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Greece Government Favours Drachma – Vows Will Not “Bow to Blackmail”
Greece Government Favours Drachma – Vows Will Not “Bow to Blackmail”
- Merkel, Hollande, Juncker, Lagarde and Draghi in “emergency” meeting re Greece
- Bankrupt Greece must find €1.6 billion to pay IMF in June
- First instalment of €300 million due on Friday
- Leaders of EU, IMF and ECB hold emergency summit in Brussels
- 58% of Syriza membership in favour of returning to Drachma
- Unforeseeable consequences and risks of 'Grexit'
An emergency meeting was held in Berlin last night between Angela Merkel, Francois Hollande, EU Commission President Junker, Christine Lagarde of the IMF and ECB president Mario Draghi. The meeting was reported to have continued past midnight.
The discussions were apparently aimed at formulating a "take it or leave it" offer that would be acceptable to the Syriza government that would allow the remaining €7 billion of the existing bailout package to be unlocked so that cash can be handed back to Greece's creditors and avoid a default.
Greece, a country whose own finance minister has described it as "bankrupt" is due to pay the IMF €1.6 billion over the course of June. The first instalment of four - totalling €300 million is due this Friday.
There were fears that the country would not be able to pay its public sector wages in May demonstrating the very fragile state of its finances. It would appear that the European leadership and that of the IMF and ECB also fear the state of Greece's finances and its ability to make its payments to the IMF this month.
A recent poll suggests that 58% of Syriza supporters would rather return to the Drachma than to remain in the single currency while severe austerity measures are imposed. Syriza have a 26 point lead over the next most popular party, New Democracy.
From this point of view it is, therefore, not entirely politically untenable for Syriza to choose the default and exit option should the "institutions" fail to respect Prime Minister Tsipras's "red line" on VAT hikes, pension cuts and labour market reforms.
Greek 10-year bond yields have been creeping higher - currently at 11.49% - indicating that the markets view the risk of a default as being quite high.
The "institutions", however, are likely to want to keep Greece in the fold at any cost. In a softening of tone Junker told German newspaper Süddeutsche Zeitung yesterday:
"Anyone who doesn’t see there is a humanitarian crisis in Greece is deaf and blind to what is happening there."
The unforeseeable risks posed by a default and "Grexit" to the Euro project are too great for the powers that be to wilfully allow it to happen. It could trigger credit default swaps and a derivatives crisis in the banking system.
It might also lead to a geopolitical crisis should erstwhile NATO member Greece turn to Russia for financial assistance in the form of funding, trade, economic and other cooperation agreements.
The consequences of making an acceptable offer to Greece may also be unforeseeable. In the short term it may buy time but in the longer term it is hard to see how Greece can come off life-support without a large scale write-off of some of its debts.
It may also embolden anti-austerity groups across Europe, particularly those in heavily indebted Italy and Spain.
The threats posed by the Greek situation to the euro - and indeed the threat posed by the entire European economic situation to the euro - make holding gold outside the banking system a vital form of financial insurance.
History and recent academic studies show that gold protects wealth from financial and economic risks.
Must-read guide:
Gold is a Safe Haven Asset
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,188.75, EUR 1,083.17 and GBP 779.91 per ounce.
Yesterday's AM LBMA Gold Price was USD 1,187.30, EUR 1,088.29 and GBP 780.40 per ounce.
Gold fell $0.40 or 0.03 percent yesterday to $1,189.30 an ounce. Silver rose $0.01 or 0.06 percent to $16.74 an ounce.
- Gold in US Dollars - 1 Week
Gold in Singapore for immediate delivery was marginally lower at $1,189.30 an ounce while gold in Switzerland was also in lockdown and continued tethered to the $1,190 level.
Gold remains capped under the psychological $1,200 an ounce level. Gold saw a sharp rally yesterday to over $1,203.50 per ounce from $1,185 per ounce. Gold was up nearly $20 or 1.5% and on track for its biggest daily rise in more than a fortnight prior to determined selling which saw prices back to exactly where they had started - down 40 cents for the day.
Gold saw even greater gains in euro terms as the euro weakened due to concerns about Greece but the euro has strengthened today which has capped gold’s gains.
Some attributed gold’s sharp rally to U.S. Federal Reserve Vice Chairman Stanley Fischer's dovish comments that it would be a mistake to assume that financial crises are at an end. However, if this was the case it is hard to fathom why gold suddenly reversed the move higher and then gave up the gains nearly as quickly as they had been gained.
Mixed economic data is not giving a clear picture of the U.S. economy. This week’s jobs figures on Friday will be watched closely for any clues on the interest rate hike long mooted by the Fed.
The largest gold backed ETF, SPDR Gold Trust holdings dipped yesterday by 0.25 percent to 714.07 tonnes its, the lowest since mid January.
Meetings continue between the IMF, ECB, German Chancellor Angela Merkel, French President Francois Hollande and Jean-Claude Juncker European Commission President to discuss a “final proposal” ahead of Greece’s deadline on Friday for its first €300 million payment due to the IMF.
In late European trading gold bullion is down 0.10 percent at $1,187.87 an ounce. Silver is off 0.43 percent at $16.67 an ounce. Platinum is up 0.21 percent at $1,106.10 an ounce while palladium is marginally lower at $776.10 per ounce.
Platinum is trading near an 11 week low, and is at a discount of $90 an ounce to gold, which is its cheapest to the yellow metal since January 2013.
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Finally the Greek people are starting to understand that staying in the Euro zone at any cost is condemning them to perpetual slavery . It's better to return to the Dracma than to be slave of the banksters forever .
Throw their asses off the Parthenon while your at it. Iceland went after their bankers...
statism is destroying the country... the only one suffering is the private sector... Public sector employees are doing fine and are those who hold the rest of the country hostage to their whims.. Greece is under the control of its corrupt public sector and their friends crony capitalists ... what's another name for mafia? Did you say Greek government? you are correct.... Just take a look how many public sector employees lost their job in comparison to private sector... NONE versus millions in the private sector... the mafia is intact and blackmails whenever threatened with pension reductions or layoffs... See the fucks all the previous years rewarded themselves with huge pensions before leaving office for the younger generations to pay them forever...... thanks for a good job fucks... you should be in the fucking jail if there was a fucking credible justice system
Why wouldn't Greece want to adopt the Drachma ... they could print, print, print like everyone else
Internal commerce will happen with or without the Euro or the Drachma.
I'll trade you some parsley and figs for some eggs, and swap some butter for your bacon. It's called the barter system, and no central banker can ever take that away.
The problem is that no economic calculation is possible under a barter system. The complex multiple stage production structure and the associated division of labor are unthinkable without money prices. Such a barter economy would soon revert to a primitive state, with people living from hand to mouth. Hardly an ideal state of affairs.
Metals would sit at the top of a barter system energies would also have a high value.
I agree. I like the idea of a barter system even though the velocity of the transactions is slower.
Unlike derivatives, barter trades don't wreck entire economies. That brings me to a thought: Can I pay my dentist with chickens? Just asking.
That depends on how hungry he is.
Anything hookers will take in trade is money.
Will not be blackmailed? So bribery and extortion are still on the table?
Last minute bailout or...
Hello Drachma!!
All this begs the question: If the Troika will keep the music going at all cost due to the risk to the moutain of derivatives, why do banks keep on buying CDSs on sovereigns? Why pay for insurance you can never collect?
Government agencies require all risk to be mitigated. Since this is impossible the end result is failure. Since the agencies then get to nationalize the industry this isn't considered a bad idea by them. ie CDS is Government required.
I see. That makes sense for gvmt, but what about everybody else? Are CDS only bought by governments?
The "proof of the pudding" will be how many Greeks accept the new drachma and if any internal commerce (that isn't corrupt as shit) survives.
I would think smart people would resort to barter if they could.
At least then both parties know what they are getting.
Grexit is as likely as a Puerto Rexit, Greece may leave the Euro but the Syrjzans will never leave the EU.
Greek 'haircut' = STAGFLATION.. Greek TROKA = DEFLATION.. CENTRAL BANKERS >>>> CHOOSE!
The EZ should forget the other PIIGS.
If they play hardball and allow Grexit, there will be such carnage on the markets that no PIIGS government, pro- or anti- austerity, will survive it.
Instead they need to ease Greece's debts - anything else will be MAD. Of course the PIIGS will come asking the same - and they will have to be appeased too. Germany and the other countries will just have to bite the bullet and pay. That's what an "ever closer unionb" is all about.
Sorry Wolfie!
Woulda, shoulda, coulda, Not a clue to be found anywhere. A deal could be made but both sides would really have to get serious about fixing the huge debt load Greece lives under. Common sense requires it, but politics can't even see it.....
""Anyone who doesn’t see there is a humanitarian crisis in Greece is deaf and blind to what is happening there."
Oh Juncker, you poor bastard. You're a day late and a dollar short...
But thanks for playing, and here are some parting gifts...
Please send Juncker's parting gifts to him at 1800 FPS.
Its not terribly clear to the peasants why a "geopolitical" crisis
can happen if Greece turns to Russia for support?
Like Brussels is the nasty boyfriend who when rejected will take it out on the next suitor?
Seems to me only Brussels can initiate a "geopolitical crisis" if Greece walks into Russian arms-aomething that from afar appears a commonsensical inevitability.
Russia has already declared war on the west, they just don't know it yet, and they are using all means outside of outright combat to achieve their goal at the present. That will change soon enough as Vlad has less than 600 days before the US elections We would all do well to review our Clausewitz for insight into the coming attractions...
Greece would find themselves in a troublesome situation in a short time, longing for bear hugs while living on the wrong side of the tracks...
As far as I can tell Russia can't survive as it currently does without world trade. They and every other country want the US as a market or at least in the market. China and Russia would quickly have a falling out if the US wasn't holding them together by being such a pain in their asses. Mistakes have and will continue to be made. The US may fall the farthest but they don't call them world wars for nothing. The stuff going on is going to hurt everyone.
The crisis just appeared out of thin air and they just can't understand how it happened.....
It boggles the mind, doesn't it?
Burn the fucking Greek banks to the ground. String up the bankers and politicians.
A plumber can delcare bankruptcy - why doesn't the Greek government? The Greek people have ABSOLUTELY NO MORAL RESPONSIBILITY to pay back a single Euro that anyone was stupid enough to loan their financial crack-whore of a government. The Greek people own nothing to anybody.
Unfortunately, the U.S. crack whore government will see the Greek crack whore government's corruption and raise it some corruption.
It all makes me want to visit Vegas.
It makes me mad that I didn't follow mama's advice and study to be a crack whore with a minor in public policy. That's where the big bucks are.
Well Said!
Throw their asses off the Parthenon as well. Iceland went after their bankers.... Just saying...
Repeat post