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The Greek Debt Strategy Is Crazy, But Shrewd
With everyone making nice - apart from Dijsselbloem - ahead of the weekend, we thought some reality checks were in order...
Submitted by Dominique Dassault via GlobalSlant.com,
This whole Greek debt “face-off” with the rest of Europe is so comical. First of all, as previously mentioned, there is NO way that Greece will EVER pay off all of its debt. And its ability to even service [interest payments] its debt is questionable.
So, really, if you are a creditor to Greece what are you to do? You are definitely going to get “stiffed”. The question = Can you recover even some of your principal? In this case probably not a lot.
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Amazingly, Greece has all the leverage in these negotiations. Really? Yes they do and the following quote sums it all up….“If you owe a bank one thousand dollars and cannot pay it back, then YOU have a problem; but if you owe a bank one million dollars and cannot pay it back, then the BANK has a problem”. In this case the Euro-Zone is the bank…and they are owed > $315B. Greece is the poor little client with no practical chance of repaying any of this debt.
The Euro-Zone is well aware of this predicament. The worst case scenario for them is Greece “flipping them the bird” as they wave goodbye to the euro. The write-downs would be massive, capital would have to be raised to replace it, the economic disruption to all of Europe would be substantial and other large creditor countries to the Euro-Zone [Italy and Spain] may be tempted to copy Greece’s move and just “bolt” from the EU.
And…the future of the Euro-Zone could actually be in peril and that is dangerous to the entire global economy. The Euro-Zone’s leaders are sure to be receiving phone calls from their free world counterparts.
The Euro-Zone’s position towards Greece and its new political leaders…just stay the course, pay your bills and do not “rock the boat”…you were the one’s stupid enough to take all of this money and squander it while we were stupid enough to give it to you. Somehow…some way…we’ll get through this economic predicament.
To Greece’s new leaders the Euro-Zone’s position is a non-starter. Apparently day to day life in Greece, for the average working “stiff, sucks…and surely must initiate doubts about whether life could really be any worse if Greece were to voluntarily exit the euro. The massive budget cuts and austerity measures imposed on a population accustomed to socialism do not seem to work. That is why the prior government was voted out and the new, younger regime has taken the reins. Their basic message to the Euro-Zone [the political platform that got them elected] was to reject the previous government’s debt inducing policies and ask for a massive change in strategy. Of course, the Euro-Zone leaders initially told them to “piss-off”.
But…alas…Greece’s leaders have a brilliant idea to solve all of these lingering problems and, of course, it has to do with money printing. Greece has suggested that the Euro-Zone’s central bank [ECB] simply purchase most of Greece’s near term [5 years] maturity debt and actually deliver the proceeds back to Greece.
Greece’s message to the Euro-Zone amounts to…since you are starting an indefinite debt monetization program in just two short months…why not include us in the money printing party too even though our ability to repay our obligations is essentially zero? Hey…we’ll even pay for the paper and ink….with the money you’ve already given to us.
Everybody wins… no write-offs for the Euro-Zone, a little breathing room for Greece, the euro depreciates even more [an objective of debt monetization] and when Greece, inevitably defaults, the ECB can just print more money for them, once again, to defer the inevitable pain.
“In your face” Euro-Zone. Greece outsmarted you at the negotiating table and you will likely acquiesce to their creative requests…in all of your money printing shame…or is it just a dubious honor?
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HOW ABSURD HAS ALL OF THIS REALLY BECOME? I SUPPOSE NOT ABSURD ENOUGH…YET.
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The problem is that Greece cannot function without a tit to suck on.
Who can?
give me a break ...
if this was real money loaned and used in greece thats different ... but this is all funny money ... just paper
Varoufakis in 2013:
https://www.youtube.com/watch?v=A3uNIgDmqwI
Start at about 1:07-1:08 and pay attention to what he says Greece's options are.
The reason you know that the Troika is desperate is because of their increasingly desperate demands and ever shortening timelines. If they really believed they hold all the cards, they would just tell Greece to take a hike and let them talk to themselves, knowing the Greeks are powerless.
That's not what you see happening; what you see are desperate faces becoming increasingly desperate to pressure Greece into a panic mode, and collapse.
You might notice that isn't working.
The reason it isn't working out is because the Greeks can see as well as others that the Troika is desperate, and they all read this desperation the same way.
The Troika is about to blow-up.
Go Greeks!!
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This Dijsseldude looks like he’s got a nailgun up his ass. ;-)
Looney
He does.......in fact he has only two choices.....nail gun Germany or nail gun himsef
He is not a man. He is just a template.
i love that photo of Varufarkthem. He looks like Riff Raff from Rocky horror
call j perk'ns and put plan b in action, cause they are coming if not already there.
" A danger to civilization as we know it"... Sobering...
Reminds me of 'Tanks in the streets if we don't get our way here' circa 2008.
well, apparently the EU and the entire Free World's economy hinges on Greece...so, this is either a) BS scaremongering or b) true. if it's true, then Greece does hold the cards and they get what they ask for. If it's just scaremongering then we've got a few more hands to go before we find out who's really holding the trump card.
Great video El Vaquero! Thanks!
Again, it suggests that all the Grexit hopers here on ZH will be wrong. As has been mentioned before, rightly or most probably wrongly, according to the bureaucrats and politbureau members the Euro is here to stay and enormous amounts of political clout and financial capital have been invested in this EUSSR project.
I'm NOT a fan of the Euro, I'm NOT a fan of socialism, I'm NOT a fan of the EUSSR, but we have to be realistic. Just like Varoufakis mentions a 'marriage of convenience' between Greece and the IMF because that's the hand that Greece has been dealt, all ZH-ers have to be realistic that most probably the Euro will not collapse in the near future and that gold will not go to $5000 overnight.
Just like in 1988-1989 when there were huge cracks in the facade of communism, there are similar cracks in the current Keynesian/fiat western capitalist model. The only problem is that IMHO a clear catalyst to accellerate the collapse is missing, unlike in 1989 when communism was quickly replaced with western style capitalism. The enormous catalyst helping the collapse of communism came from within, because the people wanted the western lifestyle, they wanted western cars, houses, jobs and vacations. Quite honestly, I can't see our current western citizens want anything else, except more of the same: more iPads, more cars, more houses and more consumer goods. It's only after this desire for consumer goods has been extinguished and if there is a more desired and economically stronger alternative, that people will think about overthrowing the system they currently live under.
Simply put: Keynesian fiat economics is the 'last man standing,' and there is nothing else to replace it with and until that time, central banks will be able to print as many EUR, RMB, USD, JPY as needed to keep the fantasy alive.
Hey El vaquero, nice find on Youtube. The answer to the question after 1hr 8mins is just as good if not better. (after the Patrick Stewart laugh...).
Knowing the stupidity and ridiculousness of governments around the world, they'll do something like converting all the existing loans and all future loans to to zero interest, so they never have to pay any back. Problem solved!
Then the rest of the world will catch on...
ZIRP perpetuities. None of the banks have to take a loss and the Greeks don't have to repay.
NIRP the loans and they will repay themselves
Waiting for loans to go to -1%. At that time I'l borrow $100,000,000 so that the bank pays me $1,000,000 per year to keep the loan. Ahhhh... what a life. What a system...
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If we go into universal NIRP, you will buy a $100M house at a -1% rate, and at the end of the loan term, your house only sells for $10M and you can't pay back the loan. The bank may pay you negative interest every year, but any financial investment you put that money in ia also into deep NIRP, so you can't win. The only out is to buy stocks. Save yourself - buy stocks.
No, it is real money from banks and privates.
Only if Greece takes more loans, these banks and privates are bailed out by fiddling this into EU-taxpayers debt.
Go, Greece!
greece is a small country if this money was real it has to be singapore or smt ...
here is the story how 2.5 billion has turned into 400 billion in about 10 years ...
https://www.youtube.com/watch?v=07-hA9DW-Po
Arius, keep it straight you and I authorized these central banks to print this money and then lend to us at interest right, right.. Oh wait, no the Government is supposed to print coinage, well then never mind..
"Ceci n'est pas une pipe."
good one ...
got to put Diessibloom picture somewhere there ... looking over la porte or smt
Not only was it a funny money bailout, but Greece didn't even get the money, the Euro BANKS did!
exactly .... it is the only country where people pay two types of property taxes ... 23% upfront when they buy the property (this is european system) and property taxes every year like the US system ...
Yea... But not Angela's
Greece's policy is exactly the same as the policy of every other government in the world, which is to borrow money every year with no plan of ever paying any of it back.
They aren't going to pay the old loans, they aren't going to pay the new loans, they aren't going to pay the interest, they aren't going to pay any of it. None of them are. Not one single penny, ever.
They will continue to "service" the debt as long as they can borrow enough to pay the interest and enough extra to put some in their pockets. They will continue to "pay back" loans as they come due as long as they can roll them over, borrowing enough new money to pay back the old money and enough extra to put some in their pockets.
But as for ever paying any of it back, that can't happen and won't happen.
What they are all going to do is go on borrowing more and more and more until no one will loan them another cent. Then, print even more bonds and "sell" them to their central bank for newly printed money if they can.
In the meantime, keep inflating the currency and watch the debt shrink in real terms while growing in nominal terms.
The scam ends when the wheels fall off, which is when no one will lend them any more money or when the whole economy blows up in a riot of hyperinflation.
Crazy shrew? That's no way to talk about LaGarde.
Fuck the EU.
Three key moves the new Greek government should definitely do
They should have left DSK in the IMF. He would of literally hung these Greeks on a wall and spanked them. Safe word 'Troika'
Enceladus: He is occupied in a French court case at the moment - no chance
There hasn't been nearly enough flailing about by the eurocrats yet for this to be resolved...
Greece knows they have the upper hand. The EU knows they will not get all their money back. The whole effort now is to prevent contagion spreading to the other broke EU members.
Good analysis!!! However two points (1) Greek veto over sanctions against Russia was not mentioned (2) Italy and Spain (and Portugal, Zyprus, Ireland) might be tempted to copy both (a) an EXIT (b) sucessful negotiation of debt relief. If the two bad boys from Athens remain stubborn the EU has a real real problem
The whole cabal game plan is to loot at cents on the euro through privatizations as many valuable European (not just Greek) assets as possible. The Greeks might have a small chance if they align with Russia and China. That's hardball:
http://winteractionables.com/?p=18306
probably ... but they own everything anyways ... yeah well
Greece "squandered" the bailout money" ??? 92% went to EuroZone BANKS!
Bingo!!
And that is why the Troika - the collection thugs for the Eurobanks - are so desperate right now. They are trying to save that cash flow to the insolvent banks.
If they don't, then the banks have to carry debt from the ECB to make up the loss.
See if the ECB will ever see that debt repaid . . .
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the ECB don't need any money repaid, that's the thing, if it gets repaid there's deflation as there is no money. The create the fucking money by making debt. i am rite?
I believe the TAXPAYERS of the remaining EU members are on the hook at this point, if the ECB takes a loss: http://globaleconomicanalysis.blogspot.com/2015/01/revised-greek-default...
exactly!!! This whole bailout is really for the BANKS, not Greece!
Crazy Ivan?
KICK that PHUCKING can once again!!! YEEEHAWWW!!
Go Greece stick it to the commie EU!
Wasn't this always the game?
As Dr Zoidberg from Futurama would say 'HOORAY! Another happy ending for the rich people!'
"So, really, if you are a creditor to Greece what are you to do? You are definitely going to get “stiffed”. The question = Can you recover even some of your principal? In this case probably not a lot."
It is not about the debt, but about the farm, Greece.
The banksters printed their near zero cost theft-via-fiat that they loaned Greece, but the loan was really a sale. The banksters paid fiat for the right to farm the Greek country, and people, for their benefit.
The banksters fear losing the income from their farm that is Greece.
The banksters need to repay us.
Guillotines = Jubilee
Greece really doesn't have all the leverage here. The EU has left institutions to believe they would back Greek debt, they only need now to work with those directly affected by a Greek default ensuring some portion of the Greek debt is serviced till they can work out all the details as to how much principal can be absorbed as a loss on average and extend a repayment schedule for the remainder over a number of years. Why this instead of forgiving more debt as Greece has requested? Because then they would have to do the same for Spain, Portugal, Italy, etc.... Furthermore, these same countries would get a ringside seat of what will happen to Greece after they leave the EU. Trade agreements with EU members will be dissolved, and Greece will have to figure out how to made their idea of a socialist utopia work without borrowing from others. Much better than continuing with this millstone around their necks.
Debt can always be extended to manana, and interest rates can be cut below zero. The ECB can refinance Greece for 30 years at a negative interest rate. Same for the rest of the Eurozone. Problem solved.
I Don't suppose you guys noticed but something very weird is happening to French domestic energy consumption.........elec consumption is down 10.9% in Nov vs Nov 2013 and down 6.5% Jan to Nov.
But p?oducion is not down much, we are witnessing a massive increase of exports to the UK. And others
If you believe the iea these are by far the worst consumption figures in both Europe and indeed world oecd
The Germans are concerned about strengthening Euro if Greece exit and reduced exports. STarnge short term logic, but thats it.
All Greece has to say is "The Russians/Chinese have offered their financial assistance if we default completely and exit the EU and NATO. The Russians would pay us to extend their new gasduct coming from Turkey and would pay top $ for our agricultural products currently banned by the EU embargo. All we have to do in exchange is kick-out NATO (the Americans) from all Greek (Athens & Crete) bases and allow THEM to be the new tennants"
Live by debt and die by debt. Both the debtor and debtee.
Yanis Varoufakis, the new Finance Minister of Greece, has a very interesting view of how the current global economic problems developed and why they continue to get worse instead of better.
He calls it "The Global Minotaur"
http://www.globaldeflationnews.com/the-global-minotaur-a-global-finance-...
Scrouge vs Shrewd...
Greece is just junping the shark... the US is going to be doing more QE in June, or whatever the midget klafte from Brooklyn is going to call it.
Let's hope the Greeks default on all their debt and then other countries(ie Italy, Portugal, Spain, Ireland) follow suit. Once debt is written down worldwide and everybody learns to live within their means, then the global economy can start to grow properly. Right now it seems the world is being held back by too much debt with which to service.
Why do so many believe that Greece giving the ECB and ECU the finger and defaulting is such a bad thing for Greece?
The alleged reason is because Greece would become a pariah to the lending community if they say fuck the EU and default. I say maybe not.
Greece will begin with a drachma at say 1=1 with the Euro. It would quickly slide what?30, 40 50% before finding a bottom. The greek people would be poor, but debt free, or mostly so. Since Greece has a positive trade balance they would be able to service at least some external debt. And having little/no debt having defaulted. they might be purceived as "credit worthy" by lenders willing to take that risk. And then there is always the Russian and/or Chinese "connection" to help out Greece if they gave Dragi and Angela the finger.
That plan doesn't work without considerable political and social reforms. Reducing political corruption, labor reform, reducing kickbacks from the oligarchy....ALL stuff that won't happen given Syriza's socialist agenda.
And so Greece will have yet another political crisis...and this time it may well be "pitchfork time".
I'm still long Greek donkey carts.
hairball
"Greece is saying ... why not include us in the money printing party too even though our ability to repay our obligations is essentially zero?"
Greece seems to have sneakily worked out that they should be treated exactly like JPM, GS et al in 2007. Eight years later, those zombies are still acting as though they are solvent even though they are only surviving on tax payer handouts.
One thing Greece really can count on: moneychangers and lenders are forever like flies. Argentina repeatedly defaults, but can always borrow, because parasites still cannot do without a host.
so we await MONDAY.....please Greece, GO ICELANDIC!!!!!