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Guest Post: What Happens When A Nation Goes Bankrupt
Submitted by Simon Black of Sovereign Man
What Happens When A Nation Goes Bankrupt
Three years ago today, my best friend called me and told me to turn on my television. I remember the way he described it– “Lehman is finished.” The TV showed guys packing up their desks on Sunday afternoon, moving out of their offices forever.
That was the precipice from which financial markets plunged the following day, taking the global economy along for the next three years.
We appear to be at that moment once more.
Greece is out of cash. Again. The Greek Deputy Finance Minister said on Monday that his country only has enough cash to operate for a few more weeks.
As I write this note, French, German, and Greek politicians are all on a conference call, feverishly trying to figure out a way to avoid default. Everyone seems to understand the consequences at stake… given the chain of derivatives out there, a Greek default will completely dwarf the Lehman collapse.
Unfortunately for the bureaucrats, dissent against the Greek bailout plan is spreading across Europe… and leaders can no longer ignore the growing wave of opposition in Finland, the Netherlands, Austria, and Germany.
It’s no wonder, when you think about it. Why should a German hairdresser who retires at age 65 stick his neck out so that a Greek hairdresser can retire at age 50? This, from a continent that was perpetually at war with itself for over a thousand years.
Europe’s great benefactor over the last several months has been China, whose treasury has been buying up worthless European sovereign debt to ensure that Greece doesn’t default.
It’s a testament to the absurdity of our failed financial system when the highly indebted rich countries of the world have to go to China, a nation of peasants, for a bailout.
Speaking at the World Economic Forum this morning, Chinese premier Wen Jiabao delivered a stern message: there is a limit to Chinese generosity, and it will come at a price.
The Chinese will undoubtedly use any further investment in European bonds as leverage to influence western politicians. They already bought Tim Geithner. The US government refuses to label China a ‘currency manipulator’. Similarly, European politicians will now be forced to acknowledge China as a ‘market economy’.
Ultimately, this charade will fail. It’s a simple matter of arithmetic. China could buy every single penny of Greek debt and it still wouldn’t solve the underlying problem: Greece would still be in debt! And more, still hemorrhaging billions of euros each month. Throwing more money at the problem only makes it worse.
Then there are those Greek assets for sale… like state-owned Hellenic Railways Group. It lost a cool billion euros last year. Or the notoriously inefficient, highly unionized, traditionally lossmaking Greek postal service, Hellenic Post. Any takers?
These are not exactly high quality assets… nor can Greece expect to get top dollar in what’s clearly a distress sale.
Over 200 years ago, Napoleon was forced to sell France’s claim to 828,000 square miles of land in the New World in order to cover his war expenses. US President Thomas Jefferson happily obliged, paying the modern equivalent of around $315 million (based on the gold price), roughly 59 cents per acre in today’s money.
According to US census records, there were around 90,000 people living within the territory during that time who literally woke up the next day to a different world. This is the sort of thing that happens when governments go bankrupt.
With the Lehman collapse, a lot of people got hurt… but it was mostly a financial and economic issue. When an entire nation goes bust, the pain is felt much deeper: the most basic systems and institutions that people have come to depend on simply disappear.
Argentina’s millennial debt crisis is a great example of this… suddenly the power failed, the police stopped working, the gas stations closed, the grocery stores ran out of food, the retirement checks stopped coming, and the banks went under (taking people’s life savings with them).
European leaders (with Chinese help) can postpone the endgame for a short time, but they’re really just taking an umbrella into a hurricane. It would be foolish to not expect a Greek default, and it would be even more foolish to not expect significant consequences. The only question is– how are you prepared to deal with what happens?
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Shorts don't need drawers--they put their paper in envelopes.
PM holders need drawers. For coins and bars and stuff.
The bailouts will continue until morale improves or the shooting starts, whichever comes first.
the irony is morale probably won't or can't improve UNTIL the shooting starts...
An hour of woes and shattered shorts, when the age of stocks comes crashing down! But it is not this day!
Bary O just start spamming campaign:
Got this in my inbox :)
"Friend --
Supporters like you are the reason I'm here, and the values we share have always made our organization more than just a political campaign.
So whenever I can, I want to take the opportunity to meet you. Last month, that meant I got to talk to folks in Iowa about small-business opportunities, and sit down with a group of volunteers from around the country who helped build this campaign in their communities this summer.
Today, I want to ask if you'll join me and three other supporters for a meal and conversation sometime soon.
Please donate $5 or more to be automatically entered for a chance to join me for dinner."
Bu-ha-ha-haha.. Donate $5 to keep America great
(do you have spare change?) :))))
a sweepstakes, how dandy!
nothing sells like celebrity
here's what happens too :
Attack Watch, new Obama campaign site to ‘fight smears,’ becomes laughing stockhttp://www.washingtonpost.com/blogs/blogpost/post/attack-watch-new-obama...
This is what happens when megalomaniacs surround themselves with sycophants.
The Teleprompter in Chief will see any and all willing sycophants and terminally stupid supporters now. Count me out from Animal Farm 2011/2012.
Epic Fail
Apparently the GOP must have put some shills into his campaign...nobody could self destruct this efficiently
The evidence shows that Ivy League eggheads can, in fact, fail this spectacularly.
'European leaders (with Chinese help) can postpone the endgame for a short time, but they’re really just taking an umbrella into a hurricane. It would be foolish to not expect a Greek default, and it would be even more foolish to not expect significant consequences. The only question is– how are you prepared to deal with what happens?'
Am I the only one who thinks that there is no Chinese help? People are buying these rumors like they were the DJIA. WHoooaaa! Zing! Left field, see what I did there?
right...when the fox hears the chickens scream he comes running...but not to help.
I believe a weasel (or mink) is a more apt comparison. A fox will stop killing when it's full. The weasel (or mink) will continue killing long after it's stomach is full, because its thirst for blood is never sated, it will not stop until it has slaughtered every chicken,
You would never know it with the way the Market is rallying. Unless this is just a short squeeze before the bid drop.
Isn't / Wasn't Norway heavily invested in Greece ???
it is amazing they won't just let Greece default. mind boggling
Does anybody have any REAL data on derivative exposure for Greece?
The big unknown.
This is why its so obvious to us to let Greece default.....It makes no economic sense....its broke..no way of paying it back...but TPTB know more..the Derivatives will take the EU down and probably the USA...again....that is why they are afraid to let it fail...the unknown knowns...liars all...the 80 billion in exposure we have heard for US banks..is more like 8 trillion...
Unfortunately for the bureaucrats, dissent against the Greek bailout plan is spreading across Europe… and leaders can no longer ignore the growing wave of opposition in Finland, the Netherlands, Austria, and Germany.
It’s no wonder, when you think about it. Why should a German hairdresser who retires at age 65 stick his neck out so that a Greek hairdresser can retire at age 50?
It goes beyond this. Why should a german hairdresser lend them money when they WON'T CHANGE ANYTHING THEY DO ?!?!?! It's like lending your drunk uncle $500 so he can go drink some more. Maybe if he entered Betty Ford and tried to change his ways, but nothing of the sort has happened! They needed DRACONIAN cuts and they took miniscule ones. Ober HALF the F***ING country WORKS FOR THE GOV'T !! The parasites outnumber the hosts! That's a model destined for failure.
F*** the Greeks. They want the rest of us to supoport their liberal utopia where everyone can be some barely qualified lazy ass gov't employee with outrageous benfits and salaries. NO! HELL NO!! Fire 80% of the gov't work force and bring in businesses. That's how you fix this mess.
It was never meant to be a loan. It is welfare.
The pols are simply lying to preserve their dream of a single European state...with them in charge, of course.
Greece's public sector is not a larger percent of its total workforce than is that in the rest of Europe.
I want to say to those who speak against public employees-- You are going to bring us all down. Is it better to work for Walmart than the Post Office? Do you provide more of a public service working at McDonald's or an insurance company or being a car salesman or whatever than being a public employee? We're paying their salaries, you say? Aren't you also paying the salaries of those at McDonald's and anywhere else you frequent? Or do you think you just buy things at cost? If the public employees lose their benefits or worse, their jobs, then employees in the private sector will face even stiffer competition. The employers will have the employees just where they want them and none of them will complain.
The US and other countries will be brought down by resentment. We're all headed for greater and greater disparities in wealth because of sentiments like those you expressed. Finally, Greece is no liberal utopia. The money is being taken from the poor and middle class and the rich are pretty much untouched.
First of all, when I go to Walmart or McDonalds, I am exchanging my money for something I want. I get a burger or toy, they get my FRN's...can you get that?
The State takes my money at the point of a gun to pay useless people like you.
Yes yes outrageous benefits and salaries of avg 27500usd p/a and the second highest hours per week (42hrs) after Korea in the OECD area....
Even Merkel is talking about a Greek bankruptcy in 2013. So she is basically saying: "Let's give the Greeks a hundred billion Euros so that they can delay going bankrupt for 18 months". This is just mind-numbing stupidity!
Perhaps she can persuade the German public. But I wonder whether she can persuade the markets. There are a lot of other PIIGS which owe a lot more money than Greece and there is no way that Germany can save them all.
Hey Vegas--I like your swagger--and your message is on target!! Good grins!! Milestones
OH!! NO!! those Poor bankers will not be able to collect their cut for servicing the debt payment(s) or collect thier SKY HIGH Interest only payments!?! What???!!! will they do?? with only the trillions of bailout dollars left?? they may starve.. it is so fucking sad to watch.
How am I prepared to deal with this? Well, well I have to say. Very well. Only thing not finished in the fence...which may be the achillies heel in my plan.
Ah Grasshoppa, there is no assurance in insurance - protect yourself...
"It’s no wonder, when you think about it. Why should a German hairdresser who retires at age 65 stick his neck out so that a Greek hairdresser can retire at age 50? This, from a continent that was perpetually at war with itself for over a thousand years"
Where he's got this shit from, from his research? If so I have to subscribe to his services to waste few free $ left.
"One Europe, under Germany" has been a German dream for a long time. The Germans are good soldiers, not inclined to question their government. They will soldier on.
This ends when the Greek people end it, not the Germans, Finns, Austrians, etc. And end it will with blood spilling in the streets. Merkel's 2013 is wishful thinking at the speed the Greek public is being impoverished. The fuse is getting shorter and shorter and these fuckers know it....
This whole thing is starting to unravel...
There will be plans proposed to tightly tie back together all of the bundles of sticks again...into neat little fasci.
Those against the EU must be skinheads or xenophobes...isn't that the line?
and if your against the Federal Reserve you are anti-semite...if you are expecting these lines then it makes it funnier when it happens.
What happens when a nation goes bankrupt?
Vietnam. The 70's. The pentagon papers. All the way through rapid bubble blowing, iraq wikileaks.
EA is bankrupt yet they are making laws.
http://www.rockpapershotgun.com/2011/08/24/eas-origin-eula-proves-even-m...
Microsoft is bankrupt yet dominantes a market.
http://www.libertylobby.org/articles/2000/20000327microsoft.html
People are baffled why equity markets won't fall. Even though PE is insane. Equity markets are corporations ability to print money. You take it away from them and they are so broke you couldn't get the money out of them with jaws of life.
What happened all through 2008, 2009 2010. Stock IPO's. Ponzi ponzi ponzi. Why were earnings so frikkin fantastic. Stock IPO's. Ponzi Ponzi Ponzi.
Today is 475 AD.
The Vandals and Goths are at the gates just waiting to privatize the Forum.
Did the Romans suddenly leave?
Did the Romans suddently stop farming?
Did the Roman trade suddenly stop?
Every year it gets a little worse, each generation a little poorer, until suddenly the Forum is stripped for stone to build a pig sty.
Tommorow is 476 AD
.357 revolver is easy to maintain and big enough to stop most things. It will shoot .38 ammo, as well. Shotgun (20 & 12 gauge) and long rifle (303, 30-30, 243, 22 mag).
Water purification tablets/filters are easier to haul than water. Night vision goggles and extra batteries are nice to haves. They only come out at night.
I was in Germany recently. Guys ordered beer, and after few beers we started discussing Eurozone.
They are bright people, but they were adamantly defending "integrated Europe", even if it means more sacrifices from Germany.
Then I asked. Your friend borrows money, and comes and says "Double or nothing". How many times are you gonna give in to "double or nothing thingy"? They couldn't answer... but German mentality is that of creating, even they have to sacrifice themselves.
If you got your prep stuff in a suburban house... where you CAN'T defend it, it's kind of a waste.
You need either a house where you can estabilsh a perimeter and defend it...
Or a house no one will be able to find (aka underground or in the fucking middle of the woods)
This ain't neccesarily true. I live in a suburb...near the water, 26 miles from a major city. Only a couple thousand people surrounded by ocean on 2 or 3 sides and a 3-4 roads via land that could all be secured. There aren't a lot of big roads that take you to our area...there are only a few roads in...lots of chickens, big yards many some farms...lots of fisherman and boats and lots of like minded families...difficult to run across country with kids and not much problem shooting trouble makers or strangers who come in. We could set up volunteer/perimeters on all the roads coming in pretty easily. A motorcycle gang could be repelled...if one comes to an isolated shack in the woods you are fucked.
Currently in the middle of the woods..
Treasury Secretary Tim Geithner jokes that he has been "hoping" to get fired after Jim Cramer asks if he is afraid of losing his job for speaking his mind.
Jim Cramer: "People are afraid of getting fired [for speaking their mind]. Are you afraid of getting fired?"
Tim Geithner: "I've been hoping -- for sometime."
http://www.realclearpolitics.com/video/2011/09/14/geithner_on_getting_fired_ive_been_hoping_for_sometime.html
That is what Simon Black wrote on Feb. 28 of this year in his piece: The Market is telling us that the Dollar is finished.
"Fast forward to today. Mubarak. Gaddafi. Khalifa. Al Said. Ben Ali.
Etc. There is no shortage of turmoil right now… yet we are seeing the
dollar get clobbered while gold, silver, and smaller currencies like the
Swiss franc rise. This represents a major shift in the way that the
market views risk.
It’s true that nothing goes up or down in a straight line… but long
term, the market is telling us that investors are washing their hands of
the dollar as a safe haven asset."
And you are going to tell me that this guy has any clue let alone that he knows how to "prepare"?. What he knows is how to charge thousands of dollars for the garbage he is trying to sell and that is the only thing that matters for him.
If I had a penny for every time I heard about the Greek hairdresser, I'd be able to bail out Greece. They list it as a hazardous profession because they deal with chemicals. It's their call. But people in Greece retire on average at about the same age as the rest of Europe.
Greece is running out of cash because it is paying back its debts which it should have DEFAULTED on long ago! If not for that stupid government run by some type of globalist they would have.
Greece has high quality assets that earn a profit. Max Keiser talked about it and how they are being sold for pennies on the dollar. I am not sure about this, but I believe the lottery and the airport are profitable. What about the Hellenic Oil? How come the US is eager to explore Greece's waters?
The country has been managed by crooks for decades. In the right hands it would be easy for the country to do well. The fruits and vegetables in Greece are the absolute best you can find anywhere in the world. I believe as a condition of entry to the EU they had to limit the quantities they grew. I'm a vegetarian so I cannot speak about the meat. I used to eat fish though and can say that was excellent-- far better than any you can find in the US. Let's not forget their sun and the potential for solar energy. When the prices come down, even more people will flock to Greece for vacation. Greeks do well economically in other countries when the migrate. And that's not because of brain drain. A lot of the dumbest people leave and become millionaires in the US.
I may sound naive here, as I do not know how much money it takes to run a country, even one of 10 million. But I can say for the short term Greece would get tons of donations from Greeks overseas. They'll pull through this. What is going on now is that the poor and middle class are being destroyed by their traitorous government. But if they were free of them and the Troika any further sacrifices would be worth it because they would actually lead to something better.
Will never happen, the banks own them now.
me & a Greek friend came up with an idea the other night -- Greece should legalize hemp. he told me about this island where everyone grows the best ganja, can't remember the name...
You "Get it" when you understand that Greece will be "bailed out," not once, not twice, but as many time as "they" decide to do so. Euro citizens have no say in this. Americans learned this when TARP passed over overwhelming voter opposition. The "voters" are not the "constituents." Simple as that.
It will only delay the inevitable, but it will still happen you can bet your last dollar. Greece will default and then the rest will start to do the same thing like dominoes.
Socialism es Muerte.
Shovel, Food, Porn.