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A Surprising Conversation With Athens

Bruce Krasting's picture




 

If you read me on a regular basis you know that I speak with a fellow in Athens who is connected to the shipping industry and the government. I provide links below to some of those articles to establish this person’s credibility. He’s been pretty much right on things that have happened in his hometown.

I called him today to discuss the (now definitive) fact that there is no new government and elections will take place on June 16. What he said completely blew my mind.

He started with the well-documented fact that 70-80% of Greeks do not want to give up the Euro. They are afraid for their future, and their ability to survive if that link is broken.  The following are his words, not mine:

Athens - The results of the May election are in conflict with the people's desire to stay with the Euro.

The people voted in anger. They voted against those they had voted for in the past. Now they see whom they have elected.

Every day on TV the extreme right is interviewed. They are Nazi’s. People are frightened by this.

On the left you have Alexis Tsipras (Syriza). This man is an uneducated thug. The people understand that. They don’t want this man to be their leader.

When the next election comes, Greeks will not vote in anger and they will not vote for the idiots on the fringes. The centrist parties will rebound. A National Salvation Government will be formed.

BK - There are polls in the US press that say that Syriza will win a majority. (link)
.

Athens - I don’t think those polls are accurate. To me, things look much brighter today than a few weeks ago.

 
BK - But does it matter who wins? Can Greece be saved?

Athens - This up to Germany. Most of the debt is now with Germany and France. France’s Hollande would agree in one minute to reset the interest on the debt to zero for the next five years. If Germany agrees to do the same, there is a chance. The IMF would support Greece under these conditions. The restructured bank debt would get paid interest.

BK - Do you really believe that Greece can achieve a long-term recovery with this?

Athens - Not a chance. Everything will blow up again in less than one year.

The thrust of this conversation runs counter to what I believed likely to happen next in Greece. There is a six-week period before the election. Anything can happen. The scenario my friend outlined is not out of the question.

If this fellow is right that the Greek elections are going to produce a surprise result, one that will create another “Kick the can down the road” opportunity, then it's not in the market today. The exact opposite is.

.

Other articles based on conversations with "Athens".

http://brucekrasting.blogspot.com/2012/04/three-conversations.

html http://brucekrasting.blogspot.com/2012/01/greece-china-and-usa.html

http://brucekrasting.blogspot.com/2011/11/thoughts-from-athens.html

http://brucekrasting.blogspot.com/2011/09/whats-up-in-cyprus-war.html

http://brucekrasting.blogspot.com/2011/04/shipping-news-pirate-update-th...

 

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Tue, 05/15/2012 - 16:47 | 2428886 Bagbalm
Bagbalm's picture

So the Greeks won't be offered any real, decent choices, just Jackass A or Jackass B. Does that sound familiar at all? Hmmm?

Tue, 05/15/2012 - 16:08 | 2428742 bankruptcylawyer
bankruptcylawyer's picture

why do people assume elections are not rigged. if the greeks are voting for the fringes, most greeks who are not connected to a private international shipping industry have ZERO interests aligned with mr. shipping magnates. they are going to vote against the status quo. germany and french overtures on debt are just admissions that german and french banking interests must negotiate with the greek electorate to save their own banking interests. 

they will attempt to persaude the greeks to be afraid of change. and they will also try to rigg the greek elections to help themselves. 

i don't buy for a second that greeks want to vote for french and german interests. they are not voting for unity and they know it. this doesnt' mean the elections won't be rigged however. 

we'll wait a month and see. but i'm sure the powers that be will use the bank run and panic that is now happening in greece as a tool of fear to bring the 'electorate' back towards them. 

 

 

 

Tue, 05/15/2012 - 16:16 | 2428765 FlyoverCountryS...
FlyoverCountrySchmuck's picture

What the Greeks are voting for is ALL THAT FREE CHEESE they were promised by the leftists, for years, in return for votes. And they don't really give a damn who has to pay for it.

After all, they already "Paid" for it. (We all understand how this works)

Tue, 05/15/2012 - 16:08 | 2428736 apberusdisvet
apberusdisvet's picture

If things don't go the IMF's way, there will be a "humanitarian" NATO invasion; count on it.  No way that the masters of the universe will allow any possibility that  the linchpin of the NWO agenda, the Eurozone, will be in any way impacted by Greek recalcitrance.

Tue, 05/15/2012 - 16:38 | 2428838 FinalCollapse
FinalCollapse's picture

No problemo. If it happens then start growing poppies all over Greece and the NATO will gladly protect the fields and profits for a small fee. Greeks will get easy way to blow up some Germans every day. European sheeple will get high on cheap. Everyone wins and Greece will be rich and happy again. 

Tue, 05/15/2012 - 16:08 | 2428730 vegas
vegas's picture

Bruce, it's just the ouzo speaking. I got Greek relatives too, and if they could seriously screw with Germany they would do it in a heartbeat. See Tyler's link to Panos for details.

 

http://vegasxau.blogspot.com

Tue, 05/15/2012 - 15:57 | 2428692 FinalCollapse
FinalCollapse's picture

It is hard to argue with someone who is well informed and lives in Greece. However the electorate maybe well justified to break the status quo. Voting for the centrist parties would be absurd - sort of like reelecting Obama. There is a big difference between big cities and farmers. The people in countryside want change more than big city boys. 

I would bet that Bruce's contact in Greece is out of touch this time around. It is time for big change in Greece and hit the reset button. That's what Greeks want - I think. Time will show... 

Tue, 05/15/2012 - 15:54 | 2428688 taraxias
taraxias's picture

Bruce, your Greek contact is a fool.....or a PASOK or ND supporter.

The charismatic Mr Tsipras is a Civil Enginner, not an uneducated thug, and Greece's next PM.

Let your friend know.

Tue, 05/15/2012 - 16:29 | 2428824 Bruce Krasting
Bruce Krasting's picture

I will let him know.

This fellow is a centrist, and yes he is biased. But he is not a fool.

He does not know what voters will do in six weeks anymore than you (or I) do. But he made a very strong argument with me.

The last vote scared the pants off of the Greeks. They will vote differently next time around as a result according to him.

As always, we shall see.

bk

 

 

Wed, 05/16/2012 - 16:31 | 2432967 flyweight
flyweight's picture

The last vote did not scare all Greeks. Election results were ND 19%, Syriza 16,6%. A poll two days after the elections took place, with the question: "If you knew the result of the election, what would you have voted for?"

The answer was Syriza first with 23,2%. My explanation (completely different from your friend in Athens): Many people simply did not expect Syriza to gain a big percentage such as the one it actually did, because it was always a small party of 4-7% and publication of opinion polls was forbidden for 14 days before the election, and it was exactly in the last few days that Syriza climbed so high. Many people like to vote for the one who is going up, not the old parties who are going down. It is a matter of psychology also.

Tue, 05/15/2012 - 15:28 | 2428521 ebworthen
ebworthen's picture

Bank run in progress.

Greeks are getting ready for the new Drachma.

Tue, 05/15/2012 - 15:24 | 2428497 Mercury
Mercury's picture

Of course Greeks don't want to leave the Euro.  Even now the average Greek is probably living larger now than he was pre-Euro.  They have been the beneficiaries of spending other people's money and money they don't have..

The danger is that they get booted from the Euro - in which case they should be worried about converting what money they have into harder assets.

Tue, 05/15/2012 - 17:33 | 2429070 Carl Spackler
Carl Spackler's picture

I have to agree with the Roman god of commerce. 

Greeks get a free ride on the Euro, and they would never want to give up a free ride...they'll keep voting for the free ride until it is taken from them.  This is the learning point to be taken from Bruce's friend in Athens.

So Germany pulls the plug...without France carrying any more load...and with the Greeks not really showing any ablity or bona fide willingness to ever repay... the game is up.  The Germans remember Weimar and French WW1 reparations which Germans never wanted to repay.

Greeks showed today, ala the bank runs, that they are now preparing for life after the Euro...salvage as much of your cash as you can and wait until after the reset button is hit...or sail your Greek yacht to Mone Carlo like the Greek crooks on the ZDF news story.

 

 

 

Tue, 05/15/2012 - 15:11 | 2428427 Uncle Remus
Uncle Remus's picture

FUD about FUD

Tue, 05/15/2012 - 15:03 | 2428404 bank guy in Brussels
bank guy in Brussels's picture

Great piece, Mr Krasting ...

Some highly relevant points from another recent good ZH piece, on Greek disaster vs. Icelandic success.

One key element in the Greek disaster being the absolute callousness of EU and Greek authorities to the poorest Greek citizens ... This is the real stain on the EU 'government' that will not be washed away ... If you are claiming to be a 'government' you need to be concerned with the most vulnerable of your citizens ... that is the European way ...and the EU has glaringly failed to be concerned with that.

« Perhaps the best way to understand what went wrong with the Greek adjustment program is to compare it with Iceland’s program.
On Nov 3rd 2011, the IMF issued the verdict on its 3-year adjustment program for Iceland. The IMF’s verdict was that its “program for Iceland was a success” due to 4 factors:

1. the decision not to make taxpayers liable for bank losses.
2. the decision not to tighten fiscal policy during the first year of the IMF program.
3. preservation and even strengthening of Iceland’s welfare state during the crisis.
4. prudent use of capital controls. The IMF said: “capital controls were necessary and are now seen as useful addition to policy toolkit”.

Although permissible under EU treaties, factor 4 is admittedly not consistent with a monetary union. But none of the remaining 3 factors were present in the Greek program. No debt relief was given to Greece early, the fiscal adjustment was front-loaded rather than back-loaded (a massive 5% deficit reduction was required in the first year only), and not much attention was paid to protecting those at the low end of the income distribution. »

http://www.zerohedge.com/news/jpmorgan-estimates-immediate-losses-greek-...

Tue, 05/15/2012 - 15:05 | 2428391 Vegetius
Vegetius's picture

Most Greeks who have saving, have withdrawn them and are getting ready for the collapse of the Euro in Greece. Having worked on main land Greece I was interested to note that nearly all Greeks except for the ultra urban have significant food cultivation of there own, same as most of the Balkans and they can and do feed themselves. So the Greeks are ready for default and thats what is going to happen and they will not pay a cent on the dollar back to anyone. Tough for the EU IMF ECB and any of those guys who were bullish on Greek bonds, I sure the Greeks will shed a tear over them.

Tue, 05/15/2012 - 15:02 | 2428390 GeneMarchbanks
GeneMarchbanks's picture

Bruce your contact clearly doesn't understand the following: i) the role of the IMF and its general 'oversight' of all things fiscal in Greece ii) that Germany is an economic backstop --a creditor-- while the French are the ones spearheading policy.

Greeks needing to vent frustration isn't surprising but let's not pretend only these 'new extremist' parties are extortionists in opposition to the centerists.

Tue, 05/15/2012 - 16:56 | 2428942 Barefooted_Tramp
Barefooted_Tramp's picture

His contact is talking his own book.

Remember the Shipping Industry in Greece is paying zero taxes at the moment and wants to continue to do so as long as possible. This is best guarranteed by the status-quo.

 

Tue, 05/15/2012 - 14:59 | 2428386 malek
malek's picture

Good article, but your friend from Athens is either grasping for straws to support his belief, or the majority of Greeks have now swallowed TINA hook, line and sinker... (=There Is No Alternative)

Tue, 05/15/2012 - 15:00 | 2428379 cbaba
cbaba's picture

Hi Bruce ;

 

Sorry for your friend. It doesnt matter any more what will happen to Greece, they can default now or 1 year later, market knows this, it will not make any difference if they stay in Euro and Union as well. Their best interest is to default and leave the Euro as currency and stay in Euro like England. Of course that is up to Germany.

We are on the next step, who is next ? What will happen in Spain and Italy since they are un-bailable. Euro will collapse.

 

Tue, 05/15/2012 - 14:55 | 2428368 falak pema
falak pema's picture

watch the greeks burn to pay for private banking crimes of lazy hubristic passion, on a scale unimagined. All it takes for Hercules to clean the Augean stables of banking debt is for someone to pull the plug on them: and then...

Tue, 05/15/2012 - 14:40 | 2428301 Big Ben
Big Ben's picture

These arguments have a ring of plausibility to them. I think that Greece will leave the euro, but not until they have extracted every last euro-cent from the rest of Europe. And Germany, faced with contagion in Spain and Italy and the possible breakup of the euro, might very well be willing to toss a few more concessions to Greece in order to kick the can a little farther.

We are once again entering the time of rumors where the European finance ministers will huddle and new plans to save everything will be leaked by FT and other tools of TPTB just before the market closes.

Tue, 05/15/2012 - 14:39 | 2428296 the not so migh...
the not so mighty maximiza's picture

He loves his country so much he cannot admit his country is toast. Same here in US.

 

 

Tue, 05/15/2012 - 14:38 | 2428293 onlooker
onlooker's picture

Great, thaks Bruce.

Interesting that the greeks are seeing the politicians as who they are and a middle ground is likely. Hope the US can some day become smarter.

Tue, 05/15/2012 - 14:25 | 2428252 Sutton
Sutton's picture

But once the thugs are in the tent, they don't leave.

As we'll see in November.

Tue, 05/15/2012 - 14:24 | 2428248 walküre
walküre's picture

According to your friend in Athens the situation is FUBAR either way.

BK - Do you really believe that Greece can achieve a long-term recovery with this?

Athens - Not a chance. Everything will blow up again in less than one year.
So it's not really up to Germany (and France) who owns the debt. Even if it were at 0% over 5 years. Then what IS the sensible thing to do? Does your friend offer any solutions? A reset and jubilee are never going to happen unless there's blood on the streets across Europe. Been there done that 2x.
Tue, 05/15/2012 - 14:53 | 2428358 AntiLeMaire
AntiLeMaire's picture

Solutions? Easy: Place them under receivership, make them a ward of the court.

About a quarter of Greece's GDP is lost to corruption. That is easy enough to fix, if you're willing & able. The issue is that the Greeks themselves do not seem to be willing and/or able to do that.

Greeks are fed up with having to pay extra 'baksheesh' for EVERY government permit, even for every visit to hospital (no kidding!, no extra money, no operation, even when that operation has already been paid for in full via insurance!), etc. etc..

So why don't they vote for parties that have that as their no. 1 priority !?

Strangely enough a party like Syriza does not mentions this (and curbing tax evasion) as the main part of the solution. Less austerity is fine IF, and only IF, something is done in return.

Or have they (Syriza) already been bought & paid for? A fairly new 'leftist' party ...???

 

 

 

Tue, 05/15/2012 - 15:20 | 2428457 Peter Pan
Peter Pan's picture

Tax evasion was engaged in previously in order to finance the good life. It is now engaged in to make ends meet after all the slashing and burning in the economy.

If Tsipras is a thug what were the others who for thirty years aided and abetted this atrocious system?

Tsipras doesn't have any painless solutions but at least Europe might think twice about strangling Greece with its current austerity measures. As with the start of the Arab spring in Egypt commencing with one street vendor, so too a European spring might commence with a tiny Greece being allowed to become a humanitarian disaster.

Tue, 05/15/2012 - 15:37 | 2428564 AntiLeMaire
AntiLeMaire's picture

>> If Tsipras is a thug what were the others who for thirty years aided and abetted this atrocious system?

Exactly!

Well of course those others are/were thieves.

That's why I was so surprised he said so little (nothing?) about curbing corruption.

It is very very bad for their economy & they would now run a surplus if only the corruption had been (say) slashed in half. Easy several percentage points in economic growth.

Perhaps the old parties have been so succesfull in telling their lies, that the people of Greece actually think that they are suffering from 'austerity', when the only thing they are really suffering from is the bill that has been raked up by the old parties, while stealing their country blind.

Of course a lot of that corruption money has been spent already, but surely a lot has been put away elsewhere, say in good old Suisse?

Perhaps now is a good time to remember the crooks of that little treaty that Switzerland has signed with the EU ... you know the one about breaking the banking secret when the EU can show sufficient evidence for wrong doing.

Easily more than 100 billion euro's in illicit gains and unpaid taxes. Perhaps enough to pay all outstanding bills ;)

 

 

Tue, 05/15/2012 - 14:23 | 2428241 alien-IQ
alien-IQ's picture

Fear of being out of the Euro is irrational. Leaving the Euro will, in the long run, be the best thing for Greece. They've been sold so many horror stories of what will happen if the leave it that many have come to believe it.

The same gloom and doom was charted out for Iceland...but did it come to be? Not quite.

Take the pain now...it'll hurt far less than it will later.

Tue, 05/15/2012 - 15:14 | 2428444 GeneMarchbanks
GeneMarchbanks's picture

Irrational? Classic anglo bullshit. Hyperinflation is the most destructive alternative possible coincidentally the most profitable for the corporate vultures.

You're a fucking disgrace.

Tue, 05/15/2012 - 15:34 | 2428559 alien-IQ
alien-IQ's picture

First of all...I'm not anglo.

and secondly...

Relax...you're gonna give yourself an ulcer.

You seem quick with the insults but a little short on ideas. I guess it comes with the territory.

Are you suggesting they are better off staying in the Euro? If so, explain your thesis...if you have one.

Tue, 05/15/2012 - 15:58 | 2428702 GeneMarchbanks
GeneMarchbanks's picture

Thesis? What am I, a graduate student?

Recurrent naivete here on this issue boggles the mind I swear. Look, fear isn't 'irrational', most Greeks are under stress for good reason. There are interests involved outside of Greece in what happens to Greece.

They're going to suffer no matter what happens but to suggest hyperinflation doesn't come with human cost is asinine. Vultures like John Taylor and countless others want this outcome because they stand to profit not because it's in the best interest of the Greek people. The issue here is a moral one not an abstract intellectual exercise.

I have no panacea for them, perhaps barter or local currencies can be a transitive 'solution' but neither do you nor any academic economist and sure as hell not some financier who is anything but impartial. Treat the issue with some sobriety instead of with off-hand clumsy 'best solution' generalization.

Tue, 05/15/2012 - 16:46 | 2428876 alien-IQ
alien-IQ's picture

Some financial types will make money if they stay in the Euro, some will make money if they leave. It's the nature of the business. Opposing bets, somebody will make money. There's no way around that.

Bottom line is really down to two choices: Stay in the Euro or leave the Euro. All else is just kicking the can down the road.

Yes, there will be hardships if they leave, but there will also be hardships if they stay. If they leave at least they take some control over their destiny as opposed to being slaves to EU bureaucrats and banksters.

Both choices are hard...but one has a future, the other doesn't.

Tue, 05/15/2012 - 15:11 | 2428429 Peter Pan
Peter Pan's picture

Leaving the Euro might feel a little scary until others follow. It will then be liberating.

Tue, 05/15/2012 - 15:39 | 2428575 Azannoth
Azannoth's picture

It's like going to a Dentist, it's scary but necessary better to have a filling today than loose a tooth 1-2 years later, the sooner you take the pain the better you are for it

Tue, 05/15/2012 - 14:28 | 2428266 walküre
walküre's picture

I agree. The Greek economy could pick up on the basis of a diluted and cheaper national currency. The questions is, how many Greeks will stick around to see it through. Would you stay in the US if your money was worthless, but you could apply your talents in Canada and make a decent living? At this juncture, I don't think it makes a difference anymore. Greece never had a place in the EMU and could flourish today if it had kept the Drachma. At least the rest of the world wouldn't have been able to see just how corrupt the Greek system is.

Too late.

Tue, 05/15/2012 - 14:21 | 2428237 XitSam
XitSam's picture

Well documented fact that 70-80% don't want to leave the euro. Documented where? By asking Greeks? Ie. a poll?  Yet he discounts the polled support for Syriza? For the record, I don't put much faith in polls.

Tue, 05/15/2012 - 16:11 | 2428751 krispkritter
krispkritter's picture

Sounds like pollshit to me too...

Tue, 05/15/2012 - 17:37 | 2429085 LowProfile
LowProfile's picture

...POLLSHIT!

+ 10^10!!!

Tue, 05/15/2012 - 14:19 | 2428227 malikai
malikai's picture

I'll bet you're loving your eurusd short. Usdjpy not looking too bad either.

Tue, 05/15/2012 - 14:34 | 2428279 Bruce Krasting
Bruce Krasting's picture

Yea, good day for me. But I have many things going on. So, as usual, one pocket is up, the other down...

Tue, 05/15/2012 - 14:16 | 2428216 Seorse Gorog fr...
Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

Bullish!

 

Looks like the Greeks are lacking choice. It usually happens. You vote for a change then you end up regretting it because of a lack of credible alternatives.

Tue, 05/15/2012 - 15:36 | 2428548 Azannoth
Azannoth's picture

"You vote for a change then you end up regretting it because of a lack of credible alternatives" - The Greeks didn't vote for change they voted against it!

They voted against change in their (over)spending/(easy)living/(not)working habits, their vote was merely a shot across the bow of the Elites telling them, 'you better preserve ALL our past privileges including 15month wages or else.."

The Greeks have nobody but them selves to blame(yes not even Goldman Sachs) for everything they where loyal drug addicts demanding higher and higher doses and even after everything that happened didn't make them change .. and it won't they will go down with the ship 1 way or the other nothing left to say about this

Tue, 05/15/2012 - 15:12 | 2428440 redpill
redpill's picture

At this point the choice isn't really theirs. The only way Greece stays in the Eurozone is if other Euro countries (read: Germany) subsidize their ongoing debt load perpetually. So of course many Greeks find that an attractive arrangement; they still get their pensions in Euros, and Germany is forced to lend them money for laughably small interest rates or risk seeing the economic zone fracture. Much more challenging for Greeks would be to exit the euro, reintroduce the Drachma, and undergo a complete economic reset. It would mean a lot of their comfortable economic paradigms would be shattered and they don't want to go through the pain, even if it would be better for them in the long run.

Tue, 05/15/2012 - 14:14 | 2428208 onebir
onebir's picture

So that means more Euro strength & delayed QE3? :s

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