Via Mark Grant, author of Out of the Box,
“Greece is like a Rice Crispies Square. She’s snapped, crackled and now I am waiting for the final pop.”
The new Greek Prime Minister had an eye surgery and cannot attend the EU summit meeting. The new Greek Finance Minister became ill and cannot attend the EU summit meeting. Both a tragic turns of events; I am sure. Both coincidental you may think; but not me. Perhaps upon ascending to power and examining the books they have found that everything was not exactly, how shall I say this; Kosher comes to mind. Perhaps the records indicated a far more serious excursion from the facts than previously thought. It may be that a “smoothing out” is underway before the Men in Black arrive and examine the books and records. It would not be the first time that medical excuses have been used to postpone the inevitable.
The Troika was set to send inspectors to Greece. They were going to assess just how well Greece had done in meeting the terms of their agreement with the EU and the IMF. They were due to arrive on Monday but their inspections have been postponed and perhaps at the suggestion of the Greek government.
The new Greek government has prepared a term sheet; a white paper outlining what they need/want. There are all manner of roll backs, cuts in the austerity measures that Greece had previously agreed to and, of course, a request for new money to get them through the next few months. Apparently the request for new funds is staggering but not unexpected as I am sure the Greeks figured it was a place to start that could be negotiated; but maybe not. After listening to the pronouncements of the German Finance Minister on Sunday; very maybe not.
The Germany Finance Minister came just about right out and said, “no more money.” His statement was about 1/32nd of a degree from it and so close that a very sharp knife could not fit in between his comment and an outright denial. Greece may now be in the final scenes of their tragedy where they got all of the money that they could, where they soaked Europe for each and every penny that could be squeezed and where they have reached the end of their long tether. The game appears to play out like this: pleading, begging with the other troubled and southern countries for help, an official roll out of expectations and demands, pleas for European unity, eventual examinations by the Troika, austerity measures fixated one more time on some phony eventual sale of assets and on cutting out corruption and the like and finally an eventual refusal by Germany et al to fund any more money. Then Greece will scream and scream some more, decide to stay in the Eurozone or not, default on all of its debts, reintroduce the Drachma and receive some sort of debtor in possession financing from the European Union. The final scenes will get very ugly, the default will likely be worse than most think because the Europeans probably believe the nonsense that they have manufactured and it will be the sovereign debt, the bank debt, the state guaranteed corporate debt, $90 billion in derivatives, the regional Greek debt, the Greek portion of the Traget2 funding and the collateral and securitizations pledged at the ECB which will all go into default and cause myriads of headaches and consequences. Only if there is debt forgiveness, which will not be happening, or more money once again soaked out of Germany can default be avoided and I think that now Germany is prepared to stop the flow of cash and deal with the consequences. Cans may get kicked down the road but each road, every road, eventually comes to an end and I think we are barely inches now from the end of this road for Greece.
The Separation of Fantasy from Reality
“The appropriation of public money always is perfectly lovely until someone is asked to pay the bill.”
-President Calvin Coolidge
There will not be any Eurobonds or Eurobills; Germany is against it.
There will not be any grand European Banking Authority; Germany is against it.
The ECB will not become the lender of last resort; Germany is against it.
Nothing of significance will happen in the European Union unless Germany approves it. (Please repeat this five times and write it on your whiteboard if necessary.)
“You've decided... DECIDED! Past the point of no return. No backward glances... our games of make-believe are at an end!”
-The Phantom of the Opera