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As The Year Comes To An End The Ability Of Greece To Kick The Can Mirrors The Chances Of A Man With No Feet
As the year 2012 comes to an end I would like to remind readers and subscibers alike of the impending deadline posed by the leaderless leadership in the EU. Right after the first Greek default and 3rd bailout, in Beware The Overly Optimistic Greek Speculators As Icarus Comes Crashing Down To Earth! I made it perfectly clear that Greece was actually in worse condition cashflow wise and balance sheet-wise after the default than before. This has put a deadline of roughly 2013-2014 until that nasty stinky brown stuff splatters off the fan blades - to wit:
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_balanceGreece_Primary_balance
The primary balance looks at the structural issues a country may have.
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
Looking at the chart above, it should be obvious that by this time next year Greece would be pretty much shit out of water for there is no way they can make their interest payments AND thier expenditures sans interest, or make their government expenditures alone, or even in two years even make their interest payments assuming they don't even touch their other expenditures. I predicted this way back in the 1st quarter of 2010 (I Think It’s Confirmed, Greece Will Be the First Domino to Fall and then with with more specificity a month later As I Explicitly Forewarned, Greece Is Well On Its Way To Default, and Previously Published Numbers Were Waaaayyy Too Optimistic!) when everyone in charge said that the Greek problem was over, ex. Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!.
By the 2nd quarter of 2010 I clearly and articulately detailed exactly how Greece would default with specific structures in play- What is the Most Likely Scenario in the Greek Debt Fiasco? Restructuring Via Extension of Maturity Dates. Due to a few institutions who were skeptical, I attempted to make it a bit more real - A Comparison of Our Greek Bond Restructuring Analysis to that of Argentina.
Well, Greece defaulted according to plan, despite all of the "people in the know" saying otherwise - - from government officials to the EC and IMF - Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse! Even after the default, I made clear that this wasn't over for Greece, for the default actually left Greece worse off fundamentally, not better. Go wonder... I know I did, reference the warning from 5 months ago:
This will be exacerbated by a re-default of the Greek debt that was designed to bail out the defaulted Greek debt. Why will this happen? Greece has severe, rigid structural problems that simply cannot (and will not) be solved by throwing indebted liquidity at it. As a matter of fact, the additional debt simply exacerbates the problem - significantly! This was detailed in the post Beware The Overly Optimistic Greek Speculators As Icarus Comes Crashing Down To Earth!
... Subscribers can download my full thoughts on Greece's sustainability post bailout here - debt restructuring_maturity extension blog - March 2012. Professional and institutional subscribers should feel free to email me in order to receive a copy of the Greek restructuring model used to create these charts and come to these conclusions.
- Even with the elimination of interest payments Greece will spiral downward.
- Even with the near total absolution of its debt, as in a 90% haircut of the most recent bonds issued (which were swapped for bonds of which investors took an effective 74% haircut), Greece will spiral downward.
- That is the likely reason why these newest bonds back by EU/IMF bailout economic capital are already trading 70 points below par and rated CCC.
- These bonds are almost definitely slated for a 90%+ haircut by 2016
Long story short, TPTB have put Greece in a situation where it has to literally choose whether it feeds its people or it pays banks exorbitant interest.
I'll let you guess which is actually taking place....
Greek Interest Imposed Poverty
- BBC News - Greece's pensioners face looming poverty
- Poverty-stricken Greek town hits new low | Reuters
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- Poverty, Homelessness and Suicide: Greek Citizens Bludgeoned by ...
- The face of poverty in Greece | Demotix.com
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Let's see: choose between feeding its people or suck off the banks.
Long fly spray.
Samaras says it's just a flesh wound.
So what ?
Reggie, stop worrying about Greece and EU, they will survive on their own, they survived 2 world wars and they prosper not to speak about the excellent educational system they have.
Start worrying ( A LOT ) about US. This is something epic that is going to happen, start looking at the energy issues. Money is just the first derivative of power and power is the first derivative of energy.
So see, while you are looking at the small fluctuations on the second derivative level, it is the primary function that is the BIG mover, and I mean so BIG, that will strongly impact the physical world ( mostly human ), in the next 5-10 years, so severely that ANY financial/imaginary crises will be like a Broadway show compared with the change in the energy distribution dynamic we are about to experience. And the biggest impact on that will be on the wealth in US, because the wealth is build on energy, and when the energy (EIOER) decreases, rapidly, the wealth decreases even more rapidly, for as I mentioned, if wealth is just a second derivative ( in the most simple view ) of energy. Hopefully someone did not sleep in the differential equation course at the university.
No feet? how bout no feet and no can, that thing has rusted out long ago.
Time to learn ESP.
We must evolve.
Did anyone proof-read the headline, or is that a Google translation from Sanskrit?
Well, that's better, but still no Pulitzer.
'the end' justifies the means; don't be mean with Reggie. He does have both his feet.
I try to ignore the small stuff, and intend no harm to Reggie. His analysis is solid, communication skills..., not so much.
To succeed at a high level, you have to be willing to work on your problems as well as celebrate your strengths. This is not a new issue.