Ben Davies: Greece Is Just A Preview Of What's Coming For The Rest Of Us

Tyler Durden's picture




 

Submitted by Chris Martenson

Greece Is Just A Preview Of What's Coming For The Rest Of Us

All eyes are on Greece these days, with hopes the situation there can soon be resolved and the global recovery kicked into high gear.

Sadly, those hopes are misguided claims Ben Davies, CEO of Hinde Capital. In fact, he says, Greece's pain foreshadows the future awaiting the rest of the world. 

It all comes down to simple math. Greece has increased its debts at a rate far faster than its income has grown. At some point, the debt became so large that the country could no longer service it.

What makes the rest of the PIIGS immune from a similar fate? Or Japan? Or the US? Or the OECD, in general?

Nothing.

Yes, Greece had a smaller, shakier economy and doesn't have a central bank to print its own currency at will like Japan or the US. But even those countries with a printing press learn that, after a certain point, expanding the money supply only complicates the problem of too much debt by inflating key economic input costs and dangerously weakening the currency. 

The cold hard fact Greece is facing is that it's now at the point where extraordinary losses need to be taken. The problem is, no one wants to take them. And all the sturm und drang being exhibited by Brussels, the ECB, sovereign debt holders, and other world leaders is nothing more than a frantic game of hot potato.

The one thing we can be confident of is that at some point, these losses will be taken. The market will eventually force it.

And the second thing we can predict is: we don't know what will happen when they are. There is so much complexity in the counterparty exposure to Greece debt - as well as the much larger derivative exposure tied to this debt - that anything between "not much" and "worldwide financial conflagration" could be possible.

And that's just Greece. As other larger countries begin to sink under the weight of their sovereign debts, the risks to the global financial system increasingly escalates. Which is why Ben Davies has a hard time finding a good home for investment capital other than gold.

Click the play button below to listen to Chris' interview with Ben Davies (runtime 56m:40s):

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Sat, 02/25/2012 - 19:16 | 2196366 YuropeanImbecille
YuropeanImbecille's picture

have you seen that the german minister of interior is urging greece to leave the eurozone?

 

http://www.spiegel.de/politik/deutschland/0,1518,817567,00.html

 

http://translate.google.com/translate?sl=de&tl=en&js=n&prev=_t&hl=en&ie=...

 

"I am not talking about kicking them out [greece], but to offer them incetives that they leave by themselves."

 

 

Sat, 02/25/2012 - 21:23 | 2196646 max2205
max2205's picture

This is all a big tadoo about nothing. Germany will send in 160 tax collectors to get $60 billion from a list of know evaders. They will pay , the collectors will be at the bottom of the Adriatic Sea and Greeces debt to GDP will be back to 50%.

You fuckers need to get long!

Sat, 02/25/2012 - 22:43 | 2196793 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

What happens when the Greeks tell the tax collectors to go fuck themselves?

Sat, 02/25/2012 - 23:02 | 2196839 Michael
Michael's picture

I would be very careful with what the foreign invaders dine on for dinner during their stay in Greece.

Socrates' execution requires that he drink a cup of hemlock. Found in Europe and parts of Asia, hemlock is a poisonous herb that looks a great deal like parsley. You would not, however, want this "fool's-parsley" dressing the side of your dinner plate!

 

Sun, 02/26/2012 - 00:33 | 2197012 carbonmutant
carbonmutant's picture

The real issue is the method of tax enforcement...

Sun, 02/26/2012 - 11:19 | 2197627 Thomas
Thomas's picture

Gyro mystery meat takes on a whole new meaning.

Sat, 02/25/2012 - 23:17 | 2196861 Buck Johnson
Buck Johnson's picture

I've said it before, Germany want Greece out and gone from the EU.  That is why they are dragging their feet and making them do things that no normal country would do.  Make it so bad to stay they will leave.

Sat, 02/25/2012 - 19:16 | 2196373 LaLiLuLeLo
LaLiLuLeLo's picture

Its gonna be fragmented. The problems CA might have will be far different than FL's. Some places may never get bad and others will turn into slums. Make your move...

Sat, 02/25/2012 - 20:02 | 2196483 LookingWithAmazement
LookingWithAmazement's picture

Is that California bankruptcy gonna come anytime soon? I've heard about it for years and there were even IOUs given out. Since then, silence.

Sat, 02/25/2012 - 20:05 | 2196489 I think I need ...
I think I need to buy a gun's picture

Well first they have to wipe the muni bond holders out which is coming 3,,2,1 then the gold rush will be on

Sun, 02/26/2012 - 12:06 | 2197720 bdc63
bdc63's picture

Meredith Whitney is getting ready for her "I told you so" moment as I type ...

Sat, 02/25/2012 - 20:52 | 2196589 macholatte
macholatte's picture

 

It would create a state-run government continuity task force, which would study and prepare Wyoming for potential catastrophes, from disruptions in food and energy supplies to a complete meltdown of the federal government.

The task force would look at the feasibility of Wyoming issuing its own alternative currency, if needed. And House members approved an amendment Friday by state Rep. Kermit Brown, R-Laramie, to have the task force also examine conditions under which Wyoming would need to implement its own military draft, raise a standing army, and acquire strike aircraft and an aircraft carrier.

 

Wyoming House advances doomsday bill

http://trib.com/news/state-and-regional/govt-and-politics/wyoming-house-advances-doomsday-bill/article_af6e1b2b-0ca4-553f-85e9-92c0f58c00bd.html

Sat, 02/25/2012 - 21:18 | 2196635 XenoFrog
XenoFrog's picture

What is Wyoming going to do with an aircraft carrier?

Sat, 02/25/2012 - 21:21 | 2196643 CH1
CH1's picture

Look stronger than Utah!

 

Sun, 02/26/2012 - 11:10 | 2197611 blindfaith
blindfaith's picture

 

 

Since Utah has passed a legislative bill forbidding the discussion of Global Warming (notice the capital letters here, the Navy is now using them), maybe they will need an few boats afterall.

Sat, 02/25/2012 - 21:29 | 2196660 Dr. Kananga
Dr. Kananga's picture

Sell it to Haliburton at cost then lease it back for 100 years.

Sat, 02/25/2012 - 22:49 | 2196812 ndotken
ndotken's picture

dat dar's some funny shit ... I don't care where ya from

Sun, 02/26/2012 - 14:25 | 2198168 BigJim
BigJim's picture

Haliburton

Sun, 02/26/2012 - 10:50 | 2197578 francis_sawyer
francis_sawyer's picture

All they'd need the would be a battleship, a submarine, a destroyer, & a patrol boat & they could play a game of 'BATTLESHIP' with someone...

Sun, 02/26/2012 - 11:41 | 2197655 blindfaith
blindfaith's picture

 

 

What are they going to do put stagecoach wheels on them? 

Go to battle with Utah or no...how about CANADA over..duh duh...OIL !!!

 

Has EVERYONE, no...I mean HALF the nation gone crazy?  Nuts ?  Where are these ideas coming from ? 

Sat, 02/25/2012 - 21:52 | 2196701 earleflorida
earleflorida's picture

FWIW dept: 

wyoming [~50%] ___utah [~65%] ___ idaho [~68%],... just to name a few, have their % land mass owned outright by the u.s. fed. gov't [incl. minerals, oil, nat. gas, coal, etc., etc., natural resources         [12/2/10]

"State - 'Controlled' Russian Company set to take over Wyoming Uranium Mines"   http://www.theblaze.com/stories/russian-company-with-govt-ties-set-to-ta...

"The Global West: How Foreign Investment fuels resource extraction in Western States"  http://www.hcn.org/issues/43.12/the-global-west      [7/25/11] 

"China: The New Investment Savior?"    http://www.thenewamerican.com/economy/commentary-mainmenu-43/7443-china-...     [5/12/11]

 

Nice!

 

Sat, 02/25/2012 - 22:46 | 2196804 Seer
Seer's picture

Dick Cheney is from Wyoming, and we know that Dick says that debt doesn't matter.  So, what's the big problem, Wyoming doesn't believe Dick?

Sat, 02/25/2012 - 23:31 | 2196883 Calmyourself
Calmyourself's picture

Wyoming believes President Bamster when he says he needs a security force just as large and just as well funded as the Armed forces..  I can cherry pick quotes out of context too..   Perhaps Wyoming will even get their own corpsemen..  Maybe Joe can have them all stand up out of the wheelchairs, God love ya..

Sun, 02/26/2012 - 11:28 | 2197635 Don Birnam
Don Birnam's picture

Perhaps the remaining 56 states will follow suit.

Sun, 02/26/2012 - 12:10 | 2197728 bdc63
bdc63's picture

Dick Cheney said "deficits" don't matter ... not debt, deficits.

Sat, 02/25/2012 - 23:24 | 2196858 Michael
Michael's picture

And Wyoming will acquire an arsenal of nuclear weapons just as strong and just as powerful as Israel's.

I'm tired of the use of word "Doomsday" and am replacing it with "Economic Armageddon", as this is the most likely scenario.

Sun, 02/26/2012 - 11:10 | 2197610 RiverRoad
RiverRoad's picture

Wyoming is getting ready for the day that big crater which is Yellowstone blows.  They just can't say it in so many words or property values will plummet.

Mon, 02/27/2012 - 09:37 | 2200178 connda
connda's picture

Humm, a bunch of deranged, fanatical legislators contemplating preparation for a breakdown in the civil and social fabric of the United States -- or doomsday!

Doesn't that earn the entire Wyoming State legislature a spot on the FBI's potential domestic terrorist watch list? 

Sat, 02/25/2012 - 21:21 | 2196645 Dr. Kananga
Dr. Kananga's picture

I don't believe states can declare bankruptcy. A judge would simply remind them that, unlike the private sector, they have a unique power--they can raise taxes to pay off debts. And given that CA has a near 2 trillion GDP, they can't claim poverty.

It's true that some local governments in CA have gone bankrupt--but they don't have the same taxing leeway as the state.

Sat, 02/25/2012 - 21:36 | 2196672 Mitzibitzi
Mitzibitzi's picture

Ah, but remember that debt is non-enforcible under international law unless the debtor government can prove it was for the benefit of the constituents... oh, wait... welfare state.... my bad. Guess we're paying it after all.

Sun, 02/26/2012 - 18:00 | 2198736 DosZap
DosZap's picture

Dr. Kananga

but they don't have the same taxing leeway as the state.

Dr., True, but if your TAXABLE population has left the state, (and it is by the hundreds of thousands),soon you will have almost a  ZERO TAX base.

When your welfare roles are 10-1 over a taxpayers, your SOL.

Sat, 02/25/2012 - 20:40 | 2196570 obejoyful
obejoyful's picture

Just moved from a high debt / high tax state to a low debt / low tax state.

Sat, 02/25/2012 - 22:48 | 2196808 Seer
Seer's picture

So that means that it can ONLY go up?

Always think Mean...

Sat, 02/25/2012 - 23:28 | 2196882 Michael
Michael's picture

In Florida property tax can only increase at a 3% rate per year max mandated by state constitutional amendment.

Homestead bitches.

Sun, 02/26/2012 - 11:48 | 2197680 blindfaith
blindfaith's picture

 

 

 

So, if the house was 200K and the taxes were, lets say, $3,000 and the house is now worth 100K but the taxes are still $3000 that computes to 3% in a year?

The school millage is the killer in Florida, not the property tax.

Sat, 02/25/2012 - 19:18 | 2196376 Atomizer
Atomizer's picture

Wow. Will Sacha Baron Cohen walk down the red carpet of global CDS triggering? LOL

Admiral General Aladeen

Sat, 02/25/2012 - 19:20 | 2196382 Sudden Debt
Sudden Debt's picture

So we will all have to start eating braadwurst?

I don't mind. I actually love a goof BBQ!

Sat, 02/25/2012 - 19:31 | 2196412 Atomizer
Atomizer's picture

The bratwurst sausage wing of the DHS is now monitoring you very closely. You're now considered a sausage trafficker making money behind the eyes of the Government.

Sat, 02/25/2012 - 19:47 | 2196450 Money 4 Nothing
Money 4 Nothing's picture

Sausage Smuggler.. ha!

Sat, 02/25/2012 - 19:50 | 2196457 cossack55
cossack55's picture

So, when smuggling said sausage, where does he hide it?

Sat, 02/25/2012 - 19:50 | 2196458 Money 4 Nothing
Money 4 Nothing's picture

In his anal cavity I would imagine?

Sat, 02/25/2012 - 22:45 | 2196799 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Hotdog in a hallway!

Sun, 02/26/2012 - 00:22 | 2196998 wee-weed up
wee-weed up's picture

If you've never shit a turd into a higher-up's coffee pot, you have no REAL balls! Or never been in the military!

Sun, 02/26/2012 - 01:03 | 2197046 UP Forester
UP Forester's picture

They say that in the Army, the coffee's mighty fine....

It looks like muddy water, and tastes like turpentine.

Sat, 02/25/2012 - 20:09 | 2196496 Rynak
Rynak's picture

Well, you could turn it into currywurst and then claim that it isn't really a bratwurst anymore.

Sat, 02/25/2012 - 20:24 | 2196530 HurricaneSeason
HurricaneSeason's picture

I think bratwurst will be in the more expensive cafes and gyros and ouzo will be at the hot dog vendor. (heavily armed hot dog vendor)

Sat, 02/25/2012 - 19:21 | 2196383 falak pema
falak pema's picture

For an out of the box thinker who has presented a view that saving your own skin through PMs is panacea in this mad world, it seems that now the bells are ringing in CM's head; it rings for us all: those with or w/O  PMs. We all fall. Having assets helps undoubtedly. But the battle is about the will to resist and fight for making "white collar crime" world wide pay for this wilfull rape of people's wealth by the bankster cabal. 

If we don't resist and fight back by all legal means we won't stop the rot. I get the feeling the US public has no will to fight it. That is ominous. People either join the hopium and say : what crisis, boring world we live in, or they just lie back...

Europe at the core will next be in line...

Sat, 02/25/2012 - 20:13 | 2196501 CrashisOptimistic
CrashisOptimistic's picture

My 2 cents on gold.

It is insignificant to society.  The rebuttal would be "then why does XXXXXX hold gold and why does YYYYY do this or that with gold" and the answer is the amounts in question for XXXXX and YYYYY are insignificant on a relative basis.  

Here's the fundamental reality derived from the Great Lesson of 2011.  Governments will do ANYTHING to keep the wheels turning, and ANYTHING means erase any threat regardless of mechanism.

The governments took a UN mandate that said defend civilians and used it to bomb purely defensive Gadaffi positions to force regime change via air power.  They defended civilians with military advisors on the ground instructing rebel forces how to attack.  Not how to defend civilians.  How to attack.  In effect, governments went out and killed Gadaffi.

Governments robbed GM bondholders because they represented a threat via precedent to all bailouts pending.  They gutted those people and gave the proceeds to unions.

Governments are about to steal from Greece bondholders, and force them to declare the theft to be voluntary.

Governments put Strauss Kahn in jail until he resigned his IMF position (after he'd informed the Irish he would allow them to default).  Then they had a conscience attack and dropped the charges.

GOVERNMENTS WILL DO ANYTHING TO KEEP THE WHEELS TURNING.

Gold is insignificant.  If at any point it dared to become significant by perhaps diverting money from Treasuries to itself, that will be stopped.  Government has many measures it can take to stop it.  It could simply tax all gold transactions at 50%.  You think with a precedent of murder and false imprisonment on the table that they would be deterred from something as trivial as imposing a tax?

They could also do something as simple as saying "ownership of gold is absolutely protected by law.  However, trafficking in gold will be illegal."  Sort of like small quantities of marijuana.  You can own it, but you can't buy or sell it.  You would never know if your counterparty is law enforcement and that would be that for the price.

 

Sat, 02/25/2012 - 20:38 | 2196566 HurricaneSeason
HurricaneSeason's picture

I wonder what that would do to the value of gold in India and China. I don't think they buy ETFs and futures as much. I think the ETFs and futures market will have more of a problem controling the price similar to Nixon saying "Well, if you really want to take possesion of the gold backing, then the gigs up". ETFs and The Washington Agreement and things like that haven't been around long enough to prove they are sustainable.

Sat, 02/25/2012 - 20:54 | 2196597 centerline
centerline's picture

I fear that what is coming next, aside from the slow grind they are attempting, is a place were gold is nothing more than a fighting chance (if played right) out of the wrong place and/or permission to be in another place.

Greece is a test. Just like Zimbabwe and Argentina.

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