First of all, we see a defiant Greece who refuses to "play ball" with the EU. This developing story is fascinating on many levels, but particularly with regard to the future of the EU and the world economy.
Remember, "Big Crisis = Big Change" as we await the formation of the 10 Kings and the arrival of the AC:
The rhetoric from both sides in Europe is hotting up but we suggest Tsipras' comments seem far more personal and existential than the Eurogroup's beligerence for now:
- *TSIPRAS: GREEK DEMOCRACY CAN'T BE THREATENED
- *TSIPRAS: GREEK GOVT NOT IN A HURRY, WON'T COMPROMISE
- *TSIPRAS: GREECE WON'T TAKE A STEP BACK FROM PROMISES TO PEOPLE
With a "strong mandate" to save the country, Tsipras adds that he wants "a solution, not rupture."
Additionally, he noted:
- *TSIPRAS: GREECE HASN'T OVERCOME ITS FINANCIAL PROBLEMS
- *TSIPRAS: GREEKS NOW FEEL PROUD, WORTHY
- *TSIPRAS: GREECE CAN'T BE TREATED AS A COLONY
- *TSIPRAS: GREECE CAN'T BE TREATED AS EUROPE'S PARIAH
- *TSIPRAS: GREECE WILL MANAGE TO EXIT ITS DEBT TRAP
- *TSIPRAS: GREEK, EUROPEAN PEOPLE SUPPORT GOVT'S RED LINES
- *TSIPRAS: GOVT HAS STRONG MANDATE TO SAVE COUNTRY, PEOPLE
- *TSIPRAS: GREEK GOVT NOT IN A HURRY, WON'T COMPROMISE
- *TSIPRAS: GREEK GOVT WILL UPHOLD ITS ELECTION PLEDGES
- *TSIPRAS: GREECE WON'T TAKE A STEP BACK FROM PROMISES TO PEOPLE
- *TSIPRAS: GREECE WANTS SOLUTION NOT RUPTURE
The negotiations between Greece and the EU over their impossible-to-pay debt load and the austerity that was imposed on the Greek people, will either force the Greeks to maintain austerity, in exchange for more financial aid, or for Greece to default on the debt and exit the Euro.
A Greek default could very well trigger the end of the European banking system and the Euro. Such an event will reverberate throughout the world, perhaps bringing the entire global financial system down. But even if there is not a cataclysmic global reverberation, Greece is sure to suffer hyperinflation and other unpleasant consequences.
Unless fundamental, long-term reforms are put in place, the kind that eventually lead to the end to austerity, higher employment and rising wages, even more people will become disillusioned as the Greeks experience social deterioration similar to that of Weimar Germany.
The tragedy is that the formula for emerging to a better place is there for the taking. One can look at the early 20’s in the United States following World War I and the reforms in the early 1980’s that turned a very desperate economic situation into a huge rebound in both output and employment as well as an eventual drastic reduction in the inflation and interest rates.
We will soon know what path Europe and Greece will choose. The markets and the bank deposit holders seem to be betting that the ECB will blink and Greece will get the debt extension and more money. If that turns out not to be the case, there will be panic. This kind of panic would create enormous chaos in the global financial system.
For those believing the lies of the central planners and the mainstream media, those beliefs are beginning to be exposed for a much wider audience. The recent example Brian Williams in the news category and the continuing deterioration in the economic statistics are making more people realize that what has been reported is not the truth.
The central planners have been “putting lipstick on the economic and financial pig” for far too long. While there are economic success stories out there for both regions and specific companies, the macroeconomic picture is a disaster in the making. The message to be taken from the sustained and increasing volatility is that the central planners' ability to kick the can down the road is soon coming to an end. Just how much upheaval will occur in global markets remains to be seen, but based on past history, the world is headed toward extreme chaos that will create terrifying swings in major markets.
With talks between the EU and Greece reaching the boiling point, the former White House Budget Director warned that the Greek crisis is now a threat to the entire global financial system.
Former White House Budget Director, David Stockman: “The Greeks owe something like $350 billion. $60 billion of it is owned by Greek banks. The rest of it is (owned by) the EU — $210 billion — and another $30 or $40 billion by the IMF.
So the issue in the short-run is the taxpayers in all the countries of the EU…because the debt has been transferred from the banking system — that’s what all these bailouts were about — to the taxpayers of the EU.
That’s why there is so much desperation and so much tension in these negotiations. The Germans could afford to take the $47 billion hit that is guaranteed by Germany. But the Germans are afraid that if losses are triggered, in other words Greece is permitted to default, then the next two countries in line are France and Italy.
Their (French and Italian) governments simply will not survive a capital call. They will be forced into an election — I call it a run on the parliaments — and they will get radical, populist, anti-EU governments and the whole thing will come unraveled.
So this rigidity and stubbornness of the Germans is understandable because they walked themselves into a giant trap. They should have allowed the write-offs to occur and for Greece to go bankrupt and leave the EU two or three years ago. They should have forced their banks to take the losses — it wouldn’t have put Deutsche Bank under for crying out loud.
But now by socializing (roughly) $300 billion worth of Greek obligations, they have moved the whole issue to the political arena. And that’s the ticking time-bomb that is an existential threat to the continuance of the EU.
Now think about the global financial system and how fragile it is — the European economic union and currency experiment — and right in the center of it is a ticking time-bomb that’s about ready to blow. I think if people needed any warning that there is massive danger ahead, just think about what’s happening hour-by-hour, day-by-day in this Greek drama in Europe.”
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