Greek FinMin Warns "Euro Will Collapse If Greece Exits", Says Italy Is Next

Tyler Durden's picture

The time for the final all-in bet has arrived.

As we explained yesterday, when we wrote that "Greece Gambles On "Catastrophic Armageddon" For Europe, Warns It "Only Has Weeks Of Cash Left"", and as confirmed further by today's fire and brimstone speech by Greek PM Tsipras, in which he not only did not concede one millimeter to Europe but raised the stakes even higher, by promising among other things to raise the minimum wage and to halt foreclosures, Greece is now betting everything that Europe will not allow it to exit, hoping that "this time is not different", and the existential terror that would be heaped on the Eurozone as forecast in 2012 by the likes of Citi's Buiter and IIF's Charles Dallara, will still take place, and Europe will concede that spending a few more billion on Greece's bridge program is worth to avoid what could potentially spiral into an out of control collapse.

To be sure, that is precisely what Yanis Vaourfakis implied today when he said that "if Greece is forced out of the euro zone, other countries will inevitably follow and the currency bloc will collapse, Greek Finance Minister Yanis Varoufakis said on Sunday, in comments which drew a rebuke from Italy."

The comments emerged from an interview we commented on earlier with Italian state television network RAI, Varoufakis said Greece's debt problems must be solved as part of a rejection of austerity policies for the euro zone as a whole. He called for a massive "new deal" investment program funded by the European Investment Bank.

From Reuters:

"The euro is fragile, it's like building a castle of cards, if you take out the Greek card the others will collapse." Varoufakis said according to an Italian transcript of the interview released by RAI ahead of broadcast.


The euro zone faces a risk of fragmentation and "de-construction" unless it faces up to the fact that Greece, and not only Greece, is unable to pay back its debt under the current terms, Varoufakis said.


"I would warn anyone who is considering strategically amputating Greece from Europe because this is very dangerous," he said. "Who will be next after us? Portugal? What will happen when Italy discovers it is impossible to remain inside the straitjacket of austerity?"

So now that Greece is all in, the time for even more truth has emerged, and if Greece is finally being honest, it may as well spook Italy and drag it down - or rather up - with it.

"Italian officials, I can't tell you from which big institution, approached me to tell me they backed us but they can't tell the truth because Italy also risks bankruptcy and they are afraid of the reaction from Germany," he said.


"Let's face it, Italy's debt situation is unsustainable," he added, a comment that drew a sharp response from Italian Economy Minister Pier Carlo Padoan, who said in a tweet that Italy's debt was "solid and sustainable."


Varoufakis's remarks were "out of place", Padoan said, adding that Italy was working for a European solution to Greece's problems, which requires "mutual trust".


Italy's public debt is the largest in the euro zone after Greece's and Italian bond yields surged in 2011 at the height of the euro zone crisis. They have since fallen steeply and have so far come under little pressure from the renewed tensions in Greece.

And while the Greek "scorched earth" approach would have no doubt succeeded had it taken place three, two or even one year ago, when Europe still had some faint resemblance of an actual market, the difference this time is that by dint of its recently launched QE, which revealed that Germany's staunch "anti money printing " stance was nothing but melodramatic theater all along, it is the ECB that is in charge of every asset class in Europe: from the EUR, to the German Bund, to the Italian BTPs, to the DAX to, well, everything, and neither fundamentals nor non-central bank players matter any more.

Which is why Greece may have waited just three weeks to long with its final gambit, as Europe is confident that the ECB's interventions can offset the loss of faith in an already crashing Eurozone (if only for a short period of time, of course). Because the alternative, ceding to Greece, means that all other European peripheral states will demand the same treatment.

Which brings us back to Greece, for whom the moment has finally arrived: the moment which was so eloquently described by a Chuck Palahniuk character when he said that "it is only after we have lost everything, that we are free to do anything."

"We" in this case being Greece. The only question is whether the freedom from its final loss has arrived just a few weeks too late...

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y3maxx's picture

....Will not be known as the "WW #3, Black Swan" event, but as the "Hamburger, Pepsi and Souvlaki on a bun" event.

Self-enslavement's picture
Self-enslavement (not verified) y3maxx Feb 8, 2015 5:54 PM

If Greece isn't already printing it's own currency, then they should all shut the fuck up. Same as it ever was.

flacon's picture

Is this good for American stocks? 

stocktivity's picture

Futures unchanged...It's all Bullshit!!!

ZerOhead's picture

Varoufakis is correct...  Europe will blink. The EU will suspend the debt and interest payments and act on Greenspans advice to finally complete European political integration.

Bankers uber alles.

kaiserhoff's picture

Don't think so Zero.  Mutti has fire walled the German banks.  She no longer cares.

The worst possible outcome is a slow cascade of exits, with lots of bitching, whining, and gnashing of teeth,

so I expect that's what we will get.

ZerOhead's picture

It would be great if it could happen but I really can't envision a slow cascade of exits.

It would be like people slowly moving to the exits in a burning building. The euro was never designed to be taken apart.

kaiserhoff's picture

If we can get that on youtube, we'll make a fortune.  Would be better if we had some cats in it.

I think that's your department;)

ZerOhead's picture

I'm completely out of my nine lives and even MacGyver couldn't defuse the upcoming derivatives bomb.

kaiserhoff's picture

Nine lives?

I'm trying to get by on kibbles and bits.

Self-enslavement's picture
Self-enslavement (not verified) kaiserhoff Feb 8, 2015 6:43 PM

The fact that there are even negotiations tells us that Greece elected the wrong guy. Nothing will change for the better, it will get worse for the Greek people. Same as Obummer...

Crisismode's picture



described by a Chuck Palahniuk character when he said that "it is only after we have lost everything, that we are free to do anything."


"Freedoms just another word

for nothing left to lose."






wee-weed up's picture



“How did you go bankrupt?"

"Two ways. Gradually, then suddenly.”  -- Ernest Hemingway, The Sun Also Rises


The time is at hand...

old naughty's picture

I agree with Self-enslavement. The guy, knows it, is saying "The first mark-down is tyhe cheapest...".

But the Troika is not "knowledgeable" to stop the G-exit (Grande Exit of PIIGS-F) so making un-intelligent decision. Hence...

saveandsound's picture

Greece is going to exit the Euro and nothing else is going to happen. Portugal, Ireland, Italy, Spain, France are going to stay where they are, the ECB has their backs and Greece is going to be a terrifying example for the remaining PIIGS to comply.

That's my bet.

The Black Bishop's picture

When the first one goes, the Euro (or perhaps even the EU) will turn into a game of Musical Chairs. Whoever gets left behind gets the unpleasent monetary mess in their lap.


It will be hard to rebuild the national finances and gather faith in a new national currency, but at least they are in control of their own fate.


My bet is on Germany as the no. 2 nation to leave the Euro if Greece leaves.

mt paul's picture


who pissed in the baklava ..

Tall Tom's picture

Just as the Federal Reserve Bank recapitalized European Banks after the 2008 debacle, (and when asked by Congress where the funds went Bernanke told Congress that he would not tell them...remember?) ...


Yellen is not going to let this happen...


That is right. The US Taxpayer is going to be footing the bill for the Greek Debts and their WELFARE PROGRAMS.


You can downarrow this all that you want...but deep down you know it is true.


It sucks. But IT will not allow the collapse.


In IT's shoes would you, knowing that all of us actually want to kill the IT?


No. THis is not the Black Swan that you are looking for.

Never One Roach's picture

I'm afraid you are right Tom. Similar to the Fed secretly bailing out the collapse of Mexican currency in the early 1990's b/c so many merikan banks were holding the bag of they did not get bailed out.

AIG was bailed out to save GS...same thing.


It's all about preventing counterparty loss.

Antifaschistische's picture

if the counterparty has corporate offices on Manhattan...yes.

Self-enslavement's picture
Self-enslavement (not verified) kaiserhoff Feb 8, 2015 6:55 PM

Mathematically it is not possible to pay off any amount of interest on a loan. Loans are a scam, a lie if you will. The entire worlds governments are based on lies.

Lore's picture

Re: "[Varoufakis] called for a massive New Deal investment program funded by the European Investment Bank." <-- MORE debt to cover OLD debt?!  Screw THAT.

I'm waiting for the UK to fragment. Would do my heart good to see The City take some long overdue lumps, karmic blowback for many, many years of doling out misery and suffering. 

soulman's picture

 Many have paid off loans, including myself. An opportunity for hubris and self-undoing. definitely. But how is it

"mathemathically impossible"?

 Although we're on the same page of the Loathesome Index for the appeal and deanges of both loans and governments- I don't think you're on track to unravel any mysteries here. Proof of your "loan" declaration please, and ideally, some realistic and practical solutions beyond ropes and lamp posts.

We don't need more doctors to tell us we're terminally ill, we desperately need visonary healers with solutions offering indivudually-desired futures. 

SumTing Wong's picture

I would say it is incredibly possible, and it all involves inflation. Less real shit is needed to take care of the shitty paper loans...

Diplodicus Rex's picture


But how is it "mathemathically impossible"?

Under the corrent fraudulent banking model, loans are made out of thin air (you are not borrowing someone else's deposits). The receipient spends the principal amount of the loan and in doing so the amount of freshly printed currency adds to the currency already in circulation and increases it by that same amount. This part of the process is inflationary. However, when the loan is repaid, the amount repaid is the original principal plus the interest but the interest was never printed. The amount of currency in circulation is the sum total of all of the principals of all of the loans. There is no interest in circulation. When the loan is repaid the amount by which the quantity of currency in circulation reduces is the pricipal plust the interest. To repay the interest on any loan the principal of someone else's loan must be used. This is highly deflationary.

For the quantity of currency to remain constant the requisite number of new loans must be made add ing their principal amounts to the pot. mathematically this formula is exponential. It is, by definition, a Ponzi scheme. 

If all outstanding loans were paid off there would be zero currency in circulaiton and all of the interest would still be outstanding.

This is why it is mathematically impossible.

ThroxxOfVron's picture

"If all outstanding loans were paid off there would be zero currency in circulaiton and all of the interest would still be outstanding. 

This is why it is mathematically impossible. "


THIS is the truth of the matter.


At the point of debt saturation there are only two ways out:

A. general broad based debt monetization -basically a suspension of the rules defining the debt-fiat currency system.

B. default/debt forgiveness -and systemic deflation.

BOTH results are suspensions of contractural agreement.  

The problem with the present regime of loigarchy and captured institutions of regulation/government is that only certain classes of debt are being forgiven or monetized and others are being relentlessly pursued.  This fact exposes the very essence of a two tiered/oligarchical system of looting and opression and exploitation.  If moneization or debt forbearance/forgiveness is to be undertaken it must be undertaken with some degree of general uniformity throughout the system from individual to nation-state in order to maintain politicaln and social stabilities and cohesion.  

IF the debts of the rich are being monetized the debts of the poor must be monetized too -or the poor will eventually repudiate the impositions of a crooked/false socilal paradym, rise up -and slaughter the rich in a destruction of the unjust tiered system of exploitation.


Jubilee was not developed and undertaken to salvage the lives of the peasants/poor people, it was developed and undertaken to salvage the lives of the kings and nobility.


BrosephStiglitz's picture

Go take a basic class on finance? Loan repayment absolutely is possible, it depends upon:

The interest rate, the future earning prospects, certainly the real size of the debt burden too.

In essence a loan is taking a chunk of future income up front today in order to invest/consume more.  This is taken at the expense of future prospective earnings.

It is absolutely 100% possible to repay loans.  It just isn't 100% possible to repay the tremendous amounts of debt which has been accumulated over the last half century. One way or another, the world has to deleverage.  This is also possible if:

- Economic growth sees an enormous rate increase (highly unlikely in the near term.)
- The unit in which the majority of the debt is denominated in should decrease in nominal value. See: increased money supply.
- The repayments are stretched out over more time. See: lower interest rates.  Currently being attempted.
- There is debt forgiveness.  See: orderly, or disorderly default. (Highly plausible, though getting to that point will not be pleasant, according to the historical record.)

The notion that no debt can ever be repaid is both ill-informed, and laughable.

Never One Roach's picture

Repaying with cheaper dollars seems to be the preferred model, currently since as you say, there's isn't much growth. Another reeason why ultimately hard assets [that are not presently overvalued such as PMs] will rise substantially after we get over the initial deflationary event.

AE911Truth's picture

Re: "The notion that no debt can ever be repaid is both ill-informed, and laughable."

It is not possible for ALL debts to be repaid, since only the principal amount is created by loans. The currency to pay the interest must be borrowed, at interest.

Understanding this may require some thinking on your part.

Those who default lose the value of their labor to bankers who created the loaned currency at no cost. This is one way the issuers of a currency extract wealth from the users of the currency. Many other methods of theft exist: Front running intentional Inflation and Deflation, Deception, Lies, Bribery, Insider Trading, Blackmail, and much much more.

The system is a scam.

One more reason Greece can not repay their debt is previous Administrations looted the Treasury.  Have you noticed the politically connected rich folks get richer, while the commoners get poorer?

The Greeks can not re-pay what was stolen. This debt must be forgiven.

It's not just Greece. These issues are global.


Diplodicus Rex's picture


"Go take a basic class on finance? Loan repayment absolutely is possible"

You have mis-quoted Self-Enslavement. He did not say that. Furthermore, your statement is not true in the aggregate. It is only true of a relatively small number of individual loans. The quantity of currency in circulation consists of only the principal amounts of each loan. There is no interest in circulation. Therefore only a limited number of loans (P+I) can be paid off before the quantity of currency reduces to zero. Said another way, if the principal of all loans were paid back there would be no currency in circulation and yet all of the interest would still be outstanding. 

"It is absolutely 100% possible to repay loans.  It just isn't 100% possible to repay the tremendous amounts of debt"

Those two statements are contradictory and mutually exclusive.

"Economic growth sees an enormous rate increase (highly unlikely in the near term.)"

Here's Dr Albert Bartlett to explain why this is not possible:

"The unit in which the majority of the debt is denominated in should decrease in nominal value. See: increased money supply."

First of all you are conflating purchasing power of the currency unit with the nominal (ie unrelated to purchasing power) sum of the debt. If your income does not increase in nominal terms the debt is no easier to pay off regardless of how much the purchasing power of the said currency unit decreases. Secondly you are advocating even more theft by stealing the purchasing power of those who have been prudent enough to save in order to bail out the lenders. Thirdly, to increase the money supply you have to issue more debt. That's just how the model works. Failing that you have to monetize existing toxic debt (QE). None of these are solutions.

"The notion that no debt can ever be repaid is both ill-informed, and laughable."

Whilst self-enslavement's question was not phrased quite as accurately as he might, the statement that "interest cannot be paid" in aggregate is a true statement. Why do you feel it necessary to deride someone who disagrees with you especially when the argument you provide to defend your position is flawed?

Antifaschistische's picture

What you're saying is technically incorrect.  It is possible even in a money invented debt induced Central Banking world, to pay off principle and interest.   But all this is "up to a point"...with that point depending on many variables.  The US pays off short term debt all the time.  It's the net debt and interest that evnetually becomes the death blow as it swells 

Diplodicus Rex's picture


What I said was not "technically incorrect" at all despite your protestations. There is no interest in circulation. The currency in circulation (M2) consists of all of the principals of all of the loans made. The government does not pay off its loans. It takes out new loans on a regular basis the sum of which equates to the principal plus interest of the old loans which are retired. If you believe this constitutes "paying off the debt" then you need to have a closer look at the maths.

If I have a loan of, say, 1000 currency units at an interest rate of 10% per annum then I added 1000 currency units to M2 when I took out the loan. When I come to pay it back I need to pay back 100 currency units more than I borrowed  which means reducing M2 by 1100 currency units when I pay back the loan, if I pat it off. In your example, if, at the exact maturity date of the first loan, I take out a second loan then the principal amount now needs to be 1100 currency units because I don't have any spare liquidity to pay the first loan off. At the same interest rate as before I will be due to repay 1100 currency units plus 110 currency units back. ie 1210 currency units. And so it goes on. Ad infinitum.  Now plot that on a graph. Can you see the problem? That curve is known as an exponential curve. Here's Dr Albert Bartlett to explain to you why that model won't work:


nmewn's picture

Man overboard cap'n!

Steady as she goes helmsman, steady as she goes ;-)

kaiserhoff's picture

Why does the name Barry Soetoro leap to mind?

nmewn's picture

He couldn't do it any better if he were trying ;-)

Not Too Important's picture

That nuke going off in Donetsk may change things up.

kaiserhoff's picture

Probably not a nuke.  My guess would be an ammo dump.

It's hard to hide those things, and easy to dispose of them.

Maxter's picture

Yea I am not sure what blew up there but that was a pretty big explosion: 

edotabin's picture

Aaaaha ha ha ha!! Rotflmao !

1. If Greece leaves, the € will strengthen

2. The € is a flawed construct and Greece is only speeding its demise by being a member.

3. They've promised a great turnaround to the already decimated Greek people and these are shots of desperation and hubris. 

4. Resorting to blackmail because they don't have anything else. 

Dear citizens of all nations: Never ever let your politicians promise you the world while running deficits. The end is never pretty.

nmewn's picture

A free glass with every fill up!

1) No, it will crater eventually, Spain or Portugal first, then Italy, finally France and done.

2) Yes. Its a debt ponzi, Greece is only stating the obvious while still trying to get...a loan from its richer "neighbors". Ideologically or fiscally, I don't know how that works together but it is Greece

3) Politicians make promises they never intend to keep.

4) Yes.

edotabin's picture

Just to clarify and be perfectly clear:

1. I am not in any way making fun of the Greek people or their plight

2. I am sick and tired of politicians being elected promising us how great things will be and ........

3. People everywhere have to realize they have to actually and truly hold their politicians accountable (no more bullshit)

4. I am poking fun at the new government because their tactics, so far, have been amazingly predictable

5. What Italy will or will not do has nothing to do with current state of affairs in Greece (this culture started in the 80s with that sellout A. Pap and was amazingly destructive)

6. The only thing the new government has said that is 100% true is that it will take years to rebuild Greece (and I'm not certain they can, but they should try their absolute best anyway)

7. I wish them luck with the MONUMENTAL task of rebuilding the country

8.  The first step to correcting anything is to realize the root of the problem.  This is called "rock bottom"  Straighten out the moral compass of the country and it will do well whether you use Drachmas, Lira, Euros or tulips.

9. Shrink the size of government, stop being such an unbearable burden. Instead encourage foreign and domestic entrepreneurs/businesses/investments.

10. Stop looking back. What happened, happened. Learn from the past but look forward.

11. All the best! ( we all need it, no matter where we live)

Carpenter1's picture

US banks engineer Greece into the EU, knowing it's a time bomb.


"Fuck the EU!"


Obama comes out in defense of Greece. 


Greek Finmin talking very tough, as if he has funding wrapped up.


US objective= Full spectrum dominance.


2 + 2=4


US behind this operation to crash EU.



skepsis101's picture

A crashed EU is a compliant EU, evermore dependent.  Mutti und Ollande und Sarcosy know that.  So which is it, to look east or to look west. Poor dumb bastards are walking a knife-edge.  Whatever happens now, I don't envy poor pooroshenko.

geno-econ's picture

Nonsense, The US is attempting to find a solution to the Ponzi by targeting another backward  economy so the EU and Bankers can increase their debt with their peoples savings and resources as collateral----UKRAINE !

El Oregonian's picture

...And it keeps on goin'... Until it doesn't.

realmoney2015's picture

I agree! The Euro will collapse even if Greece doesn't exist. Fiat currencies are not immortal. They all have the same fate. Every single one of them. Get out of funny money and into real money. Silver is at crazy low prices right. You should advise your firends and family to do so as well. A good way to get someone interested in silver is giving them a candle with a silver coin prize:

When they see that their silver coin is worth 12-20 times its face value, they will start to see that dollar doesn't hold its value. They will learn that silver is real money because it does. I remember my grandpa saying things like 'I remember when a gallon of gas cost two dimes!" Well it still does...just not the zinc dimes that are circulating today.