The Endgame: “Greeks feel hopeless”

Wolf Richter's picture

Wolf Richter

On Thursday, rumors that Greece would have a government goosed the stock markets in Europe. While everybody was out to lunch in Frankfurt, the DAX ran up 110 points, before it settled down a bit. In Athens, the ATHEX, which appears to be on a multi-year trajectory toward zero, jumped 4.2% and the bank index 13%. But on Friday, when it became clear that the rumor was just another rumor, the ATHEX resumed its downward trajectory. And Greeks went to bed without a new government.

During the May 6 election, Greek voters demolished the former top two political parties—the conservative New Democracy and socialist PASOK—that had divvyied up the spoils for decades and that had gotten Greece into its morass. In their outrage, Greeks voted for every alternative in sight, from the radical left to the Neo-Nazis on the right—in the process clobbering those who’d signed the reform memorandum that the Troika had handed them in exchange for hundreds of billions of bailout euros. Neither New Democracy with 18.9% nor PASOK with 13.2% had the votes to govern. And by Friday, all efforts had failed to form a coalition government of whatever kind.

Saturday, President Karolos Papoulias got involved in the horse-trading and spoke of “nuggets of optimism.” And on Sunday, he will invite the leaders of all parties for a last effort to cobble together a coalition government. If that fails, there will be new elections and more opportunities for the will of the people to shift in different directions. And their will is already shifting.

In a poll released on Thursday, the radical left SYRIZA would come out ahead with 23.8% of the vote, up from an already astonishing 16.8% (second place) during the May 6 elections. As the party with the most votes, thanks to an ingenious quirk in Greece’s election law, it would automatically receive an additional 50 of the 300 seats—giving it 121 of the 151 seats required to govern. With that, it will be easier to form a coalition. And it passionately rejects the reform measures imposed by the Troika, though just as passionately, it wants to keep the flood of bailout billions flowing.

A risky assumption because the Troika may shut off the bailout spigot, triggering a massive default and Greece’s return to the drachma. Bundesbank President Jens Weidmann hammered that home on Saturday: “If Athens doesn’t keep its word, that is a democratic decision. But that means the basis for further financial aid falls away.” And if Greece ended up dropping the euro, he said to nip any extortion efforts in the bud, the consequences would be more serious for Greece than for the Eurozone.

Perhaps it was aimed at Evangelos Venizelos, former Finance Minister, president of the PASOK, and master of the bailout game, who’d proclaimed: “There are certain misconceptions that worry me. For instance, the misconception that whatever happens, we are not going to leave the euro.” For the pre-election machinations, read.... “We Are Their Greatest Fear.”

In the poll, only SYRIZA gained. All other parties lost ground. New Democracy drifted down to 17.4%. PASOK, which had won by a landslide in 2009, sank to 10.8%. The Neo-Nazi Golden Dawn that in the past had never even made it into parliament but that had received nearly 7% of the vote last Sunday—sending shockwaves through Europe and causing a bout of soul-searching in Greece—well, it dropped to 4.9% in the poll, perhaps a sign that Greeks are already souring on it.

“No, the Greeks are not Nazis,” wrote blogger Panos Sialakas. And “the vast majority of those who did vote for Golden Dawn are not Nazis either.” Culprit: the horrid economy that is in its fifth year of deep recession: “People feel angry and disappointed with the mainstream parties and their failing policies.... And the worst? Greeks feel hopeless.”

“They’re also angry with the EU, Germany in particular, for the tough austerity program,” he wrote. A powerful chorus in the Greek tragedy. Layoffs, cuts in wages and benefits, deregulation of markets, etc. that would make Greece competitive in a globalized economy, are painful and don’t seem to work. But they “pushed the majority of the Greek population to the limit, and something has to be changed as soon as possible,” wrote Sialakas.

And the Germans are angry at the Greeks for not doing enough to restructure the economy, root out corruption, get a functional tax collection system in place, and live within their means. German tax payers, who are taxed out the wazoo, have committed billions to bailing out Greece. Their patience is running thin, and Greece’s exit from the Eurozone is no longer the dreaded event it once was. Even Finance Minister Wolfgang Schäuble admitted that: “The risks of contagion for other countries of the Eurozone have been reduced, and the Eurozone as a whole has become more resistant.”

The difference between Greece and other countries whose governments spend beyond their means, such as the US or Japan, is that it doesn’t have its own currency that it can print, debase, and devalue with utter abandon every time the credit markets sneeze. And the credit markets have lost confidence that Greece can service its debt without monetization. Hence the debt crisis. But there are solutions....

“The Greeks are still debt slaves, and will be until they tell Brussels to take a hike,” said David Stockman, Director of the Office of Management and Budget under President Reagan. With similarly pungent flourishes, he talked of a “paralyzed” Fed that is in its “final days,” hostage of Wall Street “robots” trading in markets that are “artificially medicated.” For his awesome interview, read.... The Emperor is Naked: David Stockman.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
bankruptcylawyer's picture

Containment idsbullshit. Spain italy and ireland are all going to stagflate towards greek style social conflagration. As thry go up in flames the french and germans will finally have to turn the printing presses on and austerity press onthemselves. The u.s. Can outlast all of europe at this game. And should the masses of obese u.s. Rise up. The government can feeed them cornsyrup dinner in front of a serving of the next televised drone war against putin kimdinijad while checking gheir smartphones for updates on the next supreme court case establishing gay marraig to pacify occupy wall streets new crop of 20 something boneheads who just got out of college and are still self absorbdd self righteous i know nothing parrots.

Nachdenken's picture

WR: "Nuggets of optimism" - that is twice incorrect.

Greece is just a recycling sump for European banks and US derivtive producers. The government that will carry that out will be pasted together or appointed. 

Democracy is an ancient Greek word, not more, nowhere.

@Psyman the structures of power know no fear.

Zero Govt's picture

"In their outrage, Greeks voted for every alternative in sight, from the radical left to the Neo-Nazis on the right.."

throwing the babies (2 major Parties) out with the bathwater seems like a jolly good idea

...the major baby (spoilt brat) is Govt however, only when you kick that out (of society) will we have any progress whatsoever fitting in the Birthplace of the bastard institution

shovelhead's picture

We're all just marks on the midway for the Global Carnival of Credit.

Unfortunately, it's going to get very ugly even for us who didn't take the bait.

Psyman's picture

Hopeless or helpless?  Learned helplessness.  The ideal state for the sheeple under the totalitarian yolk of the New World Order.

Peter Pan's picture

These are fluid times and as a result some will sink, some will float and some will ride the tsunami. Then again those with gold and silver and little debt have the option of largely been onlookers. They might not profit greatly but at the very least they will have mobility, access to their wealth and most of their wealth still intact when the big one hits.

All I know is that a different world will emerge from the adjustment. The only question is what kind of world. Hopefully it is one where the Blankfeins, Dimons and Buffetts are part of history only.

Psyman's picture

Debt is desirable during the hyper inflationary scenario that results in the precious metal holder rapture.


Buy an awesome house you can't afford, or several rental properties.  Make the inflationary play, because I guarantee you it's coming.

sessinpo's picture

Psyman                     2420809

Debt is desirable during the hyper inflationary scenario that results in the precious metal holder rapture.

Buy an awesome house you can't afford, or several rental properties.  Make the inflationary play, because I guarantee you it's coming.



This is not the 1970s. A more likely scenario is a severe bout of deflation to clear the build up in debt worldwide (global depression). Do some research on consumer debt in the 1970s and it is nowhere near where it is now ($1.5T or so including mortgages) as opposed to $14 - 15T today. That is the main factor, IMO, that QE evntually fails. As TD has shown, each QE dollar has less effect. In fact, more likely is that QE dollars that aren't being hoarded by companies (as they keep cash because of future uncertainty), are simply vanishing because they are servicing debt. You might also note that in inflation adjusted terms, real income is essentially flat from the 1970s. After the deflation, we may see that hyperinflation.


What I find silly is that somehow the Greeks or any group facing a collapse of their debt structure (and the US will see it too), fail to see that austerity measures happen automatically. It doesn't matter if the government raises taxes, implements this or that policy. The simple fact is, government will no longer be able to afford its subsidies and social programs and they will be cut. That will be austerity to those dependent on government money. And it's not really government money, it is government theft of productive citizens which is why government always gets bloated and is inefficient - government has the monopoly of force through taxation to steal and is rarely accountable for real budgets. When a budget gets blown, they just tax more.

DrewJackson's picture

The problem is one does not OWN property in the US, it merely leases it.  With broke cities and counties you can count on property taxes, fees, etc... will ALL continue to go up!


Convolved Man's picture

If Greece toes the line for the Troika and forms an acquiescent government, will the global banking cartel call on the UN or NATO for stabilization and reconstruction when the Greeks revolt?

StychoKiller's picture

Betcha there's lots of Greek Colonels picking straws right now (WHO's gonna get the long one?)

Joebloinvestor's picture

Greece is a charity case and should be treated as one.

The EU will be better off, and it would be better then kicking them out.

If socialism wants to show "compassion" for a corrupt society and a way of life, then let it.

Until the host dies, a great concept.

Peter Pan's picture

Aesop once said that necessity is the mother of all invention. The Greeks should therefore have been allowed to work out their own problems at their own speed and at their own cost. Solutions imposed from the outside rarely succeed. You just have to look at the failureof the USA to bring democracy to Iraq and Afghanistan.

GCT's picture

Aesop it was never about democracy in Iraq or Afghanistan.  This is all about resources, oil and lithium, and regimes not taking the dollar for their resources.  Libya the same way.  Iran's oil is needed and other countries are now using their currencies and gold for the oil.  Israel will be the trigger and after the elections if Obama can keep Israel from attacking until then, we will be fighting there as well. 

None of this has a thing to do with Democracy.

Psyman's picture

The only type of "democracy" we ever intended to bring to those countries is colonial servitude.  We let them vote and they keep voting for anti-American Islamic candidates.


Seems the Democracy sham isn't as effective in those countries as it is in the West.


P.S. - your vote doesn't matter.  Obama or Romney, it's the same fucking agenda.


Like Clint Eastwood said in one of his movies. " Nothing wrong with shooting........As long as the right people get shot. "

falak pema's picture

One problem about that : you can't be judge and party. If you pull the trigger you cannot decide who "the right people are". Only an impartial judge can. That's where Billy the Kid gets strung by his balls in a court of law and not shot by a bullet in the back by his old buddy, who kills in Clint Eastwood style. US Admin did the same in Irak like it did in Vietnam; that is the fundamental flaw of all empires : judge and party; "you're with us or against us, and we decide right from wrong". Until you lose the War, then God help you...ask the Romans. 

Snakeeyes's picture

They should feel helpless. They sold their souls for entitlements and followed the Keynesian lie.

But the U.S. is no better. Our media and government can't be honest be the world. For example, unemployment is NOT decreasing. They are simply going on DISABILITY.




Bag Of Meat's picture

"Serves 'em right, those Greek lazy arses!!" ............ nice..

As if they got to choose... as if anyone got to choose..

CompassionateFascist's picture

Greek Left will cut a deal with Center in order to shut out the Right. Proximate result: drift toward catastrophe continues, with more debt, more bail-out, more looting. Eventual result: HardRight takes power. Settling of scores. Same coming to America. Excellent.

falak pema's picture

want a bet on that? Hard right will not win in current world, it will always be behind the soft-worded Corpocracy for "the sake of progress and Humanity". Fascists cannot overtly win, thats the judgement of History; but the Machiavellis can...that also is history's judgement; alas! 

Peter Pan's picture

We know who ultimately controls the left and the right, but if things get ugly will they be able to control the people?

agent default's picture

He is talking about the hard right.  They are not that easy to control, and known to turn against anyone without warning.

worbsid's picture

"Greeks Feel Hopeless."  So do most of us here.  The FED and the government are out of control for most people.  The AG will not get off his butt and even try to bring fraud to justice.  PACCS run the poitical process. Zero interest rate kills our savings that took years to develope. HFT algos make the stock market hostile to the individual.  On and on, so the Greeks are not the only ones who are waiting for this show to end.

Peter Pan's picture

My friend you have hit the nail on the head. The tsunami is headed  for all of us and it's just our position on the beach that is a little different.

Psyman's picture

ETA - Australia, 6 months.


How about you?  You don't want to be anywhere North America when this shit kicks off.

Dugald's picture

So, having fucked up your country you now want to go fuck Australia?

AssFire's picture

Get your gold and climb to a high spot then enjoy the tsunami. It is a necessary unpleasantness, but it must occur; sit back and enjoy it because there is nothing anyone can do to stop it.

Popo's picture

Except confiscate gold -- or more likely tax gold sales at 90% and exports at 95%.  

And audit your holdings.  

And increasingly limit your freedoms.

Honestly -- do you think that gold owners throughout history were always able to stay above the madness as totalitarian states took hold?   If you believe that, you've been sold a bridge.   Under countless regimes in countless ages people BURIED their own gold intending to come back for it years or decades later.   I've got some Cuban friends who still talk about the gold buried by their grand-dad in Havana.  Heh. That's some "safe haven". Yeah... concealing your gold from the long arm of totalitarianism will still be your option.   But if you think you're going to "sit back and enjoy" with your little hoard -- you're in for a very bumpy ride.   The rules of the game can and will be changed to favor those in power and if you've been paying attention for the last 5 years, you should know that by now.

Your best bet is not *just* to own gold but to own gold OUTSIDE of whatever country you call home.   

Diversification isn't just a question of assets -- it's a question of governments and jurisdictions.

Psyman's picture

I do not fear you.  I do not fear the people you fear.  I am a free man.


And I am not afraid.


Not now, and not ever.


If necessary I will dump my gold somewhere near the great barrier reef of Australia.  Go find it, mother fuckers.

falak pema's picture

my mother is a great swimmer, and she only fucks with the sharks; so i don't qualify. Go suck you dad's cock! 

Dugald's picture

Have yacht, two days sail to the bottem end of the reef, just need a gps pos and I will rescue your gelt for you. A modest fee of preferred