Is Greece About to Derail the Bailout Yet Again?

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Germany found it hard to conquer and control Greece in World War II. History seems to be repeating itself.

After Greek Prime Minister Papandreou’s inspired gambit of a national referendum to approve the latest bailout pact was beaten back by an ugly combination of betrayal by his finance minister and bullying by the IMF, Merkel, and Sarkozy, the sad farce of the Eurorescue seemed to be back on track. The endgame is clearly default for Greece, or in lieu of that, a deeper restructuring down the road. In the meantime, the country is being driven into the dirt as a perverse showcase of the creditor sovereignity. Public services of various sorts are falling apart, young people who cannot find jobs are emigrating, suicides are skyrocketing. And the country now is running a trade primary budget surplus, which means default and abandonment of the euro is a viable option. And as we and other commentators have observed, Greece is only one of the many probable points of failure in the latest rescue scheme.

But foreign effort at containing Greek politics may be failing. Even though Papandreou survived a vote of confidence on Friday, by Saturday, his coalition was fracturing. Per the Financial Times:

George Papandreou’s chances of putting together a strong coalition government that could persuade international lenders to unblock fresh funding for Greece have faded after the conservative leader bluntly rejected his proposal.

Antonis Samaras said on Saturday his New Democracy party would not join a new government that would lack a clear mandate. He repeated his call for immediate elections.

Analysts said that without the support of Greece’s largest opposition party, Mr Papandreou would be unable to secure the disbursement of a desperately needed €8bn loan tranche, exposing the country to the risk of a disorderly default by the middle of December.

The New Democracy Party contends that elections could be held before the mid-December drop dead date for getting the next €8 billion infusion. Failure to receive funds by then mean both default and and bouncing checks to government employees. And while New Democracy says polls are necessary to demonstrate popular support for the deal, a survey conducted in Athens found that the public would prefer a coalition government to elections. (Note that one of my Greece mavens said polls there are not as reliable as in the US, so you may need to take this finding with a bit of salt).

The New York Times argues this may just be grandstanding. Perhaps, but if it goes on for even a few days, the markets will not by happy. And with Italian government bond yields at over 6%, the stakes are much bigger than Greece. From the New York Times:

While such stands may be nothing more than clever negotiating strategies to win concessions, any sign that Greece may be headed for a poisonous stalemate is sure to rattle other European leaders — and creditors — craving stability….

But as the dust settled Saturday, it was still unclear whether Mr. Papandreou’s referendum gamble was a brilliant strategy to hasten passage of the debt deal, which is Europe’s best hope to create a firewall around Greece, or whether it achieved a short-term political gain while dooming the government’s ability to work with opponents to approve the agreement.

It dictates the approval of a series of austerity measures the government has already agreed to and imposes a permanent foreign monitoring presence. Amid growing social unrest, the Socialist government might not have the ability to pass the necessary legislation on its own, hence Mr. Papandreou’s appeal for broader consensus.

I must be a bit dense, but I don’t see how any other vote save on a referendum would be tantamount to a show of public support for the deal. Even when big issues are looming, people vote for parties and particular politicians for all sorts of reasons. The New Democracy Party has said it favors the deal, but its leader, Antonis Samaras, also made a statement tantamount to saying some of its targets would need to be revised. The stance of the international coalition is that this deal is take it or take a hike.

This may all prove to be a weekend drama that blows over. The two camps meet tomorrow. But the Times says failure to patch things up means early elections. Stay tuned.

Update 11:00 AM: Reader Alexander Goy caught the embarrassing error (see strikeout above). Another function of overhasty drafting. I did this post while cross posting the outsourcing post, and somehow the two bled together. The funniest example I had of that was about 15 years ago, when I did a client project that included a simply insane amount of travel (5 continents in 8 weeks, with the trips sequenced in the worst imaginable manner, for instance, London-Seoul-Lisbon) for JV partner interviews. Caracas was the only port of call in South America. When I wrote the report, I played music while I was working, including Evita. Thank God I submitted a draft to some friendly people at the client. One guy wrote, “This is all really good, except what is this about Argentina?” Needless to say, I no longer play music with lyrics while drafting.

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  1. Alex

    Greek debt started to nosedive at what – 7%?

    With Italy cresting at 6, does anyone seriously think this is going to end well?

    And yes, you can count me among the many shorts having their ‘Waiting for Godot’ moment but…surely, this will all eventually collapse.


    PS – Yves, any chance we could do a NC meetup at OWS for the out of town people? I’d like to see it for myself. New York is a fun destination during the Holidays.

    1. Yves Smith Post author

      There is actually a decent bar nearby, a bit noisy, but very down to earth. Not sure how we’d find a date that worked for everyone, but not a bad idea in the abstract.

      1. Dave of Maryland

        How about a weekly meeting at some wee hour of the morning, everyone brings a laptop and comes prepared to do a round-robin of posts for NC?

        1. Yves Smith Post author

          That is brilliant in a sick way. I am trying to get my sleep cycle back to retiring at worst at 1 AM. I’ve joked that I’m probably the only person in NYC who is not either running a nighclub, on crystal meth or in the sex trade who keeps my hours.

  2. psychohistorian

    If it wasn’t that all these global western “democracy” politicians are tools of the global inherited rich, they might even be earning their money for a change.

    But alas, its all kabuki to keep the masses in line, under control…..and consuming.

    I keep wondering how my comment from the other day will turn out….As goes Greece, so goes the 99% .

    We will keep watching the worm turn……

    1. Jane

      It’s heartbreaking what these damn criminal banksters and their cohorts have done. So many shattered lives… I wonder if they even care?

      1. Cynthia

        Some words for the country of Greece

        Whom Banksters decided to fleece

        Don’t let them own ya!

        Don’t be Cleptonia!

        Rise up…this corruption must cease!

        H/T: The Limerick King

  3. Phil

    I don’t know a lot about economics, but could Greece print their own money and peg it’s value at the Euro? Wouldn’t that essentially let them print their way out of the crisis (but bring everyone else’s euros down in value?) Or would it do something else?

    1. Foppe

      It is not very easy to peg your currency to another, and it wouldn’t do Greece much good, since a large part of the problem is that the cost of living has risen enormously since the creation of the Euro (which means loss of competitiveness because wages have had to rise as well), while they have few exportable goods (and much of what they had has disappeared since then).

    2. William C


      I read your question about ‘printing their own money’ as referring to Greece printing its own euros effectively without limitation by other member states of the ECB . I have not checked the legal documentation but think there is bound to be something in the European Treaties which prevents member states from doing that (in a similar way as, presumably, individual states and cities in the US cannot just run some printing press somewhere to pay their bills), though I have read rumours of some member states’ central banks allowing themselves more freedom than they should.

      If I have misunderstood you, and in fact you meant print their own different currency, that idea is effectively what is proposed by those who suggest Greece leaves the Eurozone. The new currency (drachma) could be pegged against the euro but it would have to be at a rate that could be defended in the market if it was to be freely convertible. This is why there are suggestions Greece would have to devalue to ensure the new rate against the euro would be realistic.

      Alternatively it could allow the new currency to float in the fx markets.

      1. William C

        For those sad people like me who are sufficently nerdish, I did a little research and established that the relevant Treaty provisions are in Article 128 of the European Treaty.

  4. Lafayette


    YS: The endgame is clearly default for Greece, or in lieu of that, a deeper restructuring down the road.

    I remain skeptical that such will happen. The Greek people seem to know what is best for them – and they are the ultimate arbiters of this Unqualified Mess.

    The Greek Right (which is essentially just one party – New Democracy) is seeking a political advantage. If it comes to new elections, however, there is no definitive reason to think the ND can win it.

    Greeks may be angry about the increased austerity set upon them, but they also know the politicians who are responsible for this mess. Both major parties are guilty of increasing the debt because it was politically the easy-way-out.

    See the history of Greek debt here. Note that since inception of the EuroZone, each EU member-state’s deficit must not exceed 3% of GDP and its public debt must not exceed 60% of GDP. Note also that the euro came into existence on 1 January 1999 and throughout its existence, Greek debt has been far above the 60% limit.

    For an interesting overview of how the Greek debt evolved, this Der Spiegel article is here. Take particular note of the involvement of Goldman Sachs …


    Papandreou has negotiated the best settlement possible, given that there are only three alternatives:
    * Either the Greeks accept the austerity the solution imposes upon them, or
    * The Germans bail the Greeks out entirely because Germany is the only country that can afford to do so (but the Germans will refuse intransigently given Greece’s debt-history), or
    * The Greeks leave the EuroZone (but not the EU), which will mean even more hardship than the first alternative above as a massive depreciation of the drachma occurs (meaning, for instance, their import-oil bill will skyrocket with only a little relief from enhanced tourism).

    The sentiment in Greece, according to the polls, is that the solution impacts negatively Greece’s sovereignty. But many in the EuroZone feel Greece’s “financial sovereignty” was compromised long ago by politicians who willfully bluffed the EU regarding its National Debt and took no measures whatsoever to reduce it.


    In fact, a second line of defense is already in preparation. The IMF will be placing Italy under tutelage. Berlusconi is being placed on a leash, where he belongs. (Meno male! ;^)

    We shall see what the tandem Draghi-Lagarde can do to reinforce Italy’s position. Draghi knows well the inner workings of the Italian Ministry of Finance for having worked there.

  5. Jose

    Yves, where did you get your figures for Greece’s “trade surplus”?

    Last time I checked they were running a current account deficit of 7 or eight percent of GDP.

    1. Yves Smith Post author

      Yes, early AM drafting error, see correction and abject apology update. Primary budget surplus, not trade surplus. I was moving too fast in the early AM (drafting, packing for trip, and hence multitasking badly).

  6. Rodger Malcolm Mitchell

    Greece is monetarily non-sovereign (

    A monetarily non-sovereign government can survive long -term only if it has money coming in from outside its borders. Germany survives on its positive balance of trade. There are two, and only two, solutions for Greece:

    1. Return to Monetary Sovereignty by re-adopting its sovereign currency


    2. The EU to give (not lend) euros to member nations as needed.There are no other long-term solutions. None. Any purported “solution” that is not #1 or #2 is doomed to failure.

    Those who do not understand Monetary Sovereignty do not understand economics.

    Rodger Malcolm Mitchell

      1. F. Beard

        Not piffle. Understanding monetary sovereignty is not sufficient but it is necessary to understanding economics. And since I just know Rodger would appreciate some support from the Bible:

        Men prepare a meal for enjoyment, and wine makes life merry, and money is the answer to everything. Ecclesiastes 10:19 [bold added]

          1. porge

            correction spelling: Rothschild.

            The problem is so obvious that it makes me feel sick to watch all the nonsense that surrounds it.

            The government of the people should issue and control the money and it could also be issued as debt with the government collecting a nominal interest on each currency unit it lends to the banking system to use in lei of taxes toward the spending budget.
            The bank gets a loan applicant that it deems worthy via due diligence and then MUST go to the government for the money……The government lends to the bank at 2 % and the bank lends to the entrepreneur at some capped interest rate say another 2%.
            With this system the government has an income on ALL new money created.

            Now I know this still is a perpetual motion machine in that it demands creation of new money to pay the interest on previously created money but at least it is going to fund the national budget instead of a criminal cabal of psychopathic greedy bastards that should not only be disposed of their power but removed from society altogether.

          2. Min

            “The government of the people should issue and control the money and it could also be issued as debt with the government collecting a nominal interest on each currency unit it lends to the banking system to use in lei of taxes toward the spending budget.”

            Didn’t Pennsylvania do something like that (a land bank, I think) back in the 18th century?

          3. porge

            I don’t know.
            I am just using common sense and making this arrangement up off the top of my head.
            There are probably many other ways to structure a fair banking system but one thing that is for sure is that the current rigged, swindle system is not one of them.
            Again, I can’t believe this isn’t obvious to everyone.
            I don’t think there is anything wrong with a fiat money system either as long as it is in the hands of honest men of integrity.
            The problem with anything is that it can be high-jacked by criminals and used against the general good.

    1. Eric

      even with the drachma, Greece was not able to borrow in own currency, so option 1 will not help them.

  7. Ed

    “Germany found it hard to conquer and control Greece in World War II. History seems to be repeating itself.”

    This is nitpicking, but you don’t have an editor. It really wasn’t that hard for Germany to conquer and control Greece in World War II. Besides the inaccuracy, the sentence doesn’t really add anything or is that relevant to the rest of the post. Its just throat clearing. The post would be better off without it.

    1. The lives of others

      Yes, the sentence should be inverted:
      Greece fought hard to resist Greman invasion and occupation. Memories of the brutal German regime are still lingering in Greece.

      1. Lafayette

        TLO: Memories of the brutal German regime are still lingering in Greece.

        But, their Deutsche Marks then were and their euros now are very welcome.

        Curious, that, dontcha think?

        1. rotter

          whats to be curious about? German Imperialsm and a strong Germany ecopnomy have goone hand in hand both times. what are you puzzled about?

    2. Anon

      Respectfully, Ed, I disagree.

      We are faced with global financial fascism, no joke. Its center is not Germany, but Wall St. The German elites are merely trying to impose Wall St’s preferred “remedy” of austerity/suffering on the Greek people, in order to preserve the holdings of the greedy 1% of “risktakers” – read sociopathic banksters who have wrecked the economy for everyone else.

      As another poster on this site once pointed out, the Cold War began on the streets of Athens in 1944, with the brutal destruction by the British army of the Greek communists. A vicious military junta, backed by the West – not dissimilar to murderous right-wing governments backed by Wall St interests in Argentina, Brazil and elsewhere throughout Cold War period – held sway there for years.

      A financial solution to the Greek “crisis”, at the behest of the of the too-rich-to-give-a-fuck squiderati, is being imposed on the Greek people without their consent.

      To me, that pretty much looks like an act of financial warfare.

      I think the comparison with the German invasion of world war two is entirely apposite.

      Because underlying all wars, “hot” or “cold”, is the class war that never ends.

      1. Lafayette

        Anon: The German elites are merely trying to impose Wall St’s preferred “remedy” of austerity/suffering on the Greek people, in order to preserve the holdings of the greedy 1% of “risktakers”

        Rather, it appears that this view expressed is uniquely American in its perspective.

        The Europeans are implementing far more regulatory powers over their financial institutions – and BasleIII is being piloted far more so by the Europeans than the Yanks. And the Europeans are also promoting the Tobin Tax on financial transactions – which the US continually downplays. Obama did so again this week at the G20.

        Neither of the above measures has that much currency stateside. Perhaps Americans think Dodd-Frank patched up the holes in the Titanic?

        We shall see. If so, you (plural) have grossly underestimated the Greed on Wall Street. It knows no limits … until perp-walks are shown on prime time. Then, and only then, do the oversight authorities get some respect.

        Bringing back Glass-Steagal will do wonders to prevent a future recurrence of the Present Finance Mess. And it will not harm Investment Banking – just put a firewall around it, which it so richly deserves (pun intended).

        The above statement also refuses to understand that the EuroZone is 332 million people and 9.2T euros in GDP with 10% unemployment. Just where do you think, therefore, its priorities should be?

        1. Foppe

          Basel 3 is a joke, thanks in no small part to the institutional set-up, which ensures that the central bankers worry only about the worries of the banking lobby, and not at all about a broader need for economic stability; and while that is going on, national politicians happily pretend as though they no longer have any influence over the regulations being created by the Basel Committee.

          Furthermore — and lest you forget — Basel 2 was adopted and implemented first not in the US, but in the Eurozone. And it was that treaty that allowed the (Euro)banks to file away all OECD debt as being of the 0% risk variety, with no collateral required. In other words, it was written (and allowed to quickly be adopted) precisely by the European political/regulatory elites who you think of as more inclined to regulate than the Americans.
          Now, it is true that the EU is more cautionary in some areas (GMO’s, for instance), but this is certainly not the case when it comes to finance.

        2. Fiver

          Anon is correct.

          Any European efforts at real regulation of finance to date have been spiked by Geithner either directly or via the IMF and Basel. There is absolutely no doubt who is at the top of this grotesque debt-driven food chain, and that is Wall Street and the Fed.

          It is EXACTLY what happened during the Third World Debt Crisis, which for indebted WEAK countries lasted 2 decades. It is a brutal top-down squeeze. Merkosy have a gun pointed at their heads every bit as much as they do to that of Greece or Italy.

      2. Barbyrah

        Anon, so much insight oozing from your post…kudos.

        What so many “middle class white folk” of European descent tend to forget when championing an idea like “If we just bring back Glass-Steagall, all will be well again, and our ‘good old days’ will return once more”…is that there were no such things as “good old days” for a lot of non-white, non-European folk during those same times, courtesy of U.S. alphabet agency operatives who were plowing their way through Latin American countries and some Middle Eastern countries doing the training of death squads/assassinations thing as a way to “secure” riches for U.S. multinationals. Sheer brutality and resource confiscation, many times at gunpoint. And of course those alphabet agency folk were and still are joined at the hip to Wall Street.

        I would add just one thing to your excellent commentary: Me thinks the center of power on this planet isn’t Wall Street solely, but includes the financial district of London as well. Again, another one of those “MOTU” joined at the hip things.


    3. Yves Smith Post author

      I’ve heard accounts from Germans that suggest otherwise. Now remember, this is all relative (to Belgium, France, etc.).

      1. SidFinster

        Not to detract from the Greek struggles against German-Fascist occupation (and Greece was difficult for the Germans compared to France, Belgium, Holland, etc.) but Greece was no big deal compared to:

        3. Poland
        2. the Russian parts of the Soviet Union (Byelorus, Russia, much of Ukraine); and
        1. Serbia and Bosnia.

        All were absolutely buggy with partizans.

        The Wehrmacht used to get volunteers for the Eastern Front from men who had done tours in Serbia and Bosnia. (They also used to get volunteers for Yugoslavia from men who had come back from the Eastern Front.)

    4. Mr. Eclectic

      Actually they found it hard. After the defeat of the Italians in Albania, the Germans attacked from both Yugoslavia and Bulgaria, along with the Bulgarians, thus the Greeks had to defend against three fronts. It was the middle front that collapsed.

      After the collapse and occupation, and the first shock of the 1941/1942 winter famine (300000 dead), the Greeks organized, at first organizing strikes (the only other nation that organized a strike during the nazi occupation were the Dannish). Thus they managed to be the only occupied country that didn’t have to send forced labour to Germany, or “volunteers” to the Eastern Front.

      Furthermore, the resistance not only managed to be a continuous thorn in their side, but in fact it managed to control the majority of the countryside, and even liberating Greece, as the Germans withdrew. Greece was liberated by its own resistance forces (a centre/left/communist coalition), not by the Allies. Nevertheless, the price was dear, as the total loss of human life, as a percentage of the prewar population, was the third highest, after Poland and the USSR.

      As for the acceptance of the Reichsmark, Nazi Germany issued special Occupation marks for the occupied territories, which were practically worthless. Furthermore, it confiscated the local production (leading to the 1941/1942 famine), and forced the collaborationist government to “issue” a “loan”, which today is estimated, with a modest interest rate of 3%, to amount to 60 billion euros.

      On that latter point, the German state received a haircut in 1953, but the war time forced debts weren’t included in that. The German position was that it would honour its debts only after reunification, but in the 90s it just plainly refused to do so.

  8. Eric

    I found this interesting:

    “…Libya planned to spend as much as €200bn ($239bn, £165bn) on “a huge leap in development . . . and our relations with Greece will also see a huge development”.

    So, Libya might’ve helped to pull Greece’s chestnuts out of the fire, but Libya’s government is overthrown by NATO, which represents, by and large, Greece’s creditors.

    Is it possible that the creditors don’t want the debt or even the interest on the debt to be repaid? Tin foil-ish, I know.

    1. Barbyrah

      “Prime Minister George Papandreou met with his Libyan counterpart Al-Baghdadi Ali Al-Mahmudi on Friday, seeking closer economic cooperation…”

      “The Libyan premier said his country is currently going through a major development phase and suggested setting up an economic trade zone between the two countries.”

      “‘We are determined to stand by Greece during this economic crisis,’ Al- Mahmudi said.”

      People’s Daily Online, May, 2010

      (As for tin-foil: I’ve learned over the years those who automatically toss that phrase out in a disparaging way toward others…are those who cling to old systems thinking. Out of fear. Fear of losing firmly entrenched worldviews. Even fear of losing their very identities. Which means…anything that challenges such is automatically “attacked.” Regardless of its potential validity.)

    2. Ignim Brites

      “Is it possible that the creditors don’t want the debt or even the interest on the debt to be repaid?” If the creditors have purchased insurance (CDS) on the debt then it is entirely possible. Even the prospect of default allows them to pull more and more collateral out of the insurer, which probably could be even greater than the interest on the bonds. I wonder if this is not the real game. The demand for a solution is to protect the debt insurance (CDS) sellers. Stringing the whole thing out, ratcheting up the threat of default, seems to be in the interest of those who bought insurance. Are the big boys in London and New York being played?

  9. Hugh

    I love the idea of constructing a firewall around Greece. I think the same people who thought this up also advised on bolting the barnyard door after the horse was gone.

    Ponder what a hollow shell Europe is that this has been going on for more than a year and a half and it can’t even fix Greece let alone all the other countries in the EZ and EU that are as badly off and in many cases a lot bigger. Consider too that none of the underlying problems that affect all the European countries have been tackled: the lack of a debt and fiscal union, a weak ECB, unsustainable mercantilist trade patterns, corrupt political elites, insolvent bankster banks, and a parasitic class of the ultra rich.

    Both the math and the politics say this won’t end well, and it won’t.

    1. SidFinster

      Not to mention that it shows what a joke the EU and EZ are, if their continued existence is dependent on who wins an election, who is in power in a given country, the results of the latest had hoc emergency summit, etc..

  10. Paul Tioxon

    This info indicates that the Eurozone and the European Union have some linkage, that seems to address the difficulty in resolving the situation. It seems that you must also leave the European Union, in order to leave the Eurozone. The structural issues are ultimately political in nature and have called into question the entire political order and along with is the economic order, independently of valid critical analysis arising solely from the banking crisis.

    “…. the Treaties are silent on exit from the Euro, which the author finds to be one of the key weaknesses of the EU’s constitutional underpinning. The paper posits two interpretations of this silence – either implicitly the only way to leave the Euro is to leave the Union as a whole under Article 50, or no right of withdrawal from the Euro was ever intended to exist. Athanassiou concludes that exit from the Eurozone “without a parallel withdrawal from the EU… would be legally inconceivable.”

    The ECB paper also finds that forced expulsion of errant Member States from the Eurozone, as proposed by Dutch Prime Minister Mark Rutte, could hypothetically be feasible through indirect mechanisms such as enhanced cooperation or the conclusion of new parallel treaties, but in practical and legal terms, it would be “next to impossible.”

    The Commission reiterated this analysis today, stating that Greece could not exit the Euro without exiting the EU as a whole.”

    1. Hugh

      They are making this up as they go citing as fact what they admit are untested and unclear legal theories. This is all a power play masquerading as well established legal doctrine, nothing else.

      1. SidFinster

        Not to mention that there is nothing that prevents Greece from defaulting, being ejected from the EZ as a result, and then adopting the Euro as their de jure and de facto currency.

  11. vp

    “And the country now is running a trade primary budget surplus, which means default and abandonment of the euro is a viable option.”

    Is it? A default will cause a severe recession, during which the government’s income will collapse.

    This means that the government will have to default on healthcare, public servant’s salary, and retirees, infrastructure maintenance… making the problem even worse.

    Unless you run a very large primary surplus and that you have enough room to go through second-round effects, a default is not a viable option. In Greece’s case, a non-default is not a viable option either, but it depends on how you define viable.

    1. Ignim Brites

      In the end, Greece, like Ireland, is toast. The geographic areas will revert to wilderness. The UN and IMF should begin plans to send in massive work crews to dismantle the infrastructure of civilization. The youthful element of the population should be encouraged to migrate to the more dynamic areas, which are in need of more people. Same thing applies too Michigan too, btw.

  12. Sunny129

    FT: Nov 6, ’11 (Davyn Davies- The Eurozone decouples from the World)

    “None of the austere budgetary plans which have been announced during 2011 will achieve their fiscal targets in 2012 in the context of the recessions which will probably be encountered by many countries, and that includes France.There is no such thing as “expansionary austerity”, certainly not in countries which cannot devalue or reduce their long term interest rates. These countries are now chasing their own tails.”

    Best succinct summary of ‘insane policies’ being concocted to solve the problems beyond their control

  13. Simple simon

    If all debt -ALL debt is canceled in Greece and new money is printed – a new goverment run bank created, what then? Would Greeks as a whole be worse off?
    If it worked – do you think a few other countries might be tempted to do the same?
    What then?

  14. Sauron

    I’m pretty much an economic neophyte and maybe I’m missing something, but how can loaning money to a country too deeply in debt to repay their debts be called a bailout? A man is drowning because he is tied to an anchor and the solution is to toss him another anchor?

    1. Foppe

      Everything is possible when the journalists take dictation. Seriously, I have no idea; the only thing I know is that the journalists are happy to repeat this bit of wisdom, and that anyone who challenges it is largely ignored.

  15. Fiver

    I honestly find it bizarre that Germany continues to be portrayed as either insane or evil, and the rest of the European political leadership as well, though in lesser degree, when there is absolutely no doubt who is at the top of this grotesque debt-driven food chain, and it certainly isn’t them.

    From the Guardian:

    “The desperation of leaders to boost the EFSF are becoming increasingly apparent. Over the weekend German media reported how Jens Weidmann, Bundesbank president, had forced the chancellor, Angela Merkel, to veto a proposal to use his bank’s gold and currency reserves to boost the EFSF.”

    What we are witnessing is EXACTLY what happened during the Third World Debt Crisis, which for (then) weak indebted countries lasted 2 decades. It is a brutal top-down squeeze. Merkosy have a gun pointed at their heads every bit as much as they do at those of Greece or Italy. And the guns pointed at Merkosy are ultimately in the hands of Wall Street/the Fed and London/BoE.

    This long since has gone well beyond a bean-counting argument. It’s outright financial war and raw geopolitical power – no room for sovereign independence or anything remotely resembling democracy allowed.

    The best thing would be to actually trigger a CDS crisis, and THIS time either declare them all null and void, or simply order repayment of sums paid for this bullshit “insurance”. Shut down markets if need be. Show some frigging courage. The world will NOT END. Not even sort of. That the 20 biggest banks were allowed to create a Doomsday Machine built of “hedges” of each other’s garbage and hold everyone hostage out of sheer stupidity simply must stop.

    1. B-Russell

      If only the world worked in a way that we could just do away with the financial system overnight, alas.

      A credit event means not just a financial crisis for banks but enormous bond yields on Italy, and then moving onto the core.

      Best case scenario is that they bring the ECB off the bench and that they cover everyone’s losses to keep things intact. Otherwise, GD 2.0 here we come!

  16. J-Bentham

    It would be interesting to see a discussion of MMT and how Greece really needs to be printing its way out of this by going back to the drachma. That would end the depression in 18 months.

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