister confided to me that Germany knows that Greece will fail and that Germany will get cents in the dollar, but it was necessary to prolong the current situation and to stretch out the pain of the write off for as long as possible.

So all the trips and discussions of Merkel, Samaras and others is just an exercise in futility by a bunch of dim wits who do not know how to handle a pile of bad debt and the insolvent banks that arise from those bad debts.

Freddie's picture


the overly large and unproductive public service,

Greece is like the poster child as a totally FU'ed western country.  It is a perfect model for a country that should NOt have been in the euro.  I think the whole euro idea was idiotic.  More fiat madnes.

Nachdenken's picture

Samaras has no balls, if he did he would take Greece out of the Euro, let the Banks sit on Greek  Euro debt and sell cheap  holidays,  make money living like Greeks in the sun again.

Its the goons in Brussels mate, theys got Europe by them balls. Schaueble is sitting on his, Merkel traded hers in.

Peter Pan's picture

The fact that Samaras has no balls is old news. However, Greeks cannot go back to living like Greeks in the sun by selling cheap holidays. When Greeks used to do that their expectations were at a lower level and they had not accumulated the habits and toys of the last fifteen years. They worked the land and the ship yards and had not yet accumulated an almost one to two million illegal immigrant population.

Greece now has too many broken parts and not enough strong hands or cash to bring everything together again without severe upheaval.

Freddie's picture

Greece will stay in the euro.  Half the country is unionized govt workers.  Staying in the euro is the only way they get paid.  If they leave then there will be no money.  Think detroit or other corrupt shitholes filled with libtard Dem voters.

They should leave but they won't.  Sad.  

ThirdWorldDude's picture

Yeah, right, the syndrome of a broke alcoholic begging for another drink. 

The problem in Europe, however, is that the bartender's name is Hans.

ThirdWorldDude's picture

Breaking news: The whole fuckin' world has too many broken parts!

The way I see it, it's the only logical outcome of an insane doctrine of "infinite growth". Once again has humanity underestimated it's stupidity...

Nachdenken's picture

So its going, going, but not gone.

pashley1411's picture

Do business-destroying kleptocracies even have a "Plan B"?