We're Not In Wonderland Anymore, Alice... And The True Greek Debt/GDP Ratio Of 421.7%

Tyler Durden's picture

From Mark Grant

We're Not In Wonderland Anymore, Alice!


"You may call it ‘nonsense’ if you like," she said, "but I've heard nonsense, compared with which that would be as sensible as a dictionary!"
                               -The Red Queen

Greece Through the Looking Glass

With all of the talk of Greece leaving the Eurozone and forfeiting the Euro as its currency; what if it does not? That, my friends, is now the question. The current estimation of Greece’s GDP is $308.3 billion. All of the debt of Greece, direct, derivatives and guaranteed is $1.3 trillion giving the country an actual debt to GDP ratio of 421.67%. You may recall all of the talk, all of the pandering words spit out by the IMF and the European Union that the new austerity measures would take the Greek debt to 120%; all nonsensical and a nonfactual expression of a very fantastic and fairy tale imagination. If someone has actually stepped through the looking glass I suspect it is Christine Lagarde. Perhaps she is Alice’s granddaughter? In my estimation she must have eaten some of the cake because her reputation has dwindled as she and Greece fell down the rabbit’s hole.


“There comes a pause, for human strength will not endure to dance without cessation; and everyone must reach the point at length of absolute prostration.”

                                -Lewis Carroll

Since those false exclamations the economy of Greece has, in fact, shrunk like a grape in the process of becoming a raisin. Austerity has had an effect of the Greek economy, that much is true; it has caused it to whither like an autumn vine on a dead oak tree. Not only is the economy in decline by -9.6% but the expenditures are exceeding the budget by $2.5 billion each and every month; it is a sinkhole, a vast expanse of quicksand where anything and everything is going down. With a population of 10,768,000 the people of Greece could not pay the debt they have accumulated if they stood on their tiptoes and spat Euros at the sun. The current situation is, without doubt, an impossible contrivance that could have been avoided, was not avoided, and there is no way to climb the wall of this financial cliff without, in one way or another, blowing up the wall.

"The time has come", the Walrus said,
"To talk of many things:
Of shoes — and ships — and sealing wax —
Of cabbages — and Kings —
And why the Sea is boiling hot —
And whether pigs have wings."


The pig could be bright blue, her lipstick could be of the shiniest shimmering red, her wings could put those of the Angels to shame and still she could not fly. If Greece decides to say in the Eurozone then the question will shift to whether Europe will allow her to remain. After the elections Greece will be required to cut another $30 billion from its expenditures. This will cause a decline of about $50 billion in its revenues which will take its GDP down to around $260 billion and the debt to GDP ratio will be a whopping 500%; say it ain’t so but it will be just that number if no new debt is added which is an impossibility at this point so that the calculation will be even worse. Then the burden has shifted from the European banks and insurance companies as they handed the Greek debts to the ECB, the EIB and the IMF so that the very institutions that could have back-stopped Greece are already full of Greek debt and therefore dead in the water.

“I know they're talking nonsense,” Alice thought to herself: “and it's foolish to cry about it.” So she brushed away her tears, and went on as cheerfully as she could.

I have always said that Greece will not depart until the money spigot is turned off. Therefore Greece will hang around as long as she can but the moment is coming and coming soon when Germany and the rest will say that since Greece is not keeping its part of the bargain that it cannot play any longer in the sand box. They may demand repatriation through the Bank for International Settlements. They may try and keep the Greek assets pledged at the ECB as an offset to the sovereign and municipal debt which will never get paid back but it will not just be consequences but carnage when this point is reached as even the ECB itself will have to be recapitalized by the other nations in Europe as the Greek default overwhelms its equity capital. The Greek banks, one way or another, are history and their debt will only be useful as certificates to be hung on some office walls as a reminder of lessons that should have been learned and were not. Greece is now a “dead man walking” and the execution chamber is primed and ready. The only remaining questions, really, are who is going to flip the switch and at what time.


"The horror of that moment," the King went on, "I shall never, never forget!"

"You will, though," the Queen said, "if you don't make a memorandum of it."

Make a memorandum of what is passing before your eyes and do not forget it!

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markmotive's picture

...now that we're adjusting numbers...

So what's Greek unemployment then if not 50%+?


Soul Train's picture

Once again, Tyler has outdone himself! What an amazing commentary piece he has put together.

I have clicked on my browser's favorite tab, and will come back to review this brilliant piece.

Also, and on another subject completely, now I believe I know where John Lennon captured the idea for the Beatles 'I am a Walrus'. He must have re-read Through the Looking-Glass and got high on Alice in Wonderland and enjoyed Tweetledee of course!

"The time has come", the Walrus said,
"To talk of many things:
Of shoes — and ships — and sealing wax —
Of cabbages — and Kings —
And why the Sea is boiling hot —
And whether pigs have wings."


"I like the Walrus best," said Alice, "because you see he was a little sorry for the poor oysters."

"He ate more than the Carpenter, though," said Tweedledee. "You see he held his handkerchief in front, so that the Carpenter couldn't count how many he took: contrariwise."

"That was mean!" Alice said indignantly. "Then I like the Carpenter best—if he didn't eat so many as the Walrus."

"But he ate as many as he could get," said Tweedledum.

This was a puzzler. After a pause, Alice began, "Well! They were both very unpleasant characters—"

... and further, John's lyrics went on ... 'see how they run, Like pigs from a gun, see how they fly'.

Like Tyler, Lennon had an amazing talent and way to expose the truth. A notch above the rest.

I'm cryin', I'm cry ------- in.

The joker laughs at you.


Non Passaran's picture

Sez Wikipedia:

Lennon composed the song by combining three songs he had been working on. When he learned that a teacher at his old primary school was having his students analyse Beatles' lyrics, he added a verse of nonsense words.

But it also sez about Alice in Wonderland.

RiverRoad's picture

It should be heartening to remember that at the end of "Alice in Wonderland" when she is running from the viciously frightening "pack" that is chasing her, she suddenly stops, turns to face them and says, "Why, you're all just a deck of cards!"

   And when the world realizes that the Euro was a farce from the get-go dreamed up by Goldman et al as a safe place to hide and grow global profits while the dollar was conveniently trashed, we'll all come to our senses too and be the better for it.

falak pema's picture

this is a never ending pebble in the shoe of Oligarchy; the  Paris bourse is slightly up "as it hopes for a political solution in Greece"...Now that's like me on a roller coaster, I want a crazy ride for my money. 

Hope away...La Bourse de Paris portée par des espoirs de solution politique en Grèce

Al Gorerhythm's picture

What they need is an Enlightened Despot.

Zero Govt's picture

No Thanks

Stalin made Russia worse not better. Mao the same. Hitler the same. The French Revolution was another shambles

Beware of despots promising salvation, more often than not they're even worse

Al Gorerhythm's picture

C'mon now Zero. Won't you vote for Gully?

Zero Govt's picture

i wouldn't vote for anyone, nobody can represent me better than myself

who needs a windbag, committee or an institution to form policy for them?

...democracy is the most mindless theory/philosphy in human history, it's so stupid the Muppets could only have dreamt this inane crap up!

Al Gorerhythm's picture

But he's Enlightened, i tell ya.

Matt's picture

What about Sulla, Cincinatus, George Washington? All of them successfully restored the Republic and then rode off into the sunset. It is the man that matters, not the idealogy, I suspect.


GeneMarchbanks's picture
'The True Greek Debt/GDP Ratio Of 421.7%'

Wow Mark! That is almost half of the UK ratio! Or should I say ukAAAy...

JustObserving's picture

It is also less than half of the GAAP US Debt/GDP ratio of 898%.  But we own all the rating agencies that matter.  And threaten others who will not tow the line like Egan-Jones.  So keep focusing on Greece with a GDP of less than 2% of USA.

Excursionist's picture

Two significant digits to the right of the decimal is not needed when presenting gaudy debt / GDP ratios like in this post.

Josephine29's picture

As I was reading earlier Greece has a bank holiday coming up and has the chance to move on.

As for me I remain of the same view that the best way out for Greece is to leave the Euro and devalue and default. There are dangers and risks in a devaluation but all roads are dangerous for her now and as well as an increase in competitiveness I would like to add another factor ,shock. We as human beings are often irrational and the shock effect of such a move would be likely to shake up Greece’s political and economic establishment and I certainly hope that it would. A new start can be a powerful motivation and compared to seeing an ever increasing debt burden it must be a turn for the better.


As to timing well she has a bank holiday next Monday so there is a long weekend….



Peter Pan's picture

The problem with Greece leaving the Euro is that her politicians have not prepared for such a possibility due to their incompetence and their concentration on electioneering.

Greece hasn't got a chance in hell of emulating Iceland or Argentina in the event of departing from the Euro.

Her best chance would be for the Euro to implode. In the meantime she will remain within the clutches of the Troika and undergo ritual rape and deprivations until the people explode.

Ghordius's picture

Of course there is also the slight issue with the Greek People not wanting the country to leave the eurozone. Damn democracy, eh? ;-)

The only relevant debt is the one that can be serviced, which means how far 20% of the tax revenues go in the payment of interests on debt.

The rest is chichanery and derivatives-unicorn-accounting. Including this "oh, Greece has to leave the eurozone" or "the EUR is going to implode" financial agitprop

JeffB's picture

Why couldn't Greece just default, try and work with the debt holders to negotiate reasonable haircuts. Then move forward with attempts at structural changes to get their economy back in balance and go from there?

Stay in the Euro. Make their "partners" force them out if that's what they really want.

Once they've defaulted there's really no point in doing so, other than perhaps to try and make an example of them.


Peter Pan's picture

I have spoken to a number of people who all confirm that there is an army of people in Greece who ARE employed but are NOT being paid. They cling to their jobs despite not being paid, hoping that they will eventually be paid. They have no alternative. Periods of non-payment range from 2 to 6 months.

In addition to the above, the stated vacancy rates of retail shops and offices is in fact understating the fact that rentals have plunged and that many commercial tenants are way behind in their payments.

The major miscalculation of the TROIKA has however been the devestation to real etate values as a result of the austerity measures. This will have a major impact on bank solvency as huge pockets of negative equity are being created.

francis_sawyer's picture

This ought to prove how successful socialism has been in one respect (read further before junking)...

If it's gotten to the point (all around the world ~ not just Greece), that people work jobs without pay, for fear of losing them), and put up with this daily existence, waiting, just waiting for a solution to come down from above instead of organizing & taking control for themselves, then basically 'socialism' (as an illuminati experiment), is a wild success with regards to pacifying a population...

I have little doubt that the same type of phenomenon will be observed elsewhere...

- some are so inbred with regards to socialism that they just wander around and hope (as described above)

- the few who do rebel will be put down by force

The game, for the elites, is to continue to play the game until the last drop of despotism is achieved in the general populace... 

PR Guy's picture



? I thought what was going on was the non-application of capitalism, not a problem with socialism i.e. letting all those banks etc. go bust when they fail, not propping them up when they are clearly insovent. The only 'social' going on around here is the socialisation of losses.

Matt's picture

I think "tax-farming" is the word that should have been used, rather than socialism. The people are so conditioned to 'The System' that when the system breaks down, they keep doing their jobs without getting paid, because they don't know what else to do.

PR Guy's picture

It's exactly the same situation in Spain. Lots of people in jobs that aren't paying wages at the moment. There was talk of governement and regional workers being paid in some kind of IOU that they could take to the bank to convert into cash but the banks said 'nada'. Which is kind of typical banks - they want to hold their hands out and get as much taxpayer cash as possible but the minute you ask them for help..... now just back up there boy.

smb12321's picture

But if cuts in bloated State spending harm real estate something is desperately wrong with the economy in the first place. As Tyler reported, "austerity" governments are NOT cutting spending (spending as a pct of GDP is rising). It's so intellectually dishonest: A reduced budget is announced with massive tax hikes. A few months later the stars of this dog and pony show (Spain, Greece, Italy, etc) announce, oops, we overspent.

The ONLY reason austerity would cause problems is if the economy has become dependent on State spending (via massive debt) to function.

Nachdenken's picture

"The devastation of real estate values" is the real estate bubble a result of poor credit controls and misdirected investment of available euro funds.

The source of all this pain is the vision of One Europe in peace and plenty.  Europeans are still in the dream stage, though sweating in their sleep.

Will To Live's picture

I know a guy that will not work without pay.  However, he will shoot without pay.

pcrs's picture

haha, I like the .67% this suggests an accuracy that does not match the picture of the garbage dump I saw that was apperantly the Greek ministery of finances.

GreekGod's picture

Greek GDP is around 200 billion euros now, converted to dollars it is 250 billion.

So your calculations need some minor re-adjustment.

doomandbloom's picture

who da fac is alice?

Peter Pan's picture

I think she is the chamber maid Trichet tried to be nice to.

GeneMarchbanks's picture

Coltrane. You're missing out.

Dr.Engineer's picture

So, when Grexit occurs and the Euro looks like trash, will the Chinese step in with a competing alternative?  Perhaps China doesn't want to be the world's reserve currency but the runner up.


Ghordius's picture

IF the Grexit occours. If the EUR looks more like trash (compared to...?). IF the Chinese will stop printing their own like they are doing. IF the Dollar loses the world's reserve currency status. and IF there is a successor. lots and lots of IFs.

smb12321's picture

Anyone who shorts the dollar here is a fool. Despite the absurdity of Washington lecturing anyone on financial responsibility, the fall of the Euro (and yen) is a godsend for the dollar. What's pathetic is that it is now the currency of choice ONLY in because the others "won" the war to debase their currency. Buy all you can while the dollar is high.

WonderDawg's picture

In the short term there will probably be a correction to the current rise, so shorts may benefit in the near future. Intermediate term, you're probably right (but not for the right reasons), the dollar will gain strength if we enter a serious deflationary period (which, imo, is inevitable). In the long term, all fiat currencies are fucked.

Wakanda's picture

"Since those false exclamations the economy of Greece has, in fact, shrunk like a grape in the process of becoming a raisin."

Does it dry up
like a raisin in the sun?
Or fester like a sore--
And then run?
Does it stink like rotten meat?
Or crust and sugar over--
like a syrupy sweet?

Maybe it just sags
like a heavy load.

Or does it explode?

A Dream Deferred by Langston Hughes
Snakeeyes's picture

Even without the other debts/liabilities, Greece is the highest in Europe at 165%. The extra just shows how unsustainable Socialism really is.


And whatever Central Planning idiots thought it was such a great idea to invest everyone's future in a nonproductive asset like housing should STFU!

Olympia's picture


A country in the outmost Southeastern part of the EU has grasped the headlines for quite some time. With only 2% of the EU's economy and just 2.5% of its debt it became the "Witch" that is haunted by puritan Northern Europeans. It is claimed as the epicenter of laziness, lust and unproductively for the whole of the Continent, a bad example that pious Northerns should be feared and loath at the same time. 

This country is Greece and it must be punished! But is it really the witch hunt that has started in 2009 the most stupid move ever made in the entire European history? Is it worth to blame Greeks for the lonely dark winters up in the North and for the depression syndrome that cripples the lives of dozens of millions northern Europeans, as if Greece makes the weather?

In reality the Northern Europeans risk of pushing Greece into the broader global community where it is going to be free from investing heavily in its defense of the Eastern gates of Europe and it will bring about the greatest change in the balance of powers that Europe has felt since the collapse of the Berlin war. This time Germany will not be re-united, rather it will has to pay a dear price for its energy security. Netherlands will not become richer; rather it will have to pay from its own pocket in order to save itself from the flood of narcotics and Asian immigrants.

Austria will not be greater, rather it will have to deal with powder-keg named "Balkans" that has markets Vienna's history.


How Northern Europe shoot its leg, in order to satisfy the populist sentiments of an electorate being used to the fairy tales of "bad witches and pious farmers".


Panagiotis Traianou answers to many of the aforementioned questions and gives a proper solution on his article entitled “GREECE RANKS AMONG THE WITCHES OF SALEM”



Greece was forced from the so-called Troika (EU-ECB-IMF) to get loans from them and only from them, while prohibiting them to get any external bi-lateral agreement with countries such as Russia or China.


This way, the Orthodox Greece falls helpless into their hands. It does not get help from its central religious leadership, or its fellow believers, mainly the Russians. This is the reason why the Protestant European countries have tried – and ultimately succeeded – to cut the ties between Greece and Russia. Greece did not have help neither from that fool George Papandreou nor from Dora Bakoyiannis, both of who have caused trouble in the Greek-Russian relations. Even the Memorandum did not help the situation, because it had a reference concerning the exclusion of any loans by a third party that could help them get rid of the debt. Even Papademos, the usurer Prime Minister and Goldman Sachs associate, has tried to cause problem in the Greek-Russian relations, by refusing Putin to visit the Holy Mountain after his recent winning in the presidential elections. 

We have a chance to get some serious help. There is a chance that the fellow believers Russians will shoulder most of the Greek debts. One has to bear in mind that Moscow has state controlled funds readily available in excess of 600 billion USD, as of early 2012. Each day Russia's energy sector is pumping more than 1.5 billion USD into their economy. Thats a real economic superpower. 

Why would they do that? Is it because they are good people? Of course not. There are no good people, only good interests. On the matter in hand, the Russians can help the over-indebted Greece because they have money and because they have great needs of strategic nature. Russia is a super-power and it can view things from a relative perspective; the perspective of the needs a super-power has. Add on that that China already owning a part of Eastern Mediterranean's largest port, that of Piraeus and the financing issue of Greece can be easily resolved. The Asian giant has more than 3.2 trillion USD in state funds and has made over the years lucrative proposals to Greece in order to get into the local market by investing into ports, airports, railway and logistic services, along with maritime businesses and tourism. Japan, South Korea, Singapore, Taiwan have from time to time expressed their interest into using Greece as a European gate-away and these three countries have over 1 trillion in reserves to make their promises into solid work. 

Arab Gulf states, such as Qatar are promising billions should Athens lets them get into Southeastern Europe, whilst countries that host large Greek communities such as Australia with over 500,000 Greeks, Canada with 300,000 or South Africa with 100,000 are looking for the time that Greece decides to move globally and shed of its "provisonal EU outlook" in today's globalized era. India too, has recently set up a bilateral trade organization and has drafted a list of investments in steel industry, tobacco manufacturing, shipping and transportation.  Even Algeria with its state gas company Sonatrach has formally bided to give 2 billion Euros in order to buy a large segment of Greece's natural gas industry.

So, now that some unruly Northern European suggest Greece to sell its islands at a bargain price, they will not like it if that actually happens. They will not like it because selling the islands is not only about selling land where rooms to let will be built. Greek islands have multiple uses and can serve as parameters in various kinds of games. Instead of selling, the Greeks could rent land on the islands. It is the same as with the Chinese Shipping Company Cosco that has an interest in the port of Piraeus and the German construction company Hoch-Tief that has taken over control of the airport in Athens.

Can anyone imagine the geopolitical implications if we rent part of the island of Kythira to the Russians for a hundred years, for example? To what extent would the balance of power change in Eastern Mediterranean if the Bear set its foot in the Aegean Sea?  To what extent would the balance of power change if the Russian fleet dropped anchor permanently there? To what extent would such a naval base influence the defense of the unruly Northern Europeans? It would be a base that among other things could commit Russia to provide Greece with help in case the Turks challenged the Greek sovereignty in the Aegean Sea and anywhere else there are Greek interests.

read more here:  http://eamb-ydrohoos.blogspot.com/2012/05/greece-among-salem-witches.html




Ghordius's picture

Come on, Russia is opening it's arms for Greece since at least Nicolas II.

The question is more if you would really, really prefer the full embrace of the Bear?

Do you see Greece as a happy member of the future-and-coming EuroAsian Union Putin is talking about?

Not that it would be necessarily hell-on-earth, I'm not willing to demonize the Russians. I just note that the EAU would have a clear authoritarian Kremlin leadership instead of the typical messy wrangle of the EU or the absent-minded directives from Washington.

A question of tastes, actually...

Olympia's picture


The answer to your valuable point is fully explained here by Panagiotis Traianou: http://eamb-ydrohoos.blogspot.com/2012/05/greece-among-salem-witches.html


So, there is a question posed to those who love accounting. How many hundreds of billions of euros is a naval base worth in the middle of the Aegean? How many hundreds of billions of euros do the Europeans make because Greece provides for their defence as well? Who is the deadhead in this case? Is it Greece which provides its aircraft carriers or The Netherlands that chips in a few crates of beer for the common defence? Things are simple. Until now, the Europeans could play it smart by paying a pittance. They know Greeks will protect their interests even if it means dying, so they hide behind these interests to pay a pittance. What will happen, though, if the Greeks decide to follow their example? What will happen if the Greeks decide to pay a pittance and they hide behind the Russian interests, which are anti-European by nature?


One can play games to a limit. Bawling, insulting and threatening are meaningful as long as they bring results. So, the people who threaten and insult Greece on a daily basis had better care; especially the German Protestants who have a vital need to access the energy reserves in the Middle East; those who have made their allegedly huge competitiveness contingent upon safety on Eastern Mediterranean; who pay a pittance relying on the Greek patriotism; who as a State lack even an oil can to support their industry and use natural gas they have taken from Russia to get warm. They have to stop taking us for a ride. Until now, the Protestants not only gave money to build a defence but also they made money out of this, because they used to force Greece to buy what they both needed for their safety.


They forced it to spend 5% of GDP to military supplies. They forced it to spend money it did not have – and deprived its children of it- and not only did they not acknowledge this contribution to building a common defence but they also hastened to benefit from the expenses. Not only did they take for granted that Eastern Mediterranean was safe, but they had also turned it into a lucrative El Dorado-like source of equipping. Not only did they not contribute to something that would protect their vital interests, but they also had the nerve to play profiteering games.


Someone should explain to the competitive and unruly Protestants what it will happen if Greece follows their suggestions and starts selling its islands. Someone should explain to them the consequences for their countries, jobs, their lives if Greece starts abandoning the European trenches; if they lose the Greek line of defence; if they lose Greece that has one of the most battle-worthy fleet and one of the most battle-worthy aviation in the alliance. Someone should explain to them what it will happen if they are forced not only to lose their large-scale money provider but also to try to replace its contribution to the alliance with their own means and manpower.


Greece has never stopped guarding the Thermopylae of Europe because it has never stopped acting as a frontiersman of Europe. Greece is valuable to Europe more than ever because Europe is almost unarmed. It had got used to setting things up for itself by letting the suckers pay, taking the piss and selling civilization. It leaves the colorful and uncivilized Greeks to shoulder the burden of defence while it comes in the foreground only to provide with supplies. The Greeks are presented as barbarians who are involved in equipping competitions with Turkey and the Europeans are presented as the civilized ones who cannot stand military solutions. Having ulterior motive, these civilized Europeans act as if they do not understand that Germany ensures competitiveness in the Aegean Sea thanks to the Greek fleet, not thanks to the crippled usurer.


Europe gives its fights every day in the troubled waters of Eastern Mediterranean, not in the calm canals of Amsterdam. Can the ill-tempered, racy Minister of Finance in Holland, who exercises the imperialism of cheese and beer in a safe Europe, estimate how much it will cost Holland as a State if Greece is substituted in terms of Europe’s defence? Can the disheveled, little madam, that scolds Greeks and pretends to be the Minister of Finance in Austria estimate how much it will cost her unarmed country if the extravagant Greek defence collapses? Will the Dutch or Austrian citizens put foreign flags on Aegean islands ever again? Will they have work in order to visit the Aegean ever again?


pcrs's picture

No one needs defense, it is a protection racket.

There are no 'Greeks', you have 2 groups:those that make laws and those that have to obey them under threat of violence, same in the Netherlands. Those that tax ans those that are taxes. They have opposing will and can not be aggregated.

Everywhere those that tax and impose their will are running out of money. Too much parasite, too little host. It is just that Greece and Egypt are further down the line in years of government, than those other countries. Moral decay has progressed further. Egypt 6000 of government ruling serfs:average income 4$/day

Ghordius's picture

well, demagogy aside IMHO it was shameful what kind of language was used in the treatment of Greece in the last years

and I hope that using the "we love Uncle Bear, too" card is going to be useful. still, I hope it won't be necessary...

meanwhile I'd be very grateful if Mr. Traianou would also address the governance issues that Greece has, in particular corruption.

Olympia's picture


Once again, I can't but only to agree with you.
As far the issues of governance and corruption that you correctly mention, Mr. Traianou has already adressed them many many times and in the most hard way. Though those texts are not available in English yet. Otherwise, I'm sure you would enjoy reading those articles as well :)

In any case, we are in the same line.

Treason Season's picture

Some have argued Russia's war against Turkey avenging the massacres in Bulgaria was humanitarian motivated.

Coldfire's picture

That leathery tan, the cosmic hauteur, the signal malignancy of her mission, Lagarde makes one's skin crawl. Her cancerous austerity meme is this generation's "Let them eat cake". Here's to the broke-ass IMF breaking its teeth on Greece, Spain and Ireland.

PR Guy's picture

Greece's GDP is $308bn ? And falling - big time. Will be lucky to be much over $250bn in a years time.

Sandmann's picture

Before we get carried away with Greece and the EU can we take a look at BANKS ?  You would think that these Derivatives were somehow taken on by Citizens and Governments - just how did Banks ever think they could resolve these Derivatives ?  Whatever happened to "Going Concern" Rules in Financial Accounts ? The Managements of these Banks build pyramids of Debt upon the sand of Equity and now expect everyone else to pay for their folly.

If the ECB stops backstopping Greece and Spain their Banks collapse simply because the ECB is funding those Banks via the only route it has available. At the end of the day Greece is simply a letterbox. The Banks are going to collapse anyway so we might as well get it over with. THe Banks must be nationalised and salaries cut with all personal assets of senior bankers seized as collateral.

Anyone who thinks we can avoid nationalising all banks is going to have to find a way to keep the current merrygoround going when people are simply fed up and waiting for men with guns to start assassinations.

Ghordius's picture

sandmann, the whole purpose of endless articles on Greece, the EU, the eurozone etc. are to distract from the banks and the derivatives.

I agree with you, most banks will be nationalized at some point in the future, but derivatives? they will have to go. again.

the question is only how and when. perhaps when the next derivatives hole that opens will be of one quadrillion instead of the expected one trillion or so. at some point we will all realize how silly it was.

the banks built pyramids of bets on top of pyramids of dodgy debt. at some point we will return to the regulatory environment we had in the Sixties, and this excludes WMD derivatives.

Nachdenken's picture

Good, swift and simple solutions are not popular.  We are on the long, winding way to the same solution, we have lost time, and used up reserves.

orangegeek's picture

Ah yes, nothing like some refreshing truths to start off the week.  Hidden information and misinformation will be the way for a long time.


The real question is what are the real debt/gdp ratios for the rest of the euro countries?


Major bear coming folks.