GREXIT 2015: Europe self-destructs but doesn’t know it yet
The deal force-fed to Greece by the Germans guarantees Grexit 2015. Look at all that this deal has embedded into its terms, and you’ll see how a Grexit is now assured. This new eurodeal creates all the chemistry necessary for an explosion.
Yet, the stock markets rose today because people are excited that, at last, a deal is within reach. A deal, even a bad deal is viewed as good. The New York Stock Exchange said, “Yay! We have a deal to save Greece from leaving the euro.” Of course, the U.S. stock market is dumb. If investors knew anything collectively, the market wouldn’t crash every seven years.
Grexit 2015 is a Greek tragedy, written by German composers
A 2015 Grexit is assured now because Greek Prime Minister Alexis Tsipras was just given a meat pie to eat by Germany that is made out of his own children. Tsipras told all of his fellow Greeks that the German deal that is now two weeks stale was unacceptable because it was intended by Germans to “humiliate” Greeks. Therefore, he said they should vote against it. They supported him, and Germany repaid him by pressuring him into a deal that is twice as bad. Now, Tispras has repaid his supporters by accepting this far-worse deal.
Because of Tsipras’s referendum to the Greek hoi poloi, all Greek banks now lie in ruins. Greece’s economy became dramatically worse than it was before Tsipras started his brinksmanship with Europe. That meant that, if austerity is going to work (which it never was in Greece’s case), Greece will have to make even greater cuts and raise even more taxes to balance its budget. So, Tsipras was handed his own head to carry back to Athens because of his choice to challenge the eurogods with his referendum to the people.
He returns, first, to his own enraged party, which would certainly reject this deal, except for the fact that the Greek banks are now all broke, and everyone is really scared. Brinksmanship took the entire populace to the edge of the cliff where they could look over and see how sharp the rocks are and how far below. The Greek chorus will murmur, but it also may swoon at the thought of taking the plunge over the eurocliff.
The Greek banks are on the verge of collapse. There is not enough cash left to cover ATM withdrawals… Capital controls have led to an economic stand-still. Almost nothing is coming into the country. Firms are running down their last stocks of raw materials and vital imports. Hundreds of factories, mills, and processing plants have already cut shifts and are preparing to shut down operations as soon as this week. (The Telegraph)
Food stocks are dangerously low to where this could become a humanitarian crisis in less than a month. Greece’s major industry, tourism, is down by 30%. Some people are probably not getting paychecks because of the banks being closed.
When the referendum was called, Europe quickly shut off the valves that supply Greece in order to destabilize it and try to drive the populace away from voting against the deal Europe had proposed — to show them how horrible things can look when euros are cut off from Greek banks.
Likely, they are making a lesson out of Greece for Spain and Portugal and Italy to take note of so no one else tries the road of default. “You want to default, we’ll take a look at what default really looks like. Here’s a taste.”
Tsipras cannot even claim that he has, at least, secured debt relief. No debt relief is included in the new Eurodeal, and all bailouts are contingent upon austerity being carried out first.
Unless Greeks play the fool in their own play by embracing the new Tsipras deal as something they must now inevitably accept (which I don’t think is likely), Tsipras is a dead man walking. So is his government, even if it doesn’t accept the deal because of what it has brought about. The government will either fall apart arguing over the humiliating terms thrust upon it, thanks to its own leader; or it will face utter rebellion in the streets. The Syriza government is, itself, a party of rebels. They like to rebel. So, the deal is designed to create a lot of rebellion.
Grexit 2015 starts on the streets
Even if Tsipras can convince his factious government to accept this rotten sausage pie made from the blood of hisf fellow Greeks, Germany has virtually assured chaos on the streets. While Greeks may reluctantly accept this monstrosity as something that now has to be eaten for survival (I doubt it), the play unfolds in days ahead in ways that are certain to create disillusionment, depression, rage, chaos and anarchy that still lead to a Grexit.
Some will turn immediately to rage in the streets and in parliament because they were already the enemies of Tsipras and his Syriza party. Everything that has happened in July will authenticate everything they have ever said against Syriza. Others will hold off on their rebellion until they see national treasures that belonged to the Greek people for thousands of years sold off to private owners. The cultural humiliation will be severe, and it will be long in unfolding if the deal is accepted.
Greeks will see their taxes go up and efforts to collect those taxes become more aggressive, and that will prick toward rebellion. People that weren’t taxed before will find themselves taxed. Others will see their first pension pay check since the banks’ closed and will note with ire how much more it dropped than it would have if Tsipras hadn’t challenged the eurogods in a game of Herculean brinksmanship.
Everyone will watch as their national debt goes up by something like seventy billion euros because of this bailout, and will panic that, if the previous bailouts could never be paid, how will they pay off their national debt now. They will know for certain they are in a debtor’s prison for the remainder of their forsaken lives. All economic hope for Greeks adults who are alive today is gone with this deal, even if it should (against all likelihood) bring success for future Greeks. Despair will spread through the streets like the darkness of night.
That is, all of that will happen if the Greek government capitulates with the new eurodemands. However, the deal emasculates the Greek government, too, forcing them to agree to give up even more sovereignty to their European overlords. The Greek people, who invented democracy, will have less to say because Greek assets are being placed almost under receivership by being put in trust of European authorities.
Finally, nothing good that is promised in this new bailout goes to the Greeks unless the IMF and/or other European entities approve disbursement based on what they see of the Greeks’ willingness to live under greater austerity than what they have lived under during the last several years.
This deal is not just a debtors’ prison, it’s a stallag
Grexit 2015 starts with all Greeks being rounded up, thrown into a German-built stallag and then being starved for years to come. The new deal assures that, until the Greeks make reparation to Germany for all their debts, they will be economically imprisoned under European authority. That’s why this deal assures a Greek exit from the Eurozone.
Think of what happened when Germany was forced into extreme austerity by the victors of WWI when the German people were tasked with making heavy reparations to the victors. The result was German humiliation and years of German poverty. This gave rise to Hitler as their savior, someone who restored Germany’s prosperity and strength. It gave rise to mass sentiment that buy bulk ambien Germany needed to make certain no one ever dominated it again by making certain that Germans dominated everyone else.
I don’t think it will take years, as it did with Germany, for a Greek uprising to happen. Expect the growing heat of economic drought during the dog days of summer that are just ahead to create a landscape so bleak that Greeks rebel this summer. While rebellion will start in many quarters today, the Greek chorus of embittered people will crescendo over the scalding days of the remaining summer. Expect more riots in the streets. Expect the government, if it accepts this tragic plot, to be thrown out. Expect things to fall apart as despair gives way to rage.
Says, nobel economist Paul Krugman (someone I don’t often quote but agree with this time):
“This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.” (The Telegraph)
There is a reason for the biblical mandate that debts be forgiven when they become unpayable. Even God does not expect people to labor as slaves to debt for the remainder of their lives because of bad decisions they make; but Germany’s taskmasters are applying their stalwart ways to make certain these miserable debtors pay dearly for what Germany has already written off.
Germany is creating its own demise with this eurodeal
We have already seen three bailouts based on German austerity fail in Greece because the debt load is — by the estimation of many political leaders and financial analysts — unpayable. Since Germany has insisted on the impossible by proffering an escalation of debt with stronger assurances of payment, rather than simply forgiving the existing debt, the German people will ultimately become responsible for the much bigger debt that remains whenever Greece eventually defaults (if the eurodeal is accepted).
Nothing in the present deal makes the Greek situation more likely to end in the greater prosperity that would be necessary to pay off the much greater debt that this deal will create. That means that, when Greece does fail, all Germans will have more to lose. All of Europe will have more to lose because they are, once again, throwing good money after bad. They lack the fortitude to accept reality — to accept that bad debts are unrepayable and simply take action to cut their losses.
There is no hope whatsoever that this new deal will ever be repaid, but Germany is stubborn in its resolve to believe that tough measures will pay off. It’s that German work ethics and discipline (good at times) returning to its very worst extreme, and that has long been Germany’s blind spot because it is seen as a virtue. That is why Germany did not back down, and I did not think it would. It will do what is worst for itself in the stubborn belief that German discipline will be good for everyone … if they just do it.
The best outcome of this bad deal for everyone would be for the Greek parliament to soundly reject it this week and make for the Grexit now in 2015. Much greater pain and public turmoil in the months to come will be avoided if Greece takes it pain now.
To make that work, Greece must announce that it intends to default entirely on every debt that it owes and wipe its slate clean; but will Greeks have the courage now that they are lined up along the cliffs of the Aegean, looking down at the rocks? The eurodeal intends to push them over the cliff. A Grexit means finding the courage to climb down it. Each choice is horrifying.
Summary of Eurodeal terms that, in toto, ensure Grexit 2015
- The makers of the eurodeal seek to transfer €50bn of Greek assets to “an independent fund that will monetise the assets through privatisations and other means.” This could include cultural assets that have belonged to the people for thousands of years. The Greeks may be, in other words, agreeing to sell the family heirlooms … depending on how far they have to go to raise 50 billion. By selling off or in some manner monetizing these assets, the fund will be used to pay off Greek debts as necessary. Greeks get to run the fund, but they will be supervised by “relevant European institutions.” Maybe they’ll create Disney Acropolis with animatronic talking versions of Plato and EuroRipides. The latter can tell future tourists how this tragedy unfolded. I can hear the chorus of little Greek bluebirds now.
- The administering of any promised EU bailout funds that the Greeks get in exchange for selling the family farm will be subject to EU approval at each inflection point in the deal. Moreover, Tsipras proposed no International Monetary Fund involvement in future bailouts, but the new deal states he will actively seek IMF involvement. He got his hand slapped with a large olive branch.
- Greece must increase fiscal austerity (when its goal was to get out of austerity) by about 2% of GDP next year. That is to happen by cutting pensions and raising taxes, assuring more economic drag on a populace that already has little money to spend.
- Greece must immediately create measures for automatic spending cuts if the above action fails to meet budget targets … as happened with the U.S. sequestering agreement.
- Greece must implement banking regulations imposed earlier by the EU.
All of this comes with no debt relief in exchange — something even the International Monetary Fund said was essential in large quantity to secure any kind of sustainable program for Greece. The deal is, in other words, anathema to everything Tsipras and Syriza said they stood for, and offers Tsipras nothing of importance that he asked for.
Then, when the Greek government misses any of these targets in the future, as they already have with past targets (so how can they not with even more austere targets), then the promised funds will be withheld, assuring the next default, just as recent withholding assured the recent default. Europe has been down this road already, but that isn’t stopping the German designers from designing failure.
One might reasonably conclude from this that this deal is intended to be so reprehensible to the Greek parliament as to press them to vote to exit the euro. That way Germany can claim they offered a deal and Greece left the euro by its own choice. It’s hard to imagine the Greek parliament will accept this putrid offering, but fear may rule.
In fact, at this point, I would say Greece is ruined, no matter how you cut the pie. In the very least, by forcing the sale (“monetization”) of Greece’s national assets, the Trojans hope to loot Greece before it exits the euro if Greece chooses to remain in.
Greece, itself, looks like a dead man walking. The new Eurodeal is a worse diplomatic disaster than I imagined, but Europe is acting like this is a plan and that a 2015 Grexit has been avoided.
Since the worst possible results have been handed to Greece with Tsipras agreeing to sell them to the people, expect a lot of rage in the days ahead. I’d say a Grexit has been assured, and that 2015 looks all the more likely because of the chaos this plan will create in the streets of Athens.
But, hey, the US stock market, in all its wisdom, saw this as a good thing! So, there you go; everything is fine. Party on.
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