The Greek "Chicken or Egg Problem" Emerges: No Resignation Without Coalition Government; And Vice Versa

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Sun, 11/06/2011 - 12:19 | 1850480 So Close
So Close's picture

It has been interesting to watch this unfold.   Who will be held accoutnable for what?

Sun, 11/06/2011 - 12:22 | 1850489 Stormdancer
Stormdancer's picture

average folks, for all of it.

Sun, 11/06/2011 - 12:56 | 1850578 TheSilverJournal
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If capitalism gets the rap, we're all in trouble. And there's a good chance that capitalism will be blamed. The US won't be able to handle the implosion of the dollar and socialism at the same time, because socialism will eat us whole. The only way I stay in the US is if capitalism is set free. 

The real demon is inflation, or increasing the money supply. Increases in the money supply used to be kept in check because it could only increase as fast as gold or silver was mined. Now, there is no physical constraint on increasing the money supply and the money supply is set to increase at such a high rate that the USD will soon be worthless.

The only other option is for the Fed to stop increasing the money and allow depositors to lose their money...and I don't see the Fed choosing this options. Gold will soon have the purchasing power equal to the amount that $10,000 buys today. The silver to gold ratio will compress and at a min. will hit 10 to 1, meaning silver will have the purchasing power of at least $1,000 and possibly up to $4,000 / oz at the height of the silver bubble. When its meaningless to print dollars, easy credit will no longer be supplied to housing through low rates and the backing of mortgages, and dollars from a printing press will no longer be accepted in exchange for foreign goods, meaning the US will only be able to consume what it produces, making Americans much poorer to the point that many American's will move in with friends and family in order to share the costs of heating and maintaining a home, or leave the country altogether, which will further expose the overbuilding of housing...all in all, the proceeds from the sale of a home will be able to purchase 70%-80% less than it does now. All of this restructuring is good and necessary.

Because money was being mispriced, capital was not used in the most efficient manner. Exposing the malinvestments is what needs to happen in order have a more efficient allocation of resources and a faster increase in productivity. The dollar needs to collapse. Housing prices need to fall drastically. Banks need to fail. Most of the Federal Government needs to disappear. And gold and silver need to be returned as money in order to keep the government from printing money and creating more malinvestments.

One good solution is to save in physical silver and take the equity out of your home that you would like to keep. If you want to save in USD and want to protect yourself from hyperinflation, one good way to do so is to save in nickels which now have a melt value of more than $.05.

Sun, 11/06/2011 - 13:12 | 1850615 Mr Lennon Hendrix
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CNBC is reporting that G Pap has told his cabinet he will resign today.

Sun, 11/06/2011 - 13:14 | 1850627 trav7777
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Greece is exactly like greeks, fuckin emotional bitches who are lazy, effeminate, and high maintenance.  Kick them the fuck out.

Sun, 11/06/2011 - 13:29 | 1850644 Mr Lennon Hendrix
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I am surprised the EU has wanted them to stay in so badly.  It is as if the Greek bailout was a front op for the repeaded bailouts of the EU entirely.

Sun, 11/06/2011 - 14:02 | 1850722 RiverRoad
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The European banking cabal behind the ECB wants everybody's assets; they ain't gonna let 'em off easy-like.

Sun, 11/06/2011 - 14:27 | 1850763 Treason Season
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Trav777 is exactly like a Greek, fuckin emotional bitch who is lazy, effeminate, and high maintenance.  Kick it the fuck out.

Sun, 11/06/2011 - 13:28 | 1850661 wandstrasse
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Gold will soon have the purchasing power equal to the amount that $10,000 buys today. The silver to gold ratio will compress and at a min. will hit 10 to 1, meaning silver will have the purchasing power of at least $1,000 and possibly up to $4,000 / oz at the height of the silver bubble

My humble gut estimate is exactly the same... but this will only happen WHEN THERE IS A MARKET for PMs, I mean a market where the price depends upon demand and supply of the physical object. TBTB will not allow such a market. And when there is chaos and war, there is no sound price discovery either. I only stacked PMs because I have no better idea, I am fully aware that it is in vain with quite a high probability.

Sun, 11/06/2011 - 13:47 | 1850688 TheSilverJournal
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There's a market for PMs right now. Just because you can't take your oz of gold to the grocery store (that would be a lot of groceries), doesn't mean there isn't a market for it. TBTB aren't gods and hyperinflation will occur whether they like it or not. No laws or propaganda will be able to hold fiat together once confidence is lost. Price discovery will still occur during chaos and war. What chaos and war will do is destroy productivity and with less goods and services being provided, prices will rise. But over time, improvements in technology leads to increases in productivity causing prices to fall. Consumers of the last 100 yrs. have been robbed from the benefit of falling prices and when we return to PMs, that benefit will be there is a lot of catching up to do on that end which will be able to absorb all but the most horrific bouts of war (as far as the purchasing power of PMs is concerned).

Sun, 11/06/2011 - 14:25 | 1850761 wandstrasse
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There's a market for PMs right now

No. As of today >95% of the population is not aware of fiat money = not aware of what PMs mean = they do not participate in the market = there is no REAL market. Today the market is played by a few big ones who do with it whatever they want. The awareness will rise with each point of inflation, but when there is double digit inflation, it is game over anyway. Until then by far too few people hold physical PMs and by far too few are aware of the fiat system to demand sound money from their leadership. And it will be the easiest thing for TPTB to doom owners of PMs 'greedy speculators' and make laws against them (us). And after a war / chaos reset, as each and every time, people have other issues than caring about the monetary system.

Sun, 11/06/2011 - 14:44 | 1850819 TheSilverJournal
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TPTB will throw the kitchen sink at trying to hold down PMs, but it won't work because of the massive amount of money that they are set to print. Fiat always fails in the end and it's amazing the world has gone 40 years run on fiat. You're right, hardly anybody is into PMs, which signifies how much they will be worth when everyone is into PMs. Even with war, people will still look to save what they earn.

Sun, 11/06/2011 - 14:06 | 1850735 azusgm
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Love to see margin go to 100%. That would mean a real market.

Sun, 11/06/2011 - 13:36 | 1850670 topcallingtroll
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This is ultimately deflationary.
I am not yet convinced the Fed will take the inflationary option.

Mild inflation over the next ten years as the majority of the population gradually get accustomed to a lower standard of living is the optimal outcome.

Latin america has about half or less our standard of living and most have good lives. We dont need big houses and prime rib. Beef hearts and rice make a great meal.

Most of what we call our higher standard of living is useless unnecessary garbage that causes us to work too hard and not have enough leisure.

Sun, 11/06/2011 - 13:59 | 1850715 TheSilverJournal
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That's a bit strange to not want a higher standard of living. Please keep that to yourself and don't drag the rest of the US down with your masochist self.

In order for this to be deflationary, the Bernanke would need to stop printing money, or at the min., stop increasing the rate that the money supply grows. The problem with that is the Bernanke must increase the rate of growth in the money supply in order to keep the malinvestments from mispricing money (0% rates + QE) from becoming exposed. Said differently, now that cheap money has created malinvestments, cheaper money must be supplied and the malinvestments must be increased continuously in order to keep the malinvestments from becoming exposed. At the core of the issue, you're saying that the Bernank will allow the malinvestments to become exposed and depositors to lose their money. If depositors are not allowed to lose their money, then it just means more money printing and more inflation. And don't think for a minute the smokescreen of the FDIC holds enough to save the depositors.

Sun, 11/06/2011 - 14:19 | 1850754 topcallingtroll
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You are forgeting to add monetary velocity and money time preferences to your calculations. If consumers begin to abhor debt and continue to deleverage then he will have to monetize faster just to keep nominal prices stable.

As far as lower standard of living we have it now. Why work hard to buy a new car every five years or to have five computers per household? Do salad shooters really improve productivity?

The true test of a high living standard is increased leisure time, freedom from drudgery, and comfortable surroundings with interesting well.

Many of the middle class in Latin America have that. So what if they drive cheap cars and buy one set of quality kitchen knives per lifetime?

Sun, 11/06/2011 - 14:25 | 1850762 topcallingtroll
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These misallocations are easier to unwind in a mildly inflationary environment due to money illusion. No need to expose people to obvious losses. Let them have nominal slight gains. New capital will chase greater gains elsewhere and the rebalancing can proceed more smoothly than through dislocations and discontinuities that are more lukely in a deflationary environment.

Sun, 11/06/2011 - 15:04 | 1850876 TheSilverJournal
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You are forgeting to add monetary velocity and money time preferences to your calculations. 


Monetary velocity is a myth. Savings isn't just buried in the is invested for a return. After all, without savings, there wouldn't be capital to produce goods and services. And the only reason to produce is to consume and you can only consume what is first produced. So savings and under consumption is what drives an economy, raises productivity, and drives down prices because of the greater supply of goods and services that it creates.


If consumers begin to abhor debt and continue to deleverage then he will have to monetize faster just to keep nominal prices stable.


You're making my point for me. In order for the malinvestments to be kept from becoming exposed, the rate of monetization must be increased. This is a downward spiral because because the more monetization there is, the more malinvestments are created. There are only two ways out of this cycle. 1) Depositors are allowed to fail. or 2) Hyperinflation.

Sun, 11/06/2011 - 14:44 | 1850817 chubbar
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How are you figuring they solve the issue of 15trillion in debt payoff plus the interim debt servicing plus the 50trillion (conservative) in out year liabilities in this deflationary forecast of yours?

Sun, 11/06/2011 - 14:53 | 1850846 topcallingtroll
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Good point.

I guess my argument is that nominal wages and prices stay the same while demand goes down at the same time fiat gradually devalues.

I suppose I am calling for stagflation versus deflation. In a deleveraging low demand environment dollars can devalue but not as fast as prices of certain goods go down.

Sun, 11/06/2011 - 15:21 | 1850914 TheSilverJournal
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Demand never goes down. Demand is infinite. People always want stuff. You can only consume what is first produce and you only produce in order to consume. So demand is derived from supply. What you're really saying by "demand going down" is supply decreases, so now less is consumed. 

Sun, 11/06/2011 - 14:33 | 1850779 bb5
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Martin Armstrong has a lot of interesting things to say about the gold standard (and many other things) Check out

Sun, 11/06/2011 - 12:27 | 1850504 edotabin
edotabin's picture

Nobody will be held accountable for anything.... as usual. Well, maybe the avergae Joe who is completely screwed.

Even the person that is chosen by the media as a scapegoat will probably get a huge bank account in a foreign country and live there comfortably.

Sun, 11/06/2011 - 13:08 | 1850612 CrashisOptimistic
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Governments will do ANYTHING to avoid upset of Business-As-Usual.

If someone needs to be killed, he will die.  If bond holders have to be gutted, they will be gutted.  If Greek opposition must be bought off, they will be bought off.

If the ECB must buy Italian bonds over German objections, then Merkel will be replaced with Socialists.

Nothing stops this, people, except oil.  Oil is the only end point.

Sun, 11/06/2011 - 12:27 | 1850507 Schmuck Raker
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Fringe bloggers...for everything.

Sun, 11/06/2011 - 13:11 | 1850618 Lord Welligton
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No. They'll have o be more specific than that.

Just blame ZH for everything.


Sun, 11/06/2011 - 12:31 | 1850518 Unprepared
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The Taxi driver

Sun, 11/06/2011 - 12:38 | 1850523 The Big Ching-aso
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"Greece.   Can't live with 'em, can't live without 'em."

Ken Dorfman (or pick your favorite talking head politician)


Sun, 11/06/2011 - 12:55 | 1850563 The Big Ching-aso
The Big Ching-aso's picture

Scrambled eggs or mulched chicken either way this bird is fucked, plucked, and chucked.

Sun, 11/06/2011 - 13:01 | 1850593 UGrev
UGrev's picture

this is the biggest game of Hot Potato I've ever seen. 

Sun, 11/06/2011 - 14:24 | 1850758 Treason Season
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It's more like game Hide The Gold Pickle.

Sun, 11/06/2011 - 13:05 | 1850606 RiverRoad
RiverRoad's picture

The Europeans laid an egg when they bought into this crap.

Sun, 11/06/2011 - 13:16 | 1850633 trav7777
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yes, inviting countries like this into their currency union?  WTF, how many massive inflations have these southern euro countries been through?  Didn't Germany LEARN from fighting alongside shit nations like Italy in WW2 that these bitches were worthless?

JFC, the allies reliably scouted and then attacked EVERY non-german axis position to get anywhere.

Sun, 11/06/2011 - 12:21 | 1850484 vipmoneymachine
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Someting must be done before futures open this evening otherwise we are screwed.

Sun, 11/06/2011 - 12:56 | 1850581 DoChenRollingBearing
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+ 1

Although I have seen that before (do this, or we're screwed).  IMO, they will keep doing nothing, kicking the can, and it will all seem OK.  Until it doesn't work anymore.  Then we're screwed!

Sun, 11/06/2011 - 13:00 | 1850590 JohnG
JohnG's picture

That can is perilously close to bouncing off a wall.  That wall is made of pure, solid GOLD.

Sun, 11/06/2011 - 12:21 | 1850485 achmachat
achmachat's picture

of course!

how else could it have been? you guys thought they had found a solution? ha!

G-Pap keeps trying to find ways of saying that "it wasn't his fault".

Sun, 11/06/2011 - 12:43 | 1850555 RiverRoad
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You bet.  All this crazy political choreography is to assure his retirement in the Carlyle Group with all the rest of 'em.

Sun, 11/06/2011 - 12:21 | 1850487 agent default
agent default's picture

Freeze all funding and kick Greece out of the EU.  Then break up the EU.  Enough with this clusterfuck already.

Sun, 11/06/2011 - 12:25 | 1850506 LawsofPhysics
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I agree, then we can address the American Debt crisis...

Sun, 11/06/2011 - 13:04 | 1850598 JohnG
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Simple math, but the just don't teach exponential growth of interest in skool any more.

Sun, 11/06/2011 - 13:34 | 1850667 LawsofPhysics
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Yes, ask even the average "educated" accountant when the population of a culture of bacteria growing exponentially would be 50% of max if they double every minute and they run out of food in 60 minutes.  Most will say that the population reaches half of maximum at 30 minutes when the actual answer is 59 minutes.  In other words, when it comes to things like population dynamics and sustainability, by the time you actually notice that there is a problem, it is far too late to actually do anything about it.

Anyone living in Arizona and Nevada know what the water levels are again at Lake Mead and the Glen Canyon reservoir?  Yeah, good luck.

Sun, 11/06/2011 - 14:17 | 1850746 RiverRoad
RiverRoad's picture

You bet they don't.  I once sat on a school board where the idea of adding a math course in practical money management, as in balancing a check book, understanding compound interest, etc. was nixed behind the scenes by the pres of a local bank.  And all politics is "local".  Gives you a pretty good idea how the American people were so easily worked over by the banks.

Sun, 11/06/2011 - 12:34 | 1850529 LuKOsro
LuKOsro's picture

I wish things were that simple. But you know hos a butterfly in Tokio can cause a tornado in Texas. Be very wary of slash-and-burn techniques as they only work in agriculture. Cheers!

Sun, 11/06/2011 - 12:40 | 1850551 agent default
agent default's picture

Make those who made stupid decisions take the pain.  If they are too exposed, let them go bankrupt,liquidate them. This is capitalism.  Bailouts are just socialist nonsense. 

Really, at some point we have to stop selling each other derivatives and go back to doing something productive.  At some point the nonsense has to end.

Sun, 11/06/2011 - 12:49 | 1850571 azusgm
azusgm's picture

Go local and work on a cash basis.. It's the real way to do something productive.

Sun, 11/06/2011 - 12:22 | 1850488 slewie the pi-rat
slewie the pi-rat's picture

no more cans to kick?

let's start recycling more!

Sun, 11/06/2011 - 12:31 | 1850519 daily bread
daily bread's picture

There's a shortage of cans?  That means I should "go long on cans"!

Sun, 11/06/2011 - 13:19 | 1850640 Tramp Stamper
Tramp Stamper's picture

Be careful There shooting at the cans

Sun, 11/06/2011 - 13:19 | 1850639 erg
erg's picture

I have a styrofoam cup that I'm not using anymore.

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