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From Small 'Grexit' Dominoes, Global Crises Grow
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Greece has the potential to be the small domino that ends up toppling much larger dominoes.
....
Here is a preliminary semi-random list of thoughts on Greece's exit from the euro.
1. I make no claim to expertise in this matter--but I don't think there are any experts in this, as there is no real analog in recent history.
2. This lack of analog (a nation with a small population and GDP leaving or being ejected from a much larger currency union) undermines all references to historical examples.
3. No offense intended to the hardworking people of Greece, but the population and GDP (gross domestic product) of Greece is quite small. Greece's population is 11 million and its GDP is about $240 billion. The modest scale of Greece also undermines any analysis or projection based on historic precedents involving much larger economies.
The European Union has over 500 million residents. Greece's population represents 2.2% of the EU populace.
Ecuador, which uses the US dollar as its currency, has 15 million people.
Los Angeles County, with slightly more than 10 million residents, has a GDP of $554 billion, more than double that of Greece.
4. A sovereign currency reflects not just the interest rate paid on its bonds, but on a host of other factors: fiscal and trade deficits/surpluses, currency pegs, national income, the vibrancy and resilience of the economy, the ability of the central state to manage the economy, private bank credit, transparency, costs of corruption, ease of doing business, how foreign investment capital is treated, the skill levels of its workforce and so on.
5. Thus the Grexit discussion of currencies leads directly to all the larger questions of the Greek economy, political order and society.
In other words, Greece faces not just a debt and currency crisis, but a systemic crisis of its social and political order, its machinery of governance, the legitimacy of its system of taxation and the flexibility of its economy. The currency and debt crises are reflections of these much deeper crises.
These include:
-- Does the structure of Greece's government lend itself to fragile coalitions that are incapable of implementing tough reforms?
-- The need to modernize the practical machinery of governance: record-keeping, taxation policies, transparency, processing of permits and other regulatory necessities, etc.
-- Does the central state have the wherewithal to effectively remake the culture to eliminate corruption as the default setting in the economy?
6. All other things being equal, a nation with a weak but stable currency that makes all imports costly to its residents invites investment in producing more goods and services locally. The keys to being attractive to long-term investment of foreign capital are:
-- A stable currency
-- A central state that isn't going to nationalize the investment the next election cycle
-- A stable, transparent regulatory and permit system
-- A stable, transparent system of taxation
-- A central state that isn't going to nationalize the investment the next election cycle
-- A stable, transparent regulatory and permit system
-- A stable, transparent system of taxation
7. Some readers suggested Greece could peg a new drachma currency to the U.S. dollar as a means of establishing much-needed stability. The key to any peg's sustainability is setting the peg low enough that the market won't force the central bank to defend the peg, which is what triggered the Asian Contagion Crisis of the late 1990s.
The nation establishing the peg must also avoid overborrowing, in essence free-riding the stability established by the peg, which is what brought down Argentina's dollar peg in the early 2000s.
8. The Greek people have a simple choice: "do whatever it takes" to stay in the euro, which means living with austerity for decades to come, or leave the euro. It's that simple. The majority of Greeks supposedly want to stay in the euro, but they must come to grips with the reality that the euro is a plutonium life preserver. It's one or the other: permanent austerity as the cost of keeping the euro or no austerity and no euro. You can't have it both ways.
EU Leaders Throw Europe a Plutonium Life Preserver (October 27, 2011)
9. Though the mainstream financial media is running a full-court propaganda campaign promoting the idea that "Greece doesn't matter any more," the much-feared reality is that Greece has the potential to be the small domino that ends up toppling much larger dominoes:
Domino Chain Reaction (1:10 YouTube video)
Of related interest:
Although the financial media is blathering about negotiations and gamesmanship, the truth is Greece just blew up the Empire's Death Star of debt. There's nothing left to negotiate except the official admission that the Imperial Death Star of debt, the most fearsome threat in the galaxy, has been blown to smithereens.
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I just want to know Al Sharpton's opinion on the matter.
! ! !
*
President Putin Reveals 9/11 Satellite Imagery Evidence Indicating USA Gov’t Complicity In False Flag Attack
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Dominoes don't line themselves up standing on end in a perfect, neat little row. SOMEBODY SET THEM UP THAT WAY. Don't tell me how you think they're going to fall, tell me who set them up in the first place. Then you'll know how they're going to fall and more importantly, why.
See that hand in the picture? Whose hand is that? Ask that guy. Then you'll know.
Sorry Word, that won't even put a dent in Muricans belief system. It will just be called Russian propaganda and dismissed out of hand as conspiracy nonsense, willingly swallowed by the sheep.
What you wrote is funny as it is not entirely true.
I just responded to a British Citizen on a YouTube video about recovering Gold from Circuit Boards who was ridiculing Preppers and people whom believe in the New World Order and Illuminati.
Americans do not have the sole monopoly on buying into the lies and propaganda. That disease is pandemic, Worldwide.
Reptillians? Naw, it's just the Fed...the illegal Fed!!!
Cue the "V for Varoufakis" domino scene:
https://www.youtube.com/watch?v=vuRUlqveNYg
Your headline is false. Putin did not "reveal" anything. According to a Russian paper, he is "threatening" to do so.
You been hanging out with Brian Williams?
Yeah, noben, there have been a string of articles about this supposed to happen, which has not actually happened yet, other than the standing threat to do so ... I wonder what the Russians might have to "contribute?"
Any one who wanted to, and can afford the time to do so, could watch several dozen decent documentaries on 9/11. There was plenty of publicly available information, as dots of data that could be "rationally" connected. However, the overall results of doing so are as indicated in my comment posted below: civilization was always based on backing up lies with violence, which has always gotten worse at an exponentially accelerating rate. It gets harder and harder to imagine how that system of enforced frauds can keep on doubling down any more times?
Or how George Soros feels about "austerity."
Greece is the word.
"It's one or the other: permanent austerity as the cost of keeping the euro or no austerity and no euro. You can't have it both ways."
Or better more accurately:
"It's one or the other: permanent austerity as the cost of keeping the euro and having someone who owns you to bail you out. Or no euro, eventual economic collapse (albeit with no one to own you or to bail you out) which will by default mandate austerity at some point as well!"
Either way a tough road of austerity is in their future. Do they want freedom or dependency? Does the new government have any idea of the reality ahead? Is there anyone in Greece with the experience, integrity and leadership skills to get everyone on board long enough to actually recover? At this point I doubt it.
Yes, this is accurate. The sad thing is the dillema is true in most countries since the same slave owners have the peeps in the yoke of debt. Peeps are debt slaves. The only way out that I can fathom is cancelling out the slave owners accounts created by bogus derivatives and send them out to pasture.
To get to the top, you have to work with crooks. The new leadership will sell out the Greek people once the oligarchs offer enough money and favors.
"Greek Lives Matter".
sarc
Sharpton thinks 'Grexit' is a hair grease...like DapperDan....
If I was them I would go on some kind of silver based monetery system.
Any excess silver reserves could then be swapped for gold at the appropriate GSR
They would become very wealthy in the comming years per capita
JMHO
PM based systems require discipline in financial systems.
That is what is not being followed here.
PM based systems would help long term but the "come to jesus" discussion must happen on both sides before that would work.
“If they follow standard Imperial procedure, they’ll dump their garbage before they go to light-speed. Then we just… float away. …With the rest of the garbage.”
"In other words, Greece faces not just a debt and currency crisis, but a systemic crisis of its social and political order, its machinery of governance, the legitimacy of its system of taxation and the flexibility of its economy. The currency and debt crises are reflections of these much deeper crises"
You have just described the EU.
John 3:16
Geopolitics could save the day. Greece's threat to go over to the Russian side, and bring in the Russian Army, could force the EU/Germany to bail them out.
'Peg Greek currency to USD...that'll give it stability!'
Oh for fucks sakes...
... butterfly effect ...
...But, her face...but, her face...I love everything about her butter-face...
I seriously doubt anyone is going to notice anything dramatic looking at a computer screen.
I wish Dominoes had never been invented. Shitty game that's done us an even bigger disservice by giving rise to the hackneyed, over-used analogy of "toppling over like dominoes". It's like some kind of crutch that weak thinkers use to skip over things they don't know what they're talking about. One, two.... SIX! How'd that happen? Dominoes. Just let your mind fill in whatever blanks are between those things and that's what we said would happen.
If I never read another article that uses it again, it will be too soon.
What? Just fold the whole damn thing in half and eat it like a giant cardboard quesadilla...Oh, wait! Wrong Dominoes!..delete!, delete damn you!
I'm with you, but "perfect storm" is worse. Supposed to be reserved for multiple unlucky circumstances occuring simultaneously and causing something bad. But now you hear it used even when the causes are human actions. Moreover, despite the causes being human actions, somehow calling it a "perfect storm" is exculpatory. Expect to hear it the day the financial system collapses.
This is what, the 6th post from ZH in the last 36-hours about how risky a greek exit it?
EU has had 5 years to figure out how to unload greek soverign debt from their books. If they're not hedged by now they deserve to implode.
Exactly! This game of 'save the crooked bailouts' is just way too old.
I like the video of the dominos....woot!
The rest of this article is regurgitated content from all the other Grexit posts. I think we've covered all the "Greeks vs. the Troika" outcomes last week, Tylers.
The real story today is the Nobel prize winning, community organizer, is officially cranking up the war machine. We're going to pull out all the stops now to defeat ISiS, or ISIL, or DASH, or "those bad folks" as our fearless leader likes to address them.
Greek Deputy Foreign Minister confirms Greek plan B
"Greek plan B"
RUN!!!
Once all of Europe starts to go the banking system will pretty much go into lockdown mode. I would not be surpised if Gold and Silver are outlawed. The only way to move wealth woud be with cryptocurrencies. Greece will be a nice test to see what happens when a small country enters a massive run on the banking system.
http://www.btcfeed.net/news/beat-capital-controls-bitcoin-not-gold/
My wife allways tells me that "size doesn't matter, it is how you use it".
I don't know how to break this to you, Goop, but they all tell that same lie.
Stupid me, i could have known that.
She works for the EP in Brussel.
"No offense intended to the hardworking people of Greece,..."
Ha! Ha! Ha! Good one!
Pretty sure all the "hard-working" Greeks left that commie hell-hole generations ago...
Maybe you are just ignorant, maybe you have problems with math.In any case check the statistics instead of reproducing stereotypes.
http://stats.oecd.org/index.aspx?DataSetCode=ANHRS
Damn, they work more hours than USofA!! But, there is a caveat, they may work more hours, are they as productive? Or do they all have multiple jobs...I guess it really doesn't matter, same thing here!
Ahh, take a peek at annual avg wages, that is telling!
Well, I guess Charles reads ZH. Using the picture of the Domino example delacroix used in my thread response.
http://www.zerohedge.com/news/2015-02-10/europes-greek-showdown-sum-all-statist-errors#comment-5767768
I think my Tsunami example is also accurate...
The huge wave of the currency/debt tsunami((very small while it was out to sea) is starting to have it's bottom hitting the rising shore, the bottom(us workers) can no longer travel as fast as the top(the .1 %) , it cannot carry it any longer, It will crash on the shore line taking out much when it does.
Ouch, I guess we better move to higher ground, but where? You are absolutely correct.
Let me fix that for you:
Greece has the potential to be the small domino that ends up driving the US stock indices to new all time highs.
It would be temporary at best...
All dominoes are the same size! Greece just happens to be the worst off, and at the end of a long chain...tick tock
Here lies the problem with Greece. Greece (and others) never had any business getting involved in this mess to begin with. It was never to their actual advantage to begin with.... but the perks made it seems worth it. The perks (cash transfers and trade deals) were put out there simply for establishing a more legitimate EU than there would have been if only those who belonged in it were in it. Their inclusion also allowed for a "weakening" of the currency. If the members were all relative powerhouses, the currency would explode in value and their economies would crater. The primary issue with Greece is that they have zero actual control over the currency now, none, nadda. Traditionally they would simply devalue the drachma down to nothing, giving the economy a shot in the arm as it became cheap to come to greece or buy some crap from Greece. They are not exactly a powerhouse of manufacturing or any other real industry. Greeks with cash keep it outside the system, see immense benefit from the devalue and normal people.. eh, it's just another day more or less, savings kept in gold or other currencies.
That was the greek way, and that's the way it had been for a LONG time. The EU was the brainchild of France who dragged Germany into it during the Maastricht Treaty. No Germany signing on, meant no French support for Germany unification, and with France being a traditional enemy of Germany that leans Russian when things get hot (the root cause for those wars), it would have been rather nasty. To get Germany to give up their DM, they end up essentially being the bank. Which is what France needed, cus Germany is the economic powerhouse of Europe.
So, trade deals in place. Customs unions established for free trade, no more passports/visas needed for travel, and hey, a single currency... great idea. Unfortunately, no political union, and the things acts like a fucking vampire. The Euro has all the downsides of gold with none of the upsides. It has no real exit plan in place, and if the population of a target nation denies it, well, they get to vote over and over and over again on it until they "get it right". The carrot is out there for the politicians, so the will of the people doesn't mean a damn.
Sure, there are some good things about the EU, but the governing body is basically an oligarchic dictatorship. The people vote and their votes mean nothing if the EU says otherwise. It's fucking stupid on every level, and Germany was 100% correct in their reservation that unified currency is stupid without unified government.
If the countries want to play with either other, fine, so be it. If they want to have common currencies, sure, that's a great idea as well. But for the sake of all, they need to have their own currencies as well. Maintain the Euro as a common "peg", more of an "idea" rather than a common currency, but the members need to be able to adjust their currencies as needed if they are gonna go fiat.
And a unified government in Europe... haha, that's just Germany in control of it all, a new reich completed without the bloodshed.
Oh for freaks sake..stop it!
Greece aint goin anywhere.
Jesus people.
would you bet all your wealth on that? i didn't think so.....
greece is leaving, that's a done deal, already been decided.
Yeah. He's from Plan 9 alright:
https://www.youtube.com/watch?v=XhvDMhrws1o
Banker excess, always has the same result as they only have one product, loans/debt, they let people take money from the future to spend today.
Boom today and crash tomorrow.
That is all they do.
1929/2008 - Wall Street Crash
1930s/2010s - Global recession, currency wars, end of globalisation phase and rise of nationalism and extremism
It is always the same.
With global debt higher than 2008, this is all future money that has already been spent.
CRASH is the only possible outcome.
In points 1 and 2 it's stated that there is no analog to this situation.
Yes there is! Greece was forced out of the Latin Currency union over a century ago.
Same situation, not living up to the rules and agreements
When is a default not a default?
When the ISDA says it isn't.
Somebody's gonna get Greeked and hard.
Nice video, so as you can see Greece on one end can knock down USA at the other, just marvellous!
Nice Dominoes pic. Unfortunately the author does not understand Inertia or Torque, as it applies to a small falling Domino tipping over a much larger Domino.
Bad physics, but good Literary License, I guess.
"Greece has the potential to be the small domino that ends up toppling much larger dominoes."
Yes, that is how Ponzi schemes work except they can only sustain 2 or 3 dominoes falling.
Could this be the day when it finally hits the fan?
On the theory that we'll not get better until it does, perhaps it is.
I, for one, am pretty sick of all of it already...
m
Wait for Obama to weigh in on this . He will probably propose to make Greece the 48th State.
Time to prepare your own portfolio to the market crush:
http://prudentvalueinvestor.blogspot.com/2015/02/linkedin-corporation-ln...
Essentially, the productive potential of Greece is large. Humans are capable of creating more wealth than a horse or a cow and we think horse, cow, etc. populations have value don't we? If there is no shortage of credit and the credit is issued for production, Greece will have no problem.
Greece has been paying its assets out for interest to banks that did tricky things to its People and paid off its leaders. I remember one of them, Goldman, manipulated bonds lower after getting the government on the hook. They did a short Greek bond sale to Cyprus. Remember Cyprus? Then Goldman wouldn't go along with the "bailout" until Greese lowered their bond price. Etc., Etc.
Examples of this are more than we can ever know about and will be as long as Bank can print the money, loan to themselves essentially to make bets with against their customers, or, until Glass Steagall returns. Or, several hundred nations join the BRICS...which now looks more likely judging how cheaply our Congress is selling out for these days.
Awesome metaphor about dominoes!
Greek Souvlaki Kabuki Roller CoasterThat is a nine minute audio recording. Half way is what I considered the important point: “It is about impossible to hedge against this risk …”
I REPEAT what I posted on this previous article: The Euro’s Exponential Decay
That tragic trajectory was, bit by bit, faster and faster, due to the world's combined money/murder systems becoming more and more successfully enforced frauds. There has never been anything able to prevent the people who were the best at being dishonest and backing that up with violence from controlling civilization, and thereby driving it towards its own psychotic destruction. The ability of some human beings to control other human beings using the methods of enforced frauds are the foundation of the political economy, while that structure automatically and necessarily becomes more criminally insane everyday.
That is especially the case because there MUST be some death controls within the context of any human ecology, since there ARE chronic political problems inherent in the nature of life. The human species have developed an expedient set of solutions to those problems which operate through small groups, who specialized in being dishonest and violent, dominating larger groups, who are thereby kept ignorant and afraid. Thus, the established systems are almost nothing but organized crime and controlled opposition.
That combination of organized crime and controlled opposition means that the world is almost totally dominated by professional liars and immaculate hypocrites operating in BOTH the established organized crime AND the controlled opposition groups. Hence, there can not be any genuine progress, but only more overall criminal insanities, headed towards psychotic breakdowns. None of the "peace processes" ever address how the human species might be able to operate better death controls, in order to back up better debt controls, because everyone participating are there because they were the best available professional liars and immaculate hypocrites, within the groups that they are speaking for.
In the current flash points, or the leading edges of the established systems having driven themselves into situations of debt insanities and/or death insanities, there is always an almost totally BULLSHIT WORLD VIEW dominating all of those discussions, which makes any genuine progress practically impossible. For thousands of years, Neolithic Civilizations' social pyramid systems have been successfully based on backing up lies with violence, in order to continue to grow an an exponential rate. However, within the lifetime of those alive today, legalized lies backed by legalized violence have become globalized systems of electronic frauds, backed by the threat of force from atomic bombs.
That is the level of collectively social insanities that we have worked ourselves up into. While our problems became millions, then billions, then trillions of times worse than ever before in human history, the established systems of organized crime, and their controlled opposition, continued to be dominated by professional liars and immaculate hypocrites. The ruling classes and those they ruled over became matching bookends of the prolonged processes of controlling civilization through enforcing frauds. All the language that they use is based on false fundamental dichotomies and the related impossible ideals.
Somewhere deep, deep, deep BURIED UNDER BULLSHIT, are some relatively objective facts, and the unitary mechanisms of general energy systems, however, the social systems are so totally based on being able to continue to back up lies with violence, that those facts have almost no influence upon anything, since enforced frauds are actually controlling civilization. Therefore, the overall systems of backing up lies with violence continue to enable attitudes of evil deliberate ignorance to flourish, while our problems are headed towards becoming quadrillions of times worse than ever before in known human history, as long as progress in science and technology continues to be channeled through social pyramid systems whose basic structure is due to being able to back up lies with violence. That has gradually selected for all the most successful people within those established systems, of organized crime and controlled opposition, to become the best available professional hypocrites, so that when they meet to discuss problems there is almost nothing said which is not UTTER BULLSHIT.
In that context, it is not clear that there will be any future human historians who survive to discuss what went wrong, due to the paradox of final failure from too much "success" by controlling civilization through being able to ENFORCE FRAUDS. The basic structure of social pyramid systems is criminal, and so, the more that they are pumped up and UP by advances in science and technology, the more criminally insane they become, especially since those who benefit from those ENFORCED FRAUDS in the short-term have every kind of political advantage within the established systems to continue to be able to do so ... despite that being able to control civilization through backing up legalized lies with legalized violence has the longer term result of driving that civilization to become more and more criminally insane.
The paradox with respect to being RIGHT about that analysis is that being RIGHT makes no difference, because social systems based on backing up lies with violence do NOT CARE about more rational evidence nor logical arguments. Those ONLY CARE about being able to continue to ENFORCE FRAUDS, by being able to back up bigger lies with more violence. Therefore, the ONLY thing that follows from better understanding these kinds of political problems is that the more one knows, the worse it gets!