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Guess What Happens Next
Courtesy of Keith Dicker of IceCap Asset Management
Well, if you’re not Greeked-out by now you should be. After all, the Greek debt crisis has been spinning in and out of control for 5 years and counting.
Why should it be any different this time?
Everyone knows there is no way on this earth that Greece will ever be able to repay these debts. Unless the Greek economy can grow faster and longer than it has ever grown before, AND it can avoid the political temptation to never again spend more money than it collects in taxes – then just maybe it stands a chance of paying off some of the over $400 Billion it owes.
In today’s age of money printing, negative interest rates, and bank bailouts, many have become somewhat desensitized to “billions” and “trillions”. Yet, we assure you $400 billion for Greece is a lot of money.
For perspective, Australia owes about $1.3 trillion in various loans. If Australia suddenly entered a debt crisis on the same scale as Greece, its debt owing would skyrocket to nearly $2.5 trillion, or put another way – about $106,000 for every man, woman and child.
For Greece, it’s mathematically impossible to repay its debt. If anyone else tells you otherwise, it means they have no understanding whatsoever of how real economies actually work.
The sharpest and brightest minds at the IMF, the EU and the ECB (collectively referred to as the TROIKA) all agree that the solution to the Greek crisis is for Greece to pay more in taxes, for the Greek government to spend less money, and to continue to pay off its debt.
Let’s think about this for a very quick second:
- Greeks have to pay more taxes, which means less money is available for spending
- the Greek Government has to spend less money, which means less money is available for spending
- and of the money that the Greek government does spend, more of it has to be used to repay its debt, which means less of it is available for real spending;
And considering that economic growth is a function of aggregate spending, how on earth can any sane person expect the Greek economy to recover and grow?
The answer: they can’t. For further proof why it doesn’t work and it will never work, you just have to look at Iceland.
Iceland was the very first country wiped out by the 2008 global debt crisis. The Icelandic government and the Icelandic banks completely mismanaged everything for which they were financially responsible.
And when everything hit the fan – no one come running to save them, in fact, the complete opposite happened. Both Britain and the Netherlands threatened to completely wipe Iceland off the global financial map.
At the time, Icelandic banks offered regular banking accounts in Britain and the Netherlands that paid 6% interest. Considering other global banks offered 3% and less, and also considering that the vast majority of people in the world have no idea how a bank is structured; thousands of British and Dutch savers blindly ploughed their savings into these Icelandic bank accounts.
After all, it was a bank deposit, it was guaranteed by the bank and 6% is greater than 3%. Where was the risk with this?
Next, when the crisis hit Iceland – all bank accounts were frozen, and the savings of many British and Dutch investors melted away.
Suddenly, the risk with 6% was crystal clear. Naturally, the British and Dutch governments both demanded their citizens be repaid for making stupid investment decisions.
The Icelandic government meanwhile, finally woke from their frozen state and assessed the situation. Not only did the government not have enough money to repay bank depositors, it didn’t have enough money to pay themselves.
And since no one would lend Iceland any money – the country was officially broke. The rivers would stop running, the glaciers would stop flowing, and the thermal baths would stop steaming – or so we were told.
Instead, Iceland allowed its banks to collapse, allowed its currency to drop by over 70%, decided not to pay back all of the money it owed, and finally – it actually imprisoned certain bank executives for putting the country into such a financially toxic position.
A comparison between the Icelandic approach and the European approach forced upon Greece is as follows:
And as for the outcome, the chart below clearly shows the economic recovery experienced by both countries, over the exact same time frame, and using completely opposite solutions.
Iceland’s economy has recovered from the depths of the crisis and is now only -3% less than where it was in 2008.
Greece’s economy continues to plummet to deeper depths and is now -33% less than where it was in 2008.
The Icelandic recovery has not been perfect. Locals and foreign investors have been unable to get money out of the country. Originally, capital controls were expected to last 6 months. 7 years later they are finally being relaxed. That’s a long time not being able to access your money.
In addition, prices for all things soared with inflation hitting 20% at one point. Job losses also soared with unemployment tripling.
Yes, bad times were had – yet the country and economy survived. Greece meanwhile, continues to be subjected to a 100% guaranteed doomed strategy.
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For Greece, it’s mathematically impossible to repay its debt
You can add Japan, the USA and many other countries to that list as well.
That Chart 1 is not to proper scale, although the point made is valid. Not scaling properly is an old liar's trick (using statistics incorrectly).
* * *
And, yes, it is mathematically impossible for Japan and the USA to pay off their debts. Real debts anyway. They can hyperinflate them and pay with cheaper currency.
Only if the toilet paper money is accepted, but everybody will be in the same boat and I don't think a magical toilet paper swap will work. I could be wrong though, since I thought they couldn't get away with the present BS.....
Greeks: why let digits in a computer file ruin your life?
hmmmm....I wonder how easy is it to immigrate to Iceland?
What happens next? Lemme guess.....they elect a magic hoax and chains kneegrow, and he cuts the deficit in half by the end of his first term. Or maybe they elect a 'leader' based soley on her genitalia? Greece could learn a lot from America.....
Icelandic banks had tons of foreign depositors to give a haircut to. Greek banks hold tons of Greek sovereign debt for assets and owe Greek people and business the deposits. While its true that Iceland also had to balance their fiscal house, they also had their own currency and could devalue it.
Greece cannot follow the Icelandic path as ALL the pain would be borne by the Greek people.
Greek politicians, enabled by the troika, are doing anything they can to kick the can. Later, when the problem is a lot bigger, and all of Europes masses threaten their politicians, that when the Greek problem will be resolved. The losses suffered by Europes taxpayers will be way bigger, the Grexit will be way more painful, probably a war. And for certain, the Squid will return to begin a whole new round of population fucking.
It is scaled properly, you have the values for each country available at either side of the graph. This is how it's normally done. What is important here is the change in gdp, not the absolute value.
It doesn't matter if it's $400 TRILLION, as long as the media can keep us focused on the wonders of TSLA, NFLX, Chipotle and inane pop culture distractions, it can be dismissed as unimportant.
In Iowa, Hillary jokes about email scandal
http://tinyurl.com/qgajths
Psychopathic bitch.
DavidC
< The Jubilee.
< The Apocalypse.
What happens nest.
How's this for a scenario?
Next month CONgress votes there is no deal with Iran because freedom. USSA throws sanctions on all the countries that have already agreed they'll condict business with Iran. In response, UN members emergency convene and unanimously agree to impose sanctions on both great satan and little satan (take you pick as who is who).
The euro union dissolve with all telling central bankers to take their debt, cds, and bailouts and shove them right up their asses. NATO is disbanded. Contagia takes hold and US TBTF collapse, angry mobs burn down corp. hqtrs bosses are captured.
UN members reconvene and declare war on financial despots goldman sachs and everyone lives happily ever after. The ENd.
Cunga, quite the optimist I see. :>D
"For Greece, it’s mathematically impossible to repay its debt You can add Japan, the USA and many other countries to that list as well."
But they can keep paying the debt service to Zion. Which is the whloe point of fiat-debt.
Liberty is a demand. Tyranny is submission..
Yes, correct! But here in the USSA as we all know... debts do not matter, or so said Dickhead Chenny!
At this point what diference does it make hmm little hilary for everyone.
When it's your money or your life, the sky is the limit. Tick Tock Motherfuckers!
Dude: He fixes the cable?
Attributed to Einstein: "Definition of insanity: doing the same thing over and over and expecting a different result."
Synonym for insanity: Greece.
Since the result is always "Greece borrows money and doesn't repay it" doesn't that mean that the insane people are the ones who continure to LOAN money to Greece?
Quantum physics: You can do the same thing over and over a thousands times and then suddenly it works.
I dealt with a quantum cPanel yesterday... kept complaining it wasn't licensed until I called support and then the moment I had support on the line it started thinking it was licensed again.
Funny how the universe conspires to make a person look stupid the moment customer service picks up the helpline.
I give up. You got me here.
oooh! I know! Pick me! Pick meeeeee!
Jesuits say we need strong banks or the water gets lazy.
But but but the government says, it will be differenty this time.
Rate hike, bitchez...maybe two of them!!! LOL, wrong country -- we've got way more debt than that.
BS, Greece has been in economic malfeasance since 1824.
The IMF, the EU and the ECB are all DELUDED on Keynesian DOGMA. That dog won't hunt. Nature has a nasty way of bringing reality to those who ignore/deny it....
For a little backstory - this link has been instructive:
http://greece.greekreporter.com/2015/08/11/greeces-history-of-loans-sinc...
Teaser: "Greece has defaulted on its external debt five times in the modern era (1826, 1843, 1860, 1894 and 1932)."
Australia will evaporate the second China panics next
In case anyone hasnt noticed yet - we are all in the same boat
We're in the hole almost 18.5 Trillion - Washington doesnt care - they look at it as only numbers looking for an argument................
http://www.usdebtclock.org/
The idea that Greece had a debt crisis, and the only solution given was to take on much more debt to pay past debts really staggers the imagination! The EU, IMF and ECB, all of whom are directly manipulated from Washington DC, prepared a plan for Greece that was national suicide! All the facts point to this being a deliberate attempt to create an unsolvable Greece crisis. How come?
I am not ready for a full answer yet, but I am working on a new theory that can explain Washington's actions over the last 5-10 years. The EU, as we all know, has it's political classes totally co-opted by Washington. I think nobody can make a counter claim to that fact, and back it up with real evidence.
Washington is playing a massive game in Europe. It struck me the other day that there may be a common thread that ties all Washington's actions that regard the EU, Europe, Russia and the periphery of Europe. Washington has engaged in direct action all around the borders of the EU, in North Africa, Egypt, Syria, Turkey, Ukraine, the Baltics. Washington has stepped directly into conflicts all around Europe, it has started many of them, Libya for one, and it is engaged in dictating EU economic policies regards to sanctions on Russia, Iran, Syria and others.
Like I said, I am not ready to write my theory yet, I need to collect more facts and see if they fit with what I believe Washington is doing. It is vital to prove the connection between the EU political Class, and Washington. Once I am sure I can prove how direct that connection is, I be confident enough to say what I think the real modus operandi of Washington DC is as regards the EU in the year 2015. One hint is found in the Kiev coup d'etat, the Sanctions the EU was forced to impose, the US meddling in Libya, thus opening one gate to the immigrant floods moving north. The take down of Syria, opening a second immigrant flood gate. The US drive for war in East Ukraine and the Baltics. All these things are telling us something. The big plan. I am sure others are thinking what I am thinking. If so, feel free to say it. I will, as soon as I can gather a bit more evidence. Washington is not mad, they are following a plan. One that is shocking, too shocking for most Europeans to believe, being brain washed by a Zionist media.
This may have something to do with what you are theorizing.
http://iamthewitness.com/books/Andrew.Carrington.Hitchcock/Synagogue.of....
I would agree that there are a number of US strategies that are intertwined. Among them a plan to weaken and possibly destroy Russia by eliminating allies of Russia such as Libya, Syria and Ukraine and by destroying Russia's access to certain markets such as Europe. Apart of the apparent motivation to harm Russia there is a strong will to further the oil and gas industries in certain countries such as Quatar. As regards Greece I am not so certain. Greece is maintained in the EURO for the purported wellbeing of the EURO-zone. The effort has been made to thwart Spain and Italy jumping from the ship. The US administration was strongly opposed to a GREXIT because there has been concern about long-term effects on the stability of the global financial system. I do not share these views. I think Greece will be finally destroyed by the creditors. And the impact of all of this on the EURO-zone is going to be very negative. The only sensible thing would have been to forgive 100% of all loans to Greece - within or outside of the EURO-zone.
"The only sensible thing would have been to forgive 100% of all loans to Greece"
Not really, because of moral hazard. Soon after, you would have to do the same with the other dominos (Italy, Spain, Portugal etc).
The concept of pay-as-you-go within welfare states is the biggest flaw in Europe and it can not continue indefinitely.
Don't forget to add 124,000 illegal migrants and counting landing on Greek Islands this calendar year alone.
Syrians, Afghanis, Pakistanis, Itanians, Lybians, etc.
WHO is destabilizing the Muslim Cresent so severely that flood of half a million known refugees per annum are landing in Greece and Italy alone?
These people do not have gold and passports and LV Luggage -if they once did it is all long gone.
Many have been on the move for years and come thousands of miles. Some young people know nothing of stability or reason: nothing of formal education, or stability of government, or value of property, or social convention beyond tribal/familial and religious ties, etc...
Even at the measly and wholly unrealistic cost $5,000 per refugee per annum to squat like dogs in tents and eat gratis emergency rations provided by international charities -and go without even the most basic of sanitation and health services and security whilts standing in 'first world' Europe- the price of this is an astronomical $620,000,000.
Perpetually. Until viable housing and jobs and services are provided or organized or until there is somewhere to go.
DO YOU WANT THEM & THEIR SUFFERING AND PROBLEMS? ANYONE?
They are on someones lawn or stoop or parking space until the violence ceases and they can all go home if they care to and trust going home enough to even be coerced into returning from whence they came.
Back to places devistated by unfetterd modern war. Back to properties seized by neighboring factons religious and secular...
http://www.telegraph.co.uk/news/worldnews/europe/greece/11805181/Greece-...
Europe might have survived it's dreadfully flawed project if it was left to deal with it's conseuences during an era of security and economic progress, without such turmoil. I can't see that happening in the midst of a Global Depression and world wide WAR.
& THAT is exactly what is occcouring: a Global Depression and WAR.
..Depression & WAR: with every horrible expression of inhumanity and destruction that entails.
That Greece is being brutally subjugated and turned into a giant refugee camp -into the Palestine of Europe- is of absolutely no surprise to me.
The fact that the entire 'civilized' World is standing by and watching it happen is appalling to me beyond expression...
There is a pretty good summary of what is going on, written by Brandon Smith here:
http://www.alt-market.com/articles/2403-the-economic-end-game-explained
http://www.alt-market.com/articles/2074-russia-is-dominated-by-global-ba...
http://www.alt-market.com/articles/2168-the-new-world-order-and-the-rise...
http://www.alt-market.com/articles/2126-false-eastwest-paradigm-hides-th...
And another, more esoteric but still quite relevant discussion here:
http://redefininggod.com/understanding-the-nwo-strategy/
http://redefininggod.com/the-rockefeller-plan-for-the-brics-new-world-or...
I learned a lot by reading those articles and especially following the links they provide. Everything has pretty much gone as these guys have said it would, with just minor deviations to 'the plan.'
The cure? More supply-side policy to strengthen oligarchs. Why should they pay for ambulances and the 911 system when they have their own helicopter to whisk them to safety?
Shrink the public I say!
A good plague oughtta do it
The Federal Reserve should dispatch some of its helicopters to Greece. Euro drops should help their situation dramatically. About $400 billion is a good starting point.
Don't wake me til it hits a trillion
Let's not kid ourselves here -- the fucking global zio-bankster cabal's mandate is to keep countries in perpetual debt. That's the goal. Countries are NEVER meant to pay it all off.
Every indebted country sure enjoyed the ride while it lasted!
If you had a credit card with no limit and no bill to pay, what would you do?
Use the credit card to kill the crooks who issued the credit card; what China is doing, just more direct.
What Greece has is a strategic location. This is what's going to be repossessed. Ottoman empire 2.0
They need The Goodfella's crew to collect on them.
Crisis #1-2009 $140 Billion- Fuck you! Pay me!
Crisis #2-2012 $240 Billion- Fuck you! Pay me!
Crisis #3-2015 $400 Billion- Fuck you! Pay me!
The bankers and the TROIKA all know the debt will never be repaid; their interest is only is ensuring there is no default and that the interest payments are made on schedule; i.e., the money continues to flow back to the lenders (even if it's borrowed money used to pay interest on borrowed money). They have no interest in taking care of the Greek people or the Greek government; just keep the payments coming and all will be fine. Sad.
The Spice must flow.
Perhaps more important to creditors is getting Greece to put up REAL assests as collateral.
No bankers in jail is why this farce continues.
We don't need to be housing and feeding the plunderers at our expense.
We need to shoot the criminals and be done with them.
Politicians and Bankers and everyone else that doesn't fit neatly into those two catagories.
Oh, come now. They should get a fair trial first -- and then shoot them. We are all civilized here. Maybe hang a few and a guillotine sprinkled here and there for added spice. It can all be televised. After all, we have such amazing technology these days.
I love the Icecap essays. It is the rare event that you read something and you fully agree with everything said.
well - there is one thing. If you add the 100 billion emergency liquidity assistance loans (ELA) provided by the ECB which will never be repaid by Greece banks you arrive at a presently more realistic figure of 500 billion
I could sure use a sugar daddy like Greece has.
Get started here..
http://www.styleite.com/first-person/i-went-to-a-sugar-daddy-convention-and-heres-everything-you-need-to-know-about-being-a-successful-sugar-baby-in-l-a/
Only 1.5 quadrilllion dollars of nominal value of global derivatives lol. No one can pay under fiat system using central banking under political ponerology. One's at the top will extract all value from below until there is nothing left.
Here is some recent IMF commentary on Iceland.
First, the ownership of the core banking sector, which remains in the hands of government and the failed old bank estates, needs to be normalized by putting them in the hands of ‘fit and proper’ owners.
https://www.imf.org/external/pubs/ft/survey/so/2015/car031315a.htm
“Greece meanwhile, continues to be subjected to a 100% guaranteed doomed strategy.”
It is hilarious that Americans and the USA are on the same course as Greece! Ha. Ha. Ha.
Oh! Let us all talk about Greece, not America, and its’ doomed strategy of spending! Ha. Ha. Ha.
What a bunch of ignorant chumps! Ha. Ha. Ha.
Think if "they" were smart, really smart, they would know better and wouldn't lose money? Wrong. http://www.telegraph.co.uk/finance/financialcrisis/3206491/Financial-cri...
Oxford Univ. Lost over $40 million in Icelandic banks. Why? Greed. Glitnir et al were paying 6% when everybody else was paying 3%. They never learn.
Rather than step back and assess things objectively, in the end they, in this case the Troika, only want to see the upside. The "upside" being the Greek government's signature on an agreement.....that isn't worth the paper it's printed on because the ultimate objective isn't achievable! Don't care who the IMF, the EU, the ECB think they are....they ain't getting their money back.
Sure they don't necessarily want their money back, they just want the interest. But, as in the case of the IMF, even they said "unsustainable." Usually when one of the counterparties is even sceptical about the whole plan, its not a good idea to stick with the plan. And being "smart" isn't a guarantee of anything either, let alone success.
It's mathematically impossible for the United States Government to pay ITS debt. And it always has been. By design.
.
The Greeks paraphrasing Oliver Reed:
"We borrowed 240 billion and spent 90% of it on booze, broads, and bribes. The rest we wasted."