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Why A Grexit Would Make Lehman Look Like Childs Play

Tyler Durden's picture




 

From Peter Tchir of TF Market Advisors

Why A Grexit Would Make Lehman Look Like Childs Play

Maybe I’m wrong, but every time I look at the possibility of a Greek exit right now I see it spiraling out of control and dragging down the entire global economy.  I hear and read the arguments of why it is controllable and they just don’t seem credible.  They either link a Greek devaluation to other devaluations that have little, if anything in common.  They also seem to ignore human nature and how the markets will likely respond.  I think with planning and time, a Greek exit would be manageable but right now it would create chaos, first within Europe and then the globe.

The ECB, EFSF and IMF will take massive losses

The ECB has €50 billion of GGB bonds still on their books.  Those would not get paid at par by Greece if this is an amicable breakup, but this is quickly heading to a pots and pans thrown in the kitchen sort of break-up.  Why would Greece pay the ECB if they feel like the ECB drove them out?  Don’t forget, not for a second, that most of the money Greece now gets goes to pay back the ECB and IMF.  The EFSF is totally out of luck.  The ECB might be able to offer something to a post drachma Greece, but the EFSF offers nothing.  The IMF has more negotiating power, as their direct loans had more protection in the first place and they are likely to provide additional funds post exit, but quite simply Greece won’t be able to pay them in full on existing loans.

With the ECB, EFSF, and IMF all taking big losses, their credibility is hurt.  Worse than that, they have exposure to Portugal, Ireland, Spain and Italy and the markets (if not the politicians) will become very concerned about those exposures.  The IMF may see its alleged firewall crumble before it is ever launched.  The ECB, integral to any plan to protect Europe will have lost credibility and many will question their solvency.  The EFSF will be hung out to dry and immediately the market will attach all their risk to Germany and France, not making people in those countries particularly happy.

Preparation:  The ECB in particular is acting like a profit center.  Does it really need the current coupon it gets on its SMP portfolio?  Does it need to be paid back at original scheduled maturity date?  Paid back at par rather than cost?  The ECB should work proactively with those countries to exchange their bonds for something that doesn’t cause a loss for the ECB but gives the countries a big benefit (maturity extension, rebate of bonds purchased at discount, and much lower coupon).  Whatever message the ECB is trying to send by not doing this seems bizarre to begin with, but insane once you consider the real losses they will take upon a Grexit.  The IMF and EFSF have less flexibility but can cut rates on their loans, as they too don’t need to generate a profit either.  This takes pressure off all of the countries, has no real “cost” to any country, and sets a good tone for proper negotiations of what will happen upon a Grexit down the road.

European Trade Will Decrease Dramatically

Somehow people seem to believe that switching to the Drachma will increase exports for Greece.  That somehow trade will grow.  Just the opposite is likely to occur, and just like bank “runs” this will hit all the periphery countries immediately.

The standard image is of companies just waiting to buy new “cheaper” drachma goods from Greece.  That just doesn’t reflect the reality of modern trade.  Most companies have existing suppliers and contracts, so they may not even be able to switch to Greek suppliers in the short run.  But the key word there is “contracts”.  Companies depend on contracts.  Do you really think companies will be busy trying to sign new deals with Greece, a country that just left a currency union, and only recently retroactively changed its laws for bondholders?  Or do you think lawyers will be figuring out what it means for any existing business, not just with Greece but with all other periphery countries?

It will mean the latter.  Companies will become extremely concerned with doing business with anyone who might leave the Euro.  They will want to know what happens to their business arrangements.  They will not provide any credit in any form to businesses in those countries.  While someone might be some olives because they are now cheap, no company is about to buy components for bigger projects from Greece.  If the earthquake in Japan taught manufacturers anything, it is how critical their supply chain is.  You really think many CEO’s will take the risk of doing business in a country with an uncertain currency, laws that have been “bent” to serve the country?  No, and that is the optimistic view, as it doesn’t include the risk that Greece faces major disruptions due to the high cost of things like, um, oil.  Greek companies themselves will likely be mired in confusion over what the Grexit does for them.

The problem will hit Greece the hardest, but it won’t be isolated to Greece.  If you think there is a real risk that Spain or Italy head down the same path, you will be reluctant to work with them.  You may even be afraid of what exposure they have to Greek suppliers. 

Preparation:  Time.  Contracts need to be reviewed.  Changes need to be made that deal with the consequences.  Alternative methods of trade finance need to be developed.  Most importantly, Spain and Italy have to be doing well enough that the risk of them leaving is virtually zero.  Getting Spain and Italy on a stable footing is a critical part of any plan to have Greece leave.

Other Devaluing Countries have been Resource Rich

While some countries have devalued successfully, they are typically resource rich.  Not only do the countries typically have a lot of natural resources, with oil at the top of the list, those industries are typically government controlled.  So while the economy adjusts to the devaluation, the governments typically impose restrictions on not just capital but on natural resources.
Being able to subsidize individuals and company with raw materials at below market rates has been part of a typical EM country’s devaluation program.  Greece is no shape to do that.  Greece has to import virtually all of its energy needs.  They are at the mercy of the markets and a devalued drachma is not going to help them.  This is a huge difference that so far has been overlooked.  Without its own supply of critical resources, Greece will be forced to spend inordinate amounts of money to keep the economy merely functioning.  That will offset the alleged benefits of increased trade, with I believe in the near term are overstated to begin with.

Preparation:  Stockpiling.  Greece needs to build supplies of essential raw materials.  It will eat up additional money, but better to buy in Euros than Drachma.  Also, if the conversion can be done smoothly, maybe you only see a 10%-25% devaluation, making the risk lower and far better than some estimates of an immediate 50%-75% drop in value. 

Other Devaluing Countries weren’t part of a Fragile Currency Union

It ultimately keeps coming back to Spain and Italy.  If every other member of the EU was doing fine, the impact of a Grexit would be much lower.  The impact on the ECB, EFSF, and IMF would be bad, but tolerable if they weren’t immediately going to take losses on Portugal and Ireland, and have to face potential consequences from Spain and Italy.

Trade with Greece would drop, but other companies wouldn’t be that concerned about continuing to do business with Spain and Italy on standard terms.  While they are weak, prudent businesses will treat them more like Greece than might be warranted, but companies will be careful.  What executive would want to lose money on a Spanish business venture when everyone will say in hindsight it should have been obvious they were also going to fail.

The horrible state of Portugal and Ireland, the weakened state of Spain and Italy, the ignored but dubious state of Cyprus, Slovakia and other small members make the ramifications of one country leaving that much more difficult to deal with.  If Greece was truly an isolated case, then fine, but it isn’t.   The countries are all too similar, all too tied to the ECB and EFSF, and ultimately those connections are what making a Grexit a far bigger deal than it would be otherwise.

Preparation:  Determining which countries need to leave will be key.  If Portugal really needs to leave as well, it should be done in conjunction with leaving.  Spain and Italy have to be made to appear to be “rock solid” members of the EU.  The contagion risk of doing anything while Spain and Italy are so weak is just too big.  If they ultimately have to leave, then I think the planning and preparation is that much harder.

Currency Runs

This is already hitting.  It isn’t just bank runs, it is the willingness of companies to do business with these countries.  It is showing up in the bond markets.  The activity has been frantic with huge amounts of money flowing out of countries that aren’t just weak, but out of those with perceived currency risk.

I don’t think anyone truly believes Belgium is a great credit.  The Belgium 5 year bonds traded at 5.6% in November of last year.  They are currently at 1.8%.  This is Belgium, the home of Dexia, the land without a government, and yet they are trading much better than other members of the November 5% club.  That is at least in part because people believe they will stay in the “good” currency union. 

This currency risk is visibly playing havoc with the bond markets, and I suspect it is playing almost as much havoc in corporate board rooms we just don’t get to witness it on a daily and immediate basis.

This currency run is more than just a run on bank deposits.  It is a run on doing business within countries.  It’s an inability to get trade credit which is necessary to be competitive.  It’s deals that aren’t getting closed because whether admitted to or not, the companies are nervous about the future.

The problem with “runs” is that they become emotional and self-fulfilling.  It is relatively easy to take a stab at the solvency of a bank.  The data isn’t great, but at some level you can convince yourself BBVA is safe.  They have enough capital, enough support, etc., that their solvency risk is manageable.  Spanish branches of Deutsche Bank are even easier to get comfortable with from a solvency perspective. Bankia, right now appears to be teetering on insolvency, but with recapitalization, the depositors can get comfortable again.  Addressing solvency is painful because it will involve the governments taking stakes in banks, but it is relatively solvable.  Dealing with conversion risk is much harder.  If my money sits in a deposit account at BBVA, Bankia, or Spanish branch of DB, the currency conversion risk is the same.  The only way to protect myself is to take the money out.  It isn’t quite the same for companies doing business, but it isn’t that dissimilar.

Preparation:  Getting the bank recapitalizations done would be helpful.  Eliminating the immediate solvency risk would help.  One of the many EU institutions (EBRD? EIB?) needs to come up with some new form of trade credit support.  Not just for Greece, but for all of the at risk countries.  Ultimately, getting Spain and Italy back from the brink is key, but finalizing the much talked about, little done, bank recapitalizations and ensuring the availability of trade credit would start to calm the tension.

Decoupling is a Myth

As we saw after Lehman and then to a lesser extent after the earthquake in Japan global trade is very fragile.  A Grexit would immediately affect the entire periphery.  It would disrupt supply chains (like Japan) and impact credit (like Lehman).  From there it quickly spreads to the rest of Europe and the U.S. and China.  Some of the contagion will be over concerns about the banks in those countries and their exposures, which won’t be calmed as easily by an ECB and IMF with huge volumes of bad loans on their books.  It will also occur because their customers won’t be buying their goods.

A butterfly flapping its wings may or may not cause a rainstorm in New York, but a Grexit will make people look at the post Lehman collapse as the good old days.

A Grexit is So Bad That it Won’t Happen

Again, I fail to see the optimistic case of a Grexit.  Every time I try and play through scenarios where the IMF and ECB come to the rescue, it seems like it will be far too little and far too late.  Maybe the powers that be are smarter and have figured out a plan, but given their track record, that is hard to believe.  The more they look at the situation, the more I am convinced they will see not only how potentially awful the situation becomes, but that the cost to avoiding it right now are relatively small, and with proper preparation a Grexit can be managed down the road.

I still think we should have had more Lehman moments.  In fact, not letting the AIG moment occur was probably a bigger mistake, but most politicians have taken the lesson never to let a “Lehman” happen again, so once they see that Greece is Lehman on steroids, they will back down and figure out enough to give Europe and the markets a solid kick.

 

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Sat, 06/02/2012 - 10:15 | 2487104 Fips_OnTheSpot
Fips_OnTheSpot's picture

RUN!

Sat, 06/02/2012 - 10:29 | 2487113 veyron
veyron's picture

A wand will be waved and all will be saved ...

Sat, 06/02/2012 - 10:48 | 2487148 CrashisOptimistic
CrashisOptimistic's picture

Very possible.

People evaluate all these things as if rules apply.  They don't.

As for: The ECB, EFSF and IMF will take massive losses 

No.  There is no reason this must be so.  Why "take" the loss?  If Greece doesn't pay, continue to bill them.  Put a surcharge on their imports and collect that way.

Argentina is still cut off from credit markets and is an ongoing basket case.  They ARE negotiating to try to repay debt.  So would Greece.

The point being sovereign debt does not expunge.  It's forever.

Sat, 06/02/2012 - 11:09 | 2487168 Spastica Rex
Spastica Rex's picture

Forever is a mighty long time.

Sat, 06/02/2012 - 11:34 | 2487199 Surly Bear
Surly Bear's picture

 

I'm praying for the end of time. It's all that I can do. Praying for the end of time, so I can end my time with you!!!

~Meat Loaf

 

Sat, 06/02/2012 - 13:11 | 2487336 lineskis
lineskis's picture

Will TPTB be keen on renegotiating Greek's "bailout" terms (be it now or accepting late and incomplete payments)?

Yes -> Greek stays and all is "fine", as long as the ECB gives Greece some money. Hello CTRL+P! But how long will they keep printing?

No -> Greece cannot honor the "bailout" terms anyway. Greece will have no choice but to leave the EU to fund the basic government needs in the short/medium term.

So as long the CTRL+P option is cheaper than a Grexit, Grece will stay within the EU. But as soon as it's deemed too costly, put your helmet on and kiss Greece good bye! '.'

Sat, 06/02/2012 - 13:24 | 2487364 LoneCapitalist
LoneCapitalist's picture

Kinda like my neighbor who owes me $50. Ill never see it , but hey, at least he still owes me.

Sat, 06/02/2012 - 13:43 | 2487407 Amish Hacker
Amish Hacker's picture

He would rather owe it to you than cheat you out of it.

Sat, 06/02/2012 - 20:39 | 2488045 LuKOsro
LuKOsro's picture

I owe it to myself to see that nobody owes me anything.

Sat, 06/02/2012 - 11:11 | 2487172 shuckster
shuckster's picture

sHILL

Sat, 06/02/2012 - 11:22 | 2487181 Marco
Marco's picture

Sovereign debt denominated in a currency you can't print is "forever" ... although if it's denominated in dollars bond holders will eventually agree to a restructuring any way, they know where the dollar is heading as well as the rest of us.

Sat, 06/02/2012 - 11:45 | 2487213 fijisailor
fijisailor's picture

Better check your sources on Argentina.  Despite no credit access the country is doing remarkably well.

Sat, 06/02/2012 - 14:37 | 2487484 brunoaa
brunoaa's picture

Right now in Argentina they use dogs at the frontier to check if you are carrying dollars. The official rate for the peso is 4.5 (if the ministry of finance authorize you to buy dollars which is unlikely) and 6 on the black market. I live in Uruguay and I can tell you our Argentinian neighbour are not doing so well.

Sat, 06/02/2012 - 21:06 | 2488087 mick_richfield
mick_richfield's picture

A couple biscuits in the right places, and those dogs will look the other way.

Sat, 06/02/2012 - 21:41 | 2488152 CompassionateFascist
CompassionateFascist's picture

Argentina is crying.

Sat, 06/02/2012 - 15:57 | 2487642 Buckaroo Banzai
Buckaroo Banzai's picture

You are high on crack. Argentina is a full-fledged economic disaster.

Sun, 06/03/2012 - 07:56 | 2488807 fijisailor
fijisailor's picture

Well you're wrong according to the NYT.  But I guess you know more than they do.

http://topics.nytimes.com/top/news/international/countriesandterritories/argentina/index.html

Sat, 06/02/2012 - 11:47 | 2487217 ElvisDog
ElvisDog's picture

So true about the rules thing. It's like whenever I read an article that states "when foreign creditors refuse to buy our bonds and interest rates rise". Except, it doesn't seem to work that way. In my opinion, as long as the politicians of the periphery countries stay in line with the ECB/EU/IMF program the game will continue. If Syriza wins the Greek elections, and if they stay true to their campaign promises things might change, but counting on more than one "if" always makes me skeptical.

Sat, 06/02/2012 - 18:58 | 2487925 JeffB
JeffB's picture

There are apparently no mechanisms to force Greece or any other country out of the EU. Why couldn't they just default/negotiate some haircuts they could live with long term and stay in the EU?

If CDS insurance kicks in, do the CDS "insurors" have subrogation rights to try and collect outstanding bonds they've paid on?

They'd still have to figure out some way to get the government and the citizenry to live within their means, but that's going to have to happen one way or another no matter what they do. I suppose it would be easier to have the IMF doing the dictating so they can blame outside forces rather than the politicians having to make the hard decisions and take the heat, though.

Sat, 06/02/2012 - 12:42 | 2487283 gorillaonyourback
gorillaonyourback's picture

go read the history of argentina before you make silly statements.   argentina is constantly borrowing from the imf just to pay their loans back.    in fact i remember a few years they said out right 'if you dont give us 60 billion in loans we stop paying our bond payments' which was about 1 billion.    

here is a lesson: the borrowerer has the power over the lender

Sat, 06/02/2012 - 14:26 | 2487463 LawsofPhysics
LawsofPhysics's picture

Bullshit.  Whoever has the greater military might behind them has the power, oeriod.  Same as it ever was.  None of this is about money.  Wake the fuck up, it has always been about power and control.

Sat, 06/02/2012 - 15:47 | 2487618 Spastica Rex
Spastica Rex's picture

Word

Sat, 06/02/2012 - 12:30 | 2487269 tobus
tobus's picture

"Getting Spain and Italy on a stable footing is a critical part of any plan to have Greece leave."

A critical and impossible part of any plan to have Greece leave.

Sat, 06/02/2012 - 13:13 | 2487342 cnx
cnx's picture

-"Expelliarmus Debtus!"

Sat, 06/02/2012 - 10:33 | 2487115 William113
William113's picture

Can somebody please tell me why NOBODY has reported on GMAC going bankrupt. I received a notice from them 10 days ago and not one media outlet has reported it.

Sat, 06/02/2012 - 11:12 | 2487173 Al Huxley
Al Huxley's picture

Google it - it's there, and it's just the residential mortgage unit of what is now Ally Financial.

Sat, 06/02/2012 - 16:10 | 2487664 DosZap
DosZap's picture

Can somebody please tell me why NOBODY has reported on GMAC going bankrupt. I received a notice from them 10 days ago and not one media outlet has reported it.

 

Think they were entirely brought under ALLY Banks venue.

Sat, 06/02/2012 - 10:32 | 2487118 t_kAyk
t_kAyk's picture

WHERE TO?!

Sat, 06/02/2012 - 10:33 | 2487120 Doña K
Doña K's picture

Greece's best save-face chance is for Spain or Portugal to go first.

Sat, 06/02/2012 - 10:24 | 2487108 prains
prains's picture

the optimistic case is it will finally bring forth the giant cosmic flush or reset depending on your predilection

Sat, 06/02/2012 - 10:29 | 2487111 RSloane
RSloane's picture

Whyever would Greece voluntarily exit?

Sat, 06/02/2012 - 10:35 | 2487124 Winston Churchill
Winston Churchill's picture

You're looking at it the the wromg way.

Germany will leave first.

They will somehow  deal with a highly valued Mark.

Not with economic 'carpet bombing' recuing the Club Med periphery.

Germany first ,and 'uber alles' always.

Sat, 06/02/2012 - 11:37 | 2487204 brunoaa
brunoaa's picture

I agree. Germans are logical people, they see there is no way out in the present union, so they will act and face the consequences. Going back to DM will minimize their Euro liabilities and they will only convert into the new DM Euro from German residents, which will also minimize the Target 2 issue.

France and the other latin european countries will be more than happy to take advantage of the devalued euro.

Sat, 06/02/2012 - 14:26 | 2487465 The Reich
The Reich's picture

Unfortunately almost all German MP's are fanatic "Europeans" and thus let us - the people - pay for it. These MP are traitors to the German people!

 

It's worse that Versailles.

Sat, 06/02/2012 - 17:56 | 2487836 Ghordius
Ghordius's picture

Fanatics? Elected.
Your views are not maistream, in Germany.

Sat, 06/02/2012 - 21:10 | 2488093 mick_richfield
mick_richfield's picture

The MPs were fairly elected.

The check is in the mail.

I won't come in your mouth.

 

Sat, 06/02/2012 - 21:46 | 2488158 CompassionateFascist
CompassionateFascist's picture

That's about it. Germany will leave the EU only when the current Treason Regime is liquidated. Then, Angela and her Jew Banksters are going to be flayed alive.

Sun, 06/03/2012 - 03:54 | 2488660 Ghordius
Ghordius's picture

Mick, are you aware of that there are foreign countries with radically different election systems and laws?

Sun, 06/03/2012 - 04:43 | 2488678 ThirdWorldDude
ThirdWorldDude's picture

Ghordius, are you aware that the Germans are using Nedap's electronic voting machines in the Bundestag elections?

http://www.h-online.com/security/news/item/Hacking-at-Random-CCC-demonstrates-TEMPEST-measurement-of-voting-machines-742969.html

 

I junked you partly because you're a Eurotard (judging by your avatar and by your blind trust in the corrupt political systems) and partly because of your pseudonym and my Macedonian origin <chuckle> 

Sat, 06/02/2012 - 14:47 | 2487504 oogs66
oogs66's picture

If Germany leaves the ECB and EFSF are doomed

Sat, 06/02/2012 - 10:35 | 2487126 Neidhammel
Neidhammel's picture

 

Not voluntarily, but ECB will cut off money supply if they don’t vote in conformity with system next time.

 

Sat, 06/02/2012 - 10:29 | 2487112 eigenvalue
eigenvalue's picture

1. Do those politicians (not ZHers or Peter Tchir) think that a Grexit is much worse than Lehman? If not, a Grexit can happen. There already have been talks that Greece is only 2% of the Eurozone GDP and a Grexit will not be a big deal.

2. If anybody that can prevent a Grexit exists, the one will be Germany. Germany has the money. BUT since most Germans want Greece out of the Eurozone, will Merkel defy German citizens' will and risk her election next year?

Sat, 06/02/2012 - 10:32 | 2487119 CatoRenasci
CatoRenasci's picture

I suspect the Germans' primary concern isn't what Greece does, but rather making sure that German money isn't subsidizing the bad behavior of the Greeks, and the other PIIGS.

Sat, 06/02/2012 - 11:25 | 2487188 MsCreant
MsCreant's picture

I junked you. Greece does not have "bad behavior." Non payment is a good thing. All these contracts should be null and void because they were done under false pretenses. 

If I apply for a loan, and I do not qualify, but you falsify my stats so that I can get the loan, you are a criminal.

GS helped Greece join the union by hiding their debt in accounting tricks. They then shorted Greece. Greek leadership may not be innocent in this, but this is not about bad Greek Behavior.

Fuck Christine Lagarde, telling Greeks that they must pay their taxes. It is patriotic NOT to pay your taxes, particularly when your leaders obligate you to crooked deals you did not ask for. Fuck their system. Fuck all their agreements.

NULL AND VOID. WAKE UP LET IT ALL GO TO HELL WHERE IT BELONGS!!

Sat, 06/02/2012 - 12:25 | 2487262 Conchy Joe
Conchy Joe's picture

If false pretenses justify non payment then the whole system should be junked and no one should pay their bills.

Too bad if someone owes you money though....

Sat, 06/02/2012 - 12:33 | 2487273 MsCreant
MsCreant's picture

"If false pretenses justify non payment then the whole system should be junked and no one should pay their bills."

Not a bad idea...

What if the money you think you were owed is built on illusions and criminal behavior? Did you ever really have it? Or are we to keep propping it up so that those who "think" they have money, but don't, won't revolt and tear the system to shreds?


Sat, 06/02/2012 - 21:13 | 2488097 mick_richfield
mick_richfield's picture

If there are people empowered to create money from nothing --

let's just stop right there.

If we permit that, then there is no rule of law, and we are slaves.

 

Sat, 06/02/2012 - 23:20 | 2488383 CommunityStandard
CommunityStandard's picture

Yes and no.  Yes, if I were a Greek, I would feel no obligation to pay my taxes.  However, I wouldn't expect my cushy entitlements to continue or the German people to pay for them.  Like you said, NULL AND VOID.  Both sides of the contract must end - payments and benefits.

Sun, 06/03/2012 - 10:53 | 2488987 MsCreant
MsCreant's picture

I agree 100%.

Sat, 06/02/2012 - 13:14 | 2487345 Miss Expectations
Miss Expectations's picture

Spoken like a true loan shark.  You've been here how long?  Shame on you.

(I junked you too.)

Sat, 06/02/2012 - 10:30 | 2487114 CatoRenasci
CatoRenasci's picture

Even if the parade of horribles is pretty much accurate, the alternative is other people throwing good money after bad to prop up continuing deficit spending in the PIIGS.  This is continuing to dig in a very deep hole. The ECB, IMF and others should view money put into Greece as a sunk cost, write it off, and move on.  Stop putting new real money into the sinkhole.

Sat, 06/02/2012 - 11:28 | 2487192 MsCreant
MsCreant's picture

Please stop believing these ponzi fiction stories. Real money. Is someone putting gold in there? Printed money, digital money, in exchange for servitude.

Sat, 06/02/2012 - 10:32 | 2487116 Neidhammel
Neidhammel's picture

The GRexit is inevitable. Alternatively, the DExit could solve the EZ crisis as EUR would devalue by 30%. However, the DExit can be ruled out for “historical reasons”.

Sat, 06/02/2012 - 12:27 | 2487264 piliage
piliage's picture

Germany leaving is a tantalizing philosophical construct that makes logical sense. The problems are two:

 

1) The new Mark would shoot up by 30%-40% in value, doing serious harm to Daimler, VW, Siemens, E.on, EADS, and thousands of other German companies that rely on exports

2) It just ain't gonna fuckin' happen mate.

 

 

Sat, 06/02/2012 - 16:32 | 2487702 mjk0259
mjk0259's picture

Yes, harm but is Italy or France going to start making cars, machine tools, etc as good as Germany's? No. They never have. The sales will go on at a reduced rate in Europe. They already make cars in US and China so these markets not affected so much. Germany did quite well with ever rising currency in the past.

Sat, 06/02/2012 - 21:18 | 2488107 mick_richfield
mick_richfield's picture

The various Europeans ( and neighbors ) will go on doing what they have always done best in the past, single currency or no dumbass single currency.

 

British chefs.

French mechanics.

Italian administrators.

Swiss lovers.

German police.

 

 

Sat, 06/02/2012 - 10:32 | 2487117 spinone
spinone's picture

Greece has been in economic turmoil for most of the time since WWII.  The world did not collapse.  It wont this time either.

 

Sat, 06/02/2012 - 10:49 | 2487150 t_kAyk
t_kAyk's picture

Will it ever?  We've been carrying on with this song and dance for some time now and it never stops.  People have been screaming about doomsday for years now and every day a new article comes across the headlines that reads "the one chart that spells total collapse" or "the real canary in the coal mine", yet the train chugs along. 

Maybe they can do this forever.  Maybe it's some sick, twisted joke to keep us in a quasi-panic, to keep us occupied with ZH and chart porn and zombie rumors, so that we are constantly on edge, letting it eat away at us day after day. 

Don't get me wrong, I am preparing and spreading the word and I do think it's all coming down, but sometimes it just makes you wonder...

Fucking Groundhog's Day. 

Sat, 06/02/2012 - 10:54 | 2487157 Seasmoke
Seasmoke's picture

Fucking Groundhog's YEAR.

 

There fixed it for you

Sat, 06/02/2012 - 12:10 | 2487234 LowProfile
LowProfile's picture

We may not get Ragnarok.

But we will get a reckoning, and within the next few years.

I'm betting it gets started after the election, gets rolling by the following Spring-Summer, and concludes by the year after.

Sat, 06/02/2012 - 12:45 | 2487288 FreeNewEnergy
FreeNewEnergy's picture

I'm in general agreement with the timeline presented by LowProfile above. The global economy has to be in serious shit come November so the election fixers have justification for making Adolph Romney the new Fuerher, er, President.

Nothing short of massive sovereign defaults and a return to gold or gold/silver standard will fix the fiat mess. There are historical precedents to the demise of fiat currencies, and they always eventually end up the same way, in abject, utter failure.

This time is no different, except that it's global.

Sat, 06/02/2012 - 13:11 | 2487321 LowProfile
LowProfile's picture

Agree, except I don't think there's fundamentally any difference between Obama and Romney, and that putting a sovereign on a hard money standard is practical.  Better to let gold and silver float free of taxation and derivatives (1:1 allocated trading only, no sales tax, no capital gains tax).

Here's my work in progress:

 

1.) Let GOLD trade free of taxation and derivatives.  No more levered futures contracts.  1:1 allocated only.  No tax on gold sale, capital gains or otherwise.  Do it with silver too, while we're at it.

2.) Impose a national progressive real estate tax with a super high threshold, say $10,000,000.   No federal taxation below that level.  Amend The Constitution to allow the threshold to rise based on the true rate of inflation measured against gold, silver, energy and food.  Amend The Constitution so that the states cannot tax real estate below a threshold of $5,000.000.

3.) Ban all other forms of taxation (including fees, tolls etc.) with a Constitutional amendment.

I would include an amendment that the Fed Gov't cannot own more than 15% of the country's land, and the states cannot own more than 15% of their respective state's land AS ASSESSED BY DOLLAR VALUE....

That fixes the problem for about 1000 years.  Taxation is progressive, but only above a very high threshold, allowing those who want to live simply and self-sufficiently to do so if they wish.  This forces the monied elite to deploy their capital towards CAPITALISM (seeking profit via production of goods and services), as opposed to their current method of seeking a return on their money, COLLECTING RENT.

Sat, 06/02/2012 - 14:32 | 2487481 LawsofPhysics
LawsofPhysics's picture

Good ideas, too bad there isn't enough arable land.  I would only add that when businesses, companies, or individuals fail, there is no bailout mechanism, period.  It will make people at all levels humble damn quick, that or dead.

Either way, the good behavior and good ideas survive, and that is something that has not been happening since 1913.

Sat, 06/02/2012 - 15:14 | 2487550 t_kAyk
t_kAyk's picture

Sounds like it all comes back to 'knowing the value of your labor'.  ; )

Sat, 06/02/2012 - 15:33 | 2487590 LowProfile
LowProfile's picture

Not so sure there isn't enough arable land (at least in the USA).  Plenty of farmland currently being reclaimed from former suburbs, no reason that can't happen elsewhere.

I doubt that enough people would want the subsistence lifestyle to make it an issue.

Sat, 06/02/2012 - 21:33 | 2488133 harleyjohn45
harleyjohn45's picture

There is a big difference between Obama and Romney.  Obama welcomes a meltdown so he can reset the government into a totally socialist structure to his liking.  Since socialism is so great why is all of Europe on the ropes.

Romney cannot fix the problems, because the debt is so big any increase in interest rates would take the entire budget.  Actually the two men have nothing in common.  One is a very successful business man, the other is a failed community organizer.

Sat, 06/02/2012 - 21:20 | 2488110 mick_richfield
mick_richfield's picture

World without end, amen.

Sat, 06/02/2012 - 10:34 | 2487121 Boilermaker
Boilermaker's picture

What a party pooper.

Sat, 06/02/2012 - 10:36 | 2487127 russwinter
russwinter's picture

Official sector losses in the Greek re-default,

http://www.wallstreetexaminer.com/blogs/winter/?p=5010

Sat, 06/02/2012 - 10:39 | 2487130 Josh Randall
Josh Randall's picture

Does anyone cry when a LOAN SHARK goes bankrupt ? Didn't think so...goodbye IMF, and eventually ECB - your zerohedge moments are fast approaching

Sat, 06/02/2012 - 10:41 | 2487135 sansnobel
sansnobel's picture

Hey Tyler I just don't get why this is a big deal if Greece exits. So the ECB will have a bunch of shitty collateral Greek bonds....so what? They can make money out of keystrokes in a computer and just conjure up some new monopoly money. They don't have to abide by normal rules of accounting if they are the progenitor of the money supply. Why does everybody keep talking about balance sheets when it comes to Central banks? It doesn't matter!!! Banks fail, ECB prints more money, gives it to banks, they buy more gov't paper then the world sinks deeper and deeper into depression. That about sums it up? The politicians tell the people there needs to be more unity fiscally and monetarily in Europe or else we sink into the dark ages again....The stupid public are once again perfectly happy to pay the price of their slavery once again....rinse and repeat right? We don't have markets anymore by my estimation. Just Gov't Diktat

Sat, 06/02/2012 - 11:30 | 2487194 MsCreant
MsCreant's picture

Yup!

Sat, 06/02/2012 - 11:44 | 2487208 Marco
Marco's picture

The problem is that the ECB really isn't that print happy as everyone pretends and the losses of a Greek exit would it make it almost impossible for them to print more to buy up PIGS debt ... but they need to to save the Euro.

If Greece exits look forward to populist political parties in most norther countries demanding back the EFSF funds too ...

Sat, 06/02/2012 - 12:20 | 2487253 MsCreant
MsCreant's picture

They did print, are printing, and will print. 

We need a different word than print. It does not cover so much of what is happening. When Treasuries are sold by PDs to the fed, is this not printing? 

Sat, 06/02/2012 - 13:14 | 2487344 t_kAyk
t_kAyk's picture

How about 'conjure'? 

It is a bunch of chairsatan black magic... 

Sat, 06/02/2012 - 15:47 | 2487614 Hulk
Hulk's picture

We could call printing CTRL CVP...

Used in a sentence

The Bernank CTRL CVP'd 2 trillion more into existence

Done in actual practice:

0000

CTRL CVP

00000000

CTRL CVP

0000000000000000

and so on to infinity

no 0's were actually harmed in this CTRL CVP example...

 

 

Sat, 06/02/2012 - 11:56 | 2487222 ElvisDog
ElvisDog's picture

The key to keeping a fiat currency-based system going is that the Central banks have to maintain the illusion of wealth preservation and central bank responsibility in order to prevent a disorderly run away from the currency (e.g. Zimbabwe). If the ECB starts "making money out of keystrokes" the ponzi really will be over. What they want to do is to slowly debase the currency in a way that isn't overt to the masses.

Sat, 06/02/2012 - 14:47 | 2487505 AnAnonymous
AnAnonymous's picture

Nope. The key is to make sure the fiat keeps buying things.

Sat, 06/02/2012 - 10:43 | 2487139 fattail
fattail's picture

Wait for the election and see who the Germans are negotiating with.  The writer makes some good points, mainly that it will be too painful, and politicians will never embrace the short term pain to cleanse a system, when they can kick the can.    The wild card is convincing the strong members of the Euro to support the weak, not likely.

Sat, 06/02/2012 - 12:12 | 2487220 Marco
Marco's picture

Exactly what would we embrace which could allow short term pain?

If we allow a Greek exit and default on Greek bank deposits all the banks in Europe will domino from the weakest countries up until all remaining Euro deposits are in Germany ... destroying the European economy in the process.

Sat, 06/02/2012 - 10:47 | 2487144 ThirdWorldDude
ThirdWorldDude's picture

Uh, good luck bailing out Spain, Peter... It is game over for the euro, whether you want that or not. The games we're seeing now are only buying time, so the elites can prepare themselves for the inevitable.

Sat, 06/02/2012 - 10:53 | 2487154 CrashisOptimistic
CrashisOptimistic's picture

I don't think people quite understand that the Euro's survival is not important.

This debt will remain.  The bond holders will always have some Euro equivalent measure.  They will NEVER allow countries to redenominate their debt in their own currency.  The "Euro" per se may cease to be a common currency, but for the purposes of those bonds, it will remain a measure that exists.

There is no solution to this debt problem other than repay it.  There is no default.  The bond holders will just ignore the default and continue to bill for payment.  If they are ignored, then the countries will have no access to the credit markets.

Sat, 06/02/2012 - 11:16 | 2487180 piliage
piliage's picture

Greece tells Europe to suck it if they leave. They won't pay. What would Europe do? Drive a jeep to Greece and hand them a very hostile letter? If Greece defaults, the big losers are French, Beligan, Spanish, and German banks and they won't be able to do a damn thing about it.

I don't see the EU starving a bunch of Greeks to death on Euronews after a default no matter how much the EU Mandarins bloviate now.

 

Sat, 06/02/2012 - 11:32 | 2487196 ThirdWorldDude
ThirdWorldDude's picture

The Euro's survival is very important to the Club, strange that you haven't figured that one out yet.

The point is this: when Greece (just an example here, don't take it literally) exits the EUR and goes back to the drachma, all the debt under Greek law will be revalued in drachmas. The Grexit leads to the unholy break-up of the euro, so all the other countries will revalue their debt (under domestic and European law) into the old-new currencies, which very fast will lose between 40-70% of the nominal value. That's a pretty big haircut, primarily for the Troika. And they deserve it! 

Put yourself in their position - if someone asks you for a loan, but you know they can't pay you back, will you lend them the money?

Anyhow, my gut tells me the eurexit will be the trigger for the global reset button, in which case all debt will be repudiated.

Sat, 06/02/2012 - 12:06 | 2487229 ElvisDog
ElvisDog's picture

Hey Greece, can you keep a lid on the revolution for another month or so? I'm actually going to be in Greece at the end of June/early July. It will be interesting to see what's up first hand.

Sat, 06/02/2012 - 10:47 | 2487146 Towhog
Towhog's picture

Complete Burn. If my house is on fire. Call the fire department not the local handyman. The lunatics running the assylum are not as smart as the would have us believe. That is why they treat us as idiots. It hides their weakness.

Sat, 06/02/2012 - 10:50 | 2487151 Towhog
Towhog's picture

Complete Burn. If my house is on fire. Call the fire department not the local handyman. The lunatics running the assylum are not as smart as the would have us believe. That is why they treat us as idiots. It hides their weakness.

Sat, 06/02/2012 - 10:59 | 2487155 lolmao500
lolmao500's picture

Some more news...

- Panetta: U.S. will move majority of its warships to Asia region by 2020 (Reuters)

- Egyptian media reports that Hosni Mubarak has suffered serious heart attack (Haaretz)

- Iran builds new space center to launch satellites (AP)

- Arab League calls for UN Security Council action on Syria (DPA)

- France poll shows widening majority favors armed intervention in Syria (Reuters) (France doesn't surrender??)

- Leader of Syria exile opposition says would welcome Arab military action (AP)

- U.S. Secretary of State Clinton says Iran has until next round of talks to prove nuclear intent (AP) (war date being decided at Bilderberg right now, bet on it)

- U.S. Defense Secretary Panetta: There will be no military action in Syria without UN OK (AP) (riiiiiiiiiight)

- Britain: Military intervention in Syria would have to be ‘on greater scale’ than was in Libya (DPA) (yeah since Russia is gonna be involved...)

- Russian President Putin says political solution is possible in Syria, patience needed (Reuters) (that's funny)

http://www.haaretz.com/misc/breaking-news

- Judge revokes George Zimmerman's bond

http://abcnews.go.com/US/wireStory/judge-revokes-zimmermans-bond-trayvon...

- WORLD BANK BOSS: We're Headed For "Impending Catastrophe" -- "A Rerun Of Great Panic Of 2008"

http://www.businessinsider.com/world-bank-boss-impending-catastrophe-a-r...

- Japanese seismologists warn seismic tension is building on a tectonic plate east of Tokyo

http://theextinctionprotocol.wordpress.com/2012/06/02/japanese-seismolog...

Sat, 06/02/2012 - 12:13 | 2487242 Matt
Matt's picture

You know, all George Zimmerman had to do was claim that Treyvon Martin growled at him and tried to eat his face. Sure, people would have mocked him at the time, but by now, everyone would be supporting him.

 

Sat, 06/02/2012 - 10:58 | 2487159 Timmay
Timmay's picture

Meanwhile.... there's Dinner with Barack!

Sat, 06/02/2012 - 11:03 | 2487162 gwar5
gwar5's picture

The Daisy Chain will be an economic Daisy Cutter.

Sat, 06/02/2012 - 11:08 | 2487167 Towhog
Towhog's picture

The lunatics have us stuck in some sort of Hall of Mirrors carnival ride. Do not be fooled by the reflections. Rely on on what you know to be real. The reflections are intended to deceive us

Sat, 06/02/2012 - 11:10 | 2487169 bank guy in Brussels
bank guy in Brussels's picture

A mistake above amid Tchir's as usual fine analysis. He writes:

« ... This is Belgium, the home of Dexia, the land without a government... »

Actually, we officially installed a new government six months ago, at the end of 2011 ...

We have a very capable and nice prime minister, Elio Di Rupo, a dapper, charming, talented socialist gay man who often wears snazzy bow ties ...

And so a guy who would never make it to the top in the USA ...

Here's a photo of Di Rupo being sworn in by our beloved King of the Belgians, Albert II:

http://www.bbc.co.uk/news/world-europe-16042750

Sat, 06/02/2012 - 11:28 | 2487193 piliage
piliage's picture

"a dapper, charming, talented socialist gay man who often wears snazzy bow ties"

I agree he wears bow ties and is gay. Other than that, not so much...Belgium is in big time trouble unless it cuts the size of the government, deals with the 25% unemployment in Brussels, and sorts out the exidus of international companies to Switzerland.

He isn't addressing any of that, just trotting out the same old tired socialist canards of raising taxes...in the country with highest marginal taxes in the world (with Norway and Denmark).

Maybe you were being sarcastic?

 

Sat, 06/02/2012 - 11:35 | 2487202 MsCreant
MsCreant's picture

Don't listen to piliage. Can't you see it's just a sock puppet? ;-)

Sat, 06/02/2012 - 12:16 | 2487248 MsCreant
MsCreant's picture

I am teasing you about your chosen image. I think we agree on a lot.

Sat, 06/02/2012 - 12:19 | 2487251 piliage
piliage's picture

Poe's law in action :-)

Sat, 06/02/2012 - 14:55 | 2487517 Max UK
Max UK's picture

I think that you may be the target of some stalkers MsCreant; i can't reconcile the junks to the comments.

Fuck 'em.

Sat, 06/02/2012 - 12:10 | 2487233 ElvisDog
ElvisDog's picture

Hey Brussels bank guy, if you do a little research I think you will find that "dapper, charming, talented socialist gay" men recently have been or currently are mayors of San Francisco and Seattle. You posted this same lame-ass post a couple of months ago. Are you this guy's PR rep or something?

Sat, 06/02/2012 - 12:16 | 2487247 Matt
Matt's picture

I don't think "Mayor of San Francisco" counts as The Top. We're talking POTUS here.

Sat, 06/02/2012 - 11:15 | 2487170 Tom Green Swedish
Tom Green Swedish's picture

Gold Pumper Back.  Dominoes are falling.  Tyler - More Gold Posts Needed.

 

Here's what it looks like.

Dow Jones 1975 - 2000 - 1100 Percent Return.

Dow Jones 2000 - Now - 5 Percent Return.

We should have had at least a 500 percent return by now.

Gold is the new Dow Jones. Gold 2000 - Now - 500 percent return. Maybe there is no reward in risk.

If the US politicians cannot learn something from Greece then I do not know what can save us.

 

Sat, 06/02/2012 - 11:12 | 2487176 skipjack
skipjack's picture

Oh for Christ's sake...will somebody just stop the bailout madness already !!!  The world needs payment clearing houses; it doesn't need any particular bank.  Let the bad banks go under, ban CDS selling by depository banks, and let the sovereigns default and live within their means.  The benefits to doing all this are so sparklingly beneficial it's no wonder we hear all the screams for bailouts...the elite don't want their looting activities interrupted by the peons. 

 

We get rid of intrusive government when they can't afford to pay all those people to take away your freedom, we cut the legs out of the elite when they lose most or all of their money, since their "assets" are usually someone else's debt, and we humble the mega corporations that bring us poisonous food and crappy schlock widgets when they can't get corporate welfare off your backs and mine.

 

Really, what's NOT to like about the implosion; it's like a brilliant sunshiny day after a stormy night.

Sat, 06/02/2012 - 11:43 | 2487210 Winston Churchill
Winston Churchill's picture

Taking your metaphor just a liitle further.Having been in the eye of a hurricane

three times.There is a calm,but a background noise that sounds like a thousand

prop aircraft overhead.Then the other side of the wall hits.0 to 100 mph in no seconds.

Then a stinking hot day with no power,and days or weeks clearing up.

Huge build up by doom sayers,but in reality not that big a deal.

Its the anticipation thats the killer.

Its only paper, useful for kindlling only.

Burn.

 

 

Sat, 06/02/2012 - 11:24 | 2487186 Amish Hacker
Amish Hacker's picture

The people in charge are not in control, so pretending is the order of the day. No contagion. Ring fence. A little more stimulus ought to do it. Just one more loan. Meanwhile, there are real people experiencing real pain behind all the facile statistics. Suicide rates are way up, but the politicans are more concerned with their careers than their constituencies.

The worse things get, the more they will pretend that now, surely, it can't get any worse. It will.

 

Sat, 06/02/2012 - 11:28 | 2487191 Tom Green Swedish
Tom Green Swedish's picture

This is so stupid.  The ECB does not want Greece to leave because it wants a United Europe. How can you have a United Europe if Greeece leaves. If Greece leaves others will be tempted to leave.  What is their incentive to be United if their will never been full Unity.  Its like saying just because Mississippi sucks and is full of poor people and is a mesed up state they can leave the union.   If Greece leave no other country will want to joing the Euro again. This will go on for a long time. Use your head.

Sat, 06/02/2012 - 11:35 | 2487201 piliage
piliage's picture

So, the ECB gets to tell the Greeks, a sovereign country, that they must stay if they want to leave? How very fascist of you.

Long live the uber state! Shall we start building that wall around Greece now to keep them in?

 

 

Sat, 06/02/2012 - 11:35 | 2487200 Debugas
Debugas's picture

This is to my mind the most critical point - Other Devaluing Countries have been Resource Rich

Sat, 06/02/2012 - 11:47 | 2487215 Bag Of Meat
Bag Of Meat's picture

Great article. I don't think that this delay to kick the can means anything, some signals just come over time,and are then processed.

Sat, 06/02/2012 - 11:51 | 2487219 Towhog
Towhog's picture

Did precious metals decouple from Friday's market mayhem? Or was it an illusion?

Sat, 06/02/2012 - 12:05 | 2487228 JOYFUL
JOYFUL's picture

...While someone might be[sic] some olives because they are now cheap, no company is about to buy components for bigger projects from Greece.

It's worse than yu think. Mucho peor.

For years now the Club Med component of the YuOweZone have coasted on somebody else's cheap[er] labor...bring in north Africans by the boatload to pick the citrus n field crops...otherwise they literally would not get harvested...

Olives? For years now, the greeks, spanish and italians buy turkish olives n oil, repack into YUOW approved containers, (mis)labelled as product of wherever, n sell at big profits, to enable all of the parasitical urban dwellers of the bureaucratic classes to rush to the nearest ipod outlet for another rush of consumer madness...

It's all a big scam run outta Brussels, nexus of the child pornography rings of the dead kulture of Euromerika...

I watch the villagers piling outta vans here to work a day in the orchards for a wage that would make a Foxconn worker take a long walk off a short roof, and wonder...just how long till those poor suckers who go back home after a long days work to milk the family cow and prepare dinner for the kids are the only ones left alive n well, after the riff raff with their microwave ovens and cable enterainment packages have left the building for the nearest crematorium...

soon come.

Get a horse, if yu be wanting to make it through this next patch. If yu can't afford a horse, then get a donkey. If yu can't afford a donkey, yu better start takin long walks with a heavy pack...yu'll need the practice; "survival of the fittest" is not a concept ripped off by a C19th century biological theorist...it just is what it is...literally.

Sat, 06/02/2012 - 12:17 | 2487249 Eally Ucked
Eally Ucked's picture

What the hell he's talking about? ES? whatever or EcB, or IMF are not able to bail out anybody just for simple reason - they don't have any funds (real ones). How Greece will do in the future nobody knows, cheap prices and low wages will attract some big CEO's earlier or later there. It won't happen over night for sure. What about all those other countries overextended already (included Germany)? Where all tose monies are coming from? Extraterrestrials? He counts on some money to be made on something which is already dead? Good luck!

Sat, 06/02/2012 - 21:52 | 2488171 harleyjohn45
harleyjohn45's picture

I don't think the Greeks will work, they are not orientals, they don't have the same mindset.  The greeks will sit on their butts, until the entire country crashes.

Sat, 06/02/2012 - 12:43 | 2487285 q99x2
q99x2's picture

Repudiate the debt. Arrest the bankers. Then go fishing.

Sat, 06/02/2012 - 12:52 | 2487301 slewie the pi-rat
slewie the pi-rat's picture

gPap agrees, i would say

are the germans as styooopid as americans? 

will they continue to lie there with there asses exposed and permit these fuktards to keep hijacking their do-re-mi to cover the debt = money ponzi to enrich the facista uber-elita?

perhaps if germany were to demand acceptance gold and silver EU coinage as well as the paperFukingDerivatives as CURRENCY, also, we could see how that might work in the EU, and not hafta go all the way toUte-ah? 

let's put legal tender in the same ring with theReal and the same rules and see whotf taps out first?

slewie has been posting this for a year

the shitheads are now declaring this <totally incomrephensible> using it to prove i can't think straight!  L0L!!! 

and many are reading along and, enjoying the trolling efforts directed at their MSM-conditioned sheep-brains, join them

people who have been here since long before slewie;  some of whom blog more than once/month, too...and have very brown noZes...  the accepted disinfo agents here all have this stuff on their noZes...  and, they love it here!

and careers!  L0L!!!  and they invest and trade and have tax-shelterd retirement plans co-owned by some version of satan, herself

if it weren't for all those damnedFaustian contracts, they might be free, tho...  Hahahahahaha! 

Sat, 06/02/2012 - 13:00 | 2487313 theTribster
theTribster's picture

I agree in general although I don't think they ever believed that Greece would leave the Euro, too much has been invested in this grand plan regardless of its ultimate stability to let Greece leave and create contagion. That said, they are certainly willing to take on a considerable amount of risk visa-vie the whole issue of a Euro breakup, not just via comments made by the Eurocrats but also via actions (or non actions) they have taken. This has amazed and definitely surprised me, I expected some fo this just because they needed to set a precedent but this seems extremely risky when in the end they (Troika) will give in.

This is likely to continue until the 17th after the Greek elections, this has become the pivot point for the Greeks and their association with the union and the monetary system. I belive that but I think the pivot point simply defines how good or bad the conditions are for Greece going forward - and by extension the rest of southern Europe.

Here's the real deal behind the Greek economy:

http://www.youtube.com/watch?feature=player_embedded&v=Zvl9N9GdraQ

The Greeks are genius, absolute genius because their brain is fed by Feta Cheese and Olive Oil. As funny as this video is there is a lot of truth in it including the Drachman's under the bed, delaying the German campaign into Russia, etc. It is funny as hell though. If I was a German I don't think I'd be going to Greece anytime soon, maybe start looking at Florida for vacations. It has definitely created plenty of drama to watch and trade, volatility has been pretty predictable over the last couple of years.

 

 

Sat, 06/02/2012 - 13:18 | 2487350 CuriousPasserby
CuriousPasserby's picture

Yeah, just remember how they said the Y2K bug would be the end of the world. Greece will exit and life will go on. 

Sat, 06/02/2012 - 13:28 | 2487375 compound interest
compound interest's picture

Great article, good points, thank you.

I think in the long run there are 2 main scenarios for how things will play out in the EU:

1.) (the optimistic one) The EUR survives (not with all members, but most of'em), the banks don't.

2.) The EUR does not survive, the Eurozone breaks up. I'm afraid this also means war.

The banking system can't survive even in the best case. Most of the banks will go bankrupt and won't be bailed out, and some of them will be nationalised. The sovereign debts will be ''erased", but all the savings (bonds, money market products, bank deposits) of the people will be lost, too.

Sat, 06/02/2012 - 17:10 | 2487767 slewie the pi-rat
slewie the pi-rat's picture
Member for: 1 year 23 weeks
less than 1 page of posts, 0 posts in april and may
dude!   than you for sharing yer dualistic thought!
if there were a third possiblity, what might it be?
oops, sorry!  don't try to think!  just go way, ok? 
and take your "in the long run there are 2 main scenarios for how things will play out...  "analysis" with you!
Sat, 06/02/2012 - 18:04 | 2487853 MsCreant
MsCreant's picture

Are you implying this poster should be named "confound interest?"

Sat, 06/02/2012 - 13:47 | 2487411 kevinearick
kevinearick's picture

Auschwitz Again: Never Say Never Again

Before long, someone is going to start publishing all the research done in the concentration camps. And then the investigators are going to tie it all into what has transpired since, and it’s going to get ugly. Before that, or equivalent war misdirection, happens, you want your community buffered against shock. The Swiss Franc is in much bigger trouble than suspected, and the doctor controlled towns, running on government dependency, are designed to collapse in short order.

Most will be surprised by how much of the US consumer led, global economy came straight out of the camps. The German technocrat has attitude for a reason. Little Johnny and Suzie are about to get an education. Ignorance is not bliss. Stupidity has a steep price, all participants pay, and any delay in recognition only increases the penalty and interest at reversion.

By the way, just where is Soros keeping all his eggs, playing both sides against the middle? Bilderberg, Smildenberg. Have you noticed that the Hitlers are starting to show their true selfish, delusional, and controlling colors? Actually, the world is beginning to wake up.

If your medical treatment, your computer application, or your psychiatric evaluation was based upon psychographic research in a concentration camp, how much stock would you buy in the participating institutions? More importantly, what would you use for money? The Bible hasn’t withstood the test of time by accident.

Eye for an eye and do unto others say the same thing, from opposite sides of the looking glass. The perpetrating behavior of this little experiment in global population control is horrendous, but so isn’t the willing participation of the manufactured majority. Obama sees 2000 years back in time. Christ saw 2000 years ahead in time.

Stupidity is a test of patience. Don’t expect the basic operation of gravity to change any time soon. It’s the past. The goal is to look further and further into the future, to realize the unknown, in a feedback loop.

Ask anyone who has made any headway into the martial arts, or take a poke at that skinny old farmer some time. Physical strength is a function of spiritual strength at the higher altitudes. If you can adjust time itself, it doesn’t matter how powerful your opponent is. We barely increased the speed of time relative to the banks and they are falling apart at the seams. The German central bank refuses its counterparts and the Euro collapses, surprise, surprise.

Each community, knowingly or not, has a surplus or deficit relative to its self-sustainment, which drives its event horizon, one way or the other. What the Bible is telling you is that you want to employ counter-currency as a feedback loop, to adjust for necessary gravity. For some, the event horizon of the time fulcrum is a cow.

If you were given a blank canvas and told to draw time, what would you draw? If you value that which is timeless as your foundation, everything else will take care of itself. You were granted that which is unique at birth. Employ it.

Tobacco adjusts the time fulcrum, gold adjusts the time fulcrum, etc. Now, you are given another blank canvas. What would you draw? Don’t wait in line at the trough with replicating robots and expect a different outcome.

You are your own worst enemy, your own best friend, or something in between. Yelling at a rock may be therapeutic, but it does not change the nature of the rock. Build bridges with your spirit, and any physical opposition will work against itself, like clockwork.

Just because a manufactured majority known as US Government has the attention span of a gnat does not mean that America is so disabled. Digital money is like a radioactive dye in the blood. It reveals disease character quite effectively. A sword has two edges. A pendulum only requires one.

What is your unique durable good? Where is it relative to the root in the cycle of life? What does your import/export portfolio look like relative to you demographic requirements? At what demographic acceleration do you throw your life’s work into the black hole?

Have you taken a look at the disability and surgery rates relative to public health? If you don’t have your health, you have nothing.

Following the law isn’t about obeying the king. It’s about disrobing an effeminate boy, who “thinks” majority rule gives him the authority to direct grown men and women, only to see his strings being pulled by a girl. Ever notice how these muppets are always trying to surround you?

Making little monsters of their own children is one thing, but taxing real people, kidnapping their children, and borrowing against their grandchildren’s future is another. No such rule of law has ever withstood the test of time, but the lizards keep manufacturing majorities to that end. Bless their little hearts, because they are doing you a favor.

Empires are built to be destroyed, as an example to future generations. Bet any way you like, but God wins every time. That is History. It’s just a sh-show.

Be on your way. God has much better things for you top do than play doctor. Tend to your spirit and your intellect will flower. The body will heal itself, which is why it is so difficult to beat a fast walking man. If the goal is to know more than the unknown, failure is the only possible result.

Simple physics.

Sat, 06/02/2012 - 14:22 | 2487459 LawsofPhysics
LawsofPhysics's picture

Good post, I'll will only add that all economies are really local (as the lack of any "union" behavior in the EU now shows us) and getting more local by the minute.  Now is a Good time to know the real value of your labor, the difference between knowledge and wisdom as well as making sure that your neighbors do the same.

Sat, 06/02/2012 - 17:31 | 2487791 slewie the pi-rat
slewie the pi-rat's picture

don't forget the most important part:

make sure your neighbors understand the difference between knowlegde and wisdumb!

b/d god really likes that? 

that said, yer post above [14:26 | 2487463]  is a fine one


i think people, whoever, whatever they "believe" can also benefit by considering aggression and control in all areas of life


for example i recently cautioned a meditation student i met that imo any teachings to "control the monkey-mind" need to be examined for self-aggressiveness re: attention;  how did she evaluate what she was learning from this perspective?


huh?

Sat, 06/02/2012 - 17:30 | 2487805 tip e. canoe
tip e. canoe's picture

one of your best, kev, thanks for sharing.

it's all distilling down to the essence yes?

Sat, 06/02/2012 - 18:13 | 2487861 MsCreant
MsCreant's picture

Hey tip e. Nice to see you. Marked you up to counter that bizzare down. Agree or not, that was some thought provoking writing you were supporting. 

Tue, 06/05/2012 - 13:47 | 2496492 kevinearick
kevinearick's picture

hey tip; always good to see you.

gotta love critters....

Sat, 06/02/2012 - 14:14 | 2487442 BluePill
BluePill's picture

I want to re emphasize that Jews and Indians are running this fake show and we will see impending collapse of all economies

 

Its easy to single out Jews and Indians and tackle the problem today rather waiting for total collapse 

Sat, 06/02/2012 - 14:15 | 2487448 goodrich4bk
goodrich4bk's picture

I guess Mr. Tchir thinks we're all idiots here.  The collapse of a currency is not the end of the world.  Not even close.  Dozens of countries have experienced currency crisis and we're all still here.  I'm frickin' tired of Casandras and tools like Mr. Tchir profiting from fear.  If a "Grexit" is such a disaster, where was Mr. Tchir and all the others when the Euro was created without an exit mechanism?  It's like wiring the Twin Towers with dynamite, lighting the fuse and then running around demanding water from everybody else because you don't have an off switch.

I've got an idea.  Let Greece exit and whatever happens make sure the Greek people are free to hunt down and jail every genius who pushed them into the Euro in the first place.

Sat, 06/02/2012 - 14:19 | 2487454 goodrich4bk
goodrich4bk's picture

Bingo, just as I thought.  This dick helped create the very credit instruments that allowed Greece to get into its mess in the first place.  Here is a portion of his bio, direct from his website:

 

"Peter has been involved in all aspects of credit trading.  He started his career with Bankers Trust in 1994 in the newly formed Credit Derivatives group.  While at Bankers Trust and then Deutsche Bank, Peter ran High Yield Credit Derivatives which included cash, CDS, synthetic CDO’s, total return swaps on leveraged loans, and hybrid CLO’s.  During this time he was very involved in the industry groups that developed the CDS product and that deep familiarity with the product helps when trading as the in depth knowledge can spot trading opportunities when markets are volatile or headline driven.  He was hired by UBS to build out those businesses there, but over time became involved in the Credit Index Trading.  He was a board member of CDS Indexco, which created the CDX suite of indices." 

Sat, 06/02/2012 - 14:20 | 2487457 bugs_
bugs_'s picture

End the IMF

Sat, 06/02/2012 - 14:46 | 2487501 Jack Sheet
Jack Sheet's picture

Robert Brusca will provide the solutions to the issues addressed here in his next post.

Sat, 06/02/2012 - 15:00 | 2487524 malek
malek's picture

 with planning and time

Yeah sure. They only had 2 years to prepare for it, since the first tremors.

Sat, 06/02/2012 - 15:11 | 2487542 janus
janus's picture

Thanks, Mr. Tchir.  Janus has learned so much from ya; and i intend to continue.

in a world of woefully wittle fellas, tchir is a full grown man...and so, a tribute to ya, direct from the mississippi delta:

http://www.youtube.com/watch?v=4XSDe3UcvDE

spell M-A-N,

janus

Sat, 06/02/2012 - 16:27 | 2487694 mjk0259
mjk0259's picture

Greece doesn't export anything of significance. Tourism is their big foreign exchange earner. Conceivably, this could increase with lower prices but not if they keep bothering foreigners.

Sat, 06/02/2012 - 16:43 | 2487721 falak pema
falak pema's picture

Well when the world Bank chief says we are in global meltdown then even the TRilateralists are getting the jitterbugs : 

WORLD BANK BOSS: We're Headed For "Impending Catastrophe" -- "A Rerun Of Great Panic Of 2008" - Business Insider

Sat, 06/02/2012 - 17:06 | 2487760 Ted Baker
Ted Baker's picture

THE EURO PROJECT IS DOOMED TO FAILURE...THE BEST GERMANY CAN DO IS TO LEAVE THE EU ALLTOGETHER AND FOR THE WORLD TO RETURN TO THE GOLD STANDARD MAKING COUNTRIES EVERYWHERE MORE RESPONSIBLE AND MANANGING THEIR FINANCES MORE EFFECENTLY PERIOD...THE REST IS WASHY WASHY MEDIA...

Sat, 06/02/2012 - 18:03 | 2487848 Winston Smith 2009
Winston Smith 2009's picture

Oh, no, no, no!  The market already has all of the possible Greece scenarios priced in!  I've heard that a hundred times on CNBC.  Buy, buy, buy!  Stocks are cheap!  (sarcasm)

Sat, 06/02/2012 - 18:17 | 2487868 el Gallinazo
el Gallinazo's picture

Dead Man Walking 2 will be about Japan.  Just because the muppet matrix news is not talking about Fuckyoushima doesn't mean it is not spewing forth lethal radioactivity like a volcano.  And when the fuel rods, which for reasons of either stupidity or psychopathic intent stored above the reactors go, particularly the site containing a plutonium mix, the whole Northern hemisphere can kiss its collective asses goodbye.  Hope Kyle Bass has a ticket to Pine Gap in Australia five miles underground.

Sat, 06/02/2012 - 19:08 | 2487936 Bansters-in-my-...
Bansters-in-my- feces's picture

Remember 4 very,very important letters....

 G,O,L and D.

                                         ;0)

Sat, 06/02/2012 - 19:30 | 2487962 chriskha
chriskha's picture

Playing at your local movie theater the French movie l'idiot de l'elysées. Story-line A happy couple in Europe,where obstacles challenge their ability to get married . francois who wasted his money on gambling is in a long-term relationship with Angela. if she did agree to marry him, he'd have to borrow money from her.but before she says yes she wants gurantee that francois will never gamble again. Angela like any girl is keeping Russia and Eastern Europe  on Her hook in case things didn't work out with francois.

Sat, 06/02/2012 - 19:33 | 2487969 Coldfire
Coldfire's picture

The Greek state is insolvent in any currency. The problem is too much debt. More debt is putting out the fire with gasoline. Default started in May 2010, continued in July 2011, accelerated in March 2012 and will continue to unfold until it is complete, in Euro, drachma or quatloos.

Sat, 06/02/2012 - 21:10 | 2488057 earleflorida
earleflorida's picture

     A Greece exit [June 17-18, 2012]is the best thing that could happen for the EU, period! The Lehman event has just postponed the inevitable here in the states, when we should have taken our medicine and let the free market's work their magic. Instead, the political hacks co-opted their responsibility to the FRB which in a nutshell is a "Bond-Ghoul-Breeding Paradise" run by the worlds true 'T`PTB' Central Planning Machine"!  

      The markets are dying a slow unnecessary death of a thousand cuts when the 'bad apples' should have been discarded before they went into the proverbial barrel to begin with. Bailing out AIG, American Motors, Chrsyler [owned by a private hedge fund?], and giving all the Investment Banks, and lastly the "TBTF's", et.el., a 'Carte`Blanche' [get-out-of-jail-free-card] to the FRB discount-window [Holding Company's All,... simply pathetic!], was a JPMC/GS esoteric orchestrated exotic menagerie, of the "3rd [666] Kind"?

     Unfortunately, we are literally destroying 'true capitalism', as the bedrock foundation of modern society. Indeed, Marx's would be very proud!

       So to answer your query [anyone?], I don't think the Grexit will destroy the world [perhaps a week of managed confusion should be expected], but, just perhaps, getting this obstacle out in front of us and discarding this minute obstacle off the glide-path to a EU/USA recovery - which will embolden our courage? It should certainly open our eyes, at most,... that we as a collective global society, can't keep kicking this greasy can down the road forever without eventually breaking a [as these politically unelected hacks would have us believe] leg.

     Thus, in conclusion - this should bring back a little sanity to this [a] "Temporarily Insane Capitalist Free World Market - 'Gone Terribly Inert",... controlled by a few bond ghouls who think they control all the free world's "Central Banks"!

jmo 

 

Sat, 06/02/2012 - 22:16 | 2488224 Bugsquasher
Bugsquasher's picture

Interesting but not a line about the CDS or other related derivitives to PIIGS debt.

Sat, 06/02/2012 - 23:29 | 2488395 CommunityStandard
CommunityStandard's picture

Hold up.  Is this article supporting more can kicking?  Are we graduating from zombie banks to zombie countries?

Sun, 06/03/2012 - 11:00 | 2489010 MsCreant
MsCreant's picture

That is what I saw too.

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