Monday, July 6, 2015

Big Crisis = Big Change: What Happens Now In The EU?

The following scriptures have great relevance in these days as relating to the EU:

Daniel 2:

41 Just as you saw that the feet and toes were partly of baked clay and partly of iron, so this will be a divided kingdom; yet it will have some of the strength of iron in it, even as you saw iron mixed with clay. 42 As the toes were partly iron and partly clay, so this kingdom will be partly strong and partly brittle. 43 And just as you saw the iron mixed with baked clay, so the people will be a mixture and will not remain united, any more than iron mixes with clay.

Daniel 7:

 ‘The fourth beast is a fourth kingdom that will appear on earth. It will be different from all the other kingdoms and will devour the whole earth, trampling it down and crushing it. 24 The ten horns are ten kings who will come from this kingdom. After them another king will arise, different from the earlier ones; he will subdue three kings. 25 He will speak against the Most High and oppress his holy people and try to change the set times and the laws. The holy people will be delivered into his hands for a time, times and half a time.[b]

So we know that the next stage in the development of this "iron and clay mixture" (aka the revived roman empire, or the EU/Med Union) will be the 10 kings - and these ten kings will produce the antichrist. 

Therefore, these developments in the "iron and clay mixture" which will not remain united, are of great interest:

The result of the referendum in Greece is a great victory for freedom, but it is also threatens to unleash unprecedented economic chaos all across Europe.  
With almost all of the votes counted, it is being reported that approximately 61 percent of Greeks have voted “no” and only about 39 percent of Greeks have voted “yes”.  This is a much larger margin of victory for the “no” side than almost everyone was anticipating, and it represents a stunning rejection of European austerity.  Massive celebrations have erupted on the streets of Athens and other major Greek cities, but the euphoria may not last long.  
Greek Prime Minister Alexis Tsipras is promising that Greece will be able to stay in the euro, but that gives EU bureaucrats and the IMF a tremendous amount of power, because at this point the Greek government is flat broke.  Without more money from the EU and the IMF, the Greek government will not be able to pay its bills and virtually all Greek banks will inevitably collapse.  Meanwhile, the rest of Europe is about to experience a tremendous amount of pain as financial markets respond to the results of this referendum.  The euro is already plummeting, and most analysts expect European bond yields to soar and European stocks to drop substantially when trading opens on Monday morning.
Personally, I love the fact that the Greek people decided not to buckle under the pressure being imposed on them by the EU and the IMF.  But amidst all of the celebration, the cold, hard reality of the matter is that your options are extremely limited when you are out of money.
How is the Greek government going to pay its bills without any money?
How are the insolvent Greek banks going to operate without any money?
How is the Greek economy going to function without any money?
Now that the Greek people have overwhelmingly rejected the demands of the creditors, it will be very interesting to see what the EU and the IMF do.  Prior to the referendum, European leaders were insisting that a “no” vote would put an end to negotiations and would force Greece to leave the euro.
Now that the results are in, are they going to change their tune?  Because the ball is definitely in their court

So would they actually let Greece go bankrupt?
It is going to be fascinating to watch what happens over the next few days.  Right now, Greek banks are on life support.  If the European Central Bank decides to pull the plug, they would essentially destroy the entire Greek banking system.  The only thing that can keep Greek banks alive and kicking is more intervention from the ECB.  The following comes from the New York Times

 On Monday, the central bank’s policy makers plan to convene to determine how much longer they are willing to prop up the Greek banks, now that the country has essentially said no to the unpopular dictates of the other

Of much greater concern to the rest of the world is how financial markets are going to respond to all of this.  As I write this article, things already appear to be unraveling.  The following comes from CNBC

Germany’s Dax is indicated sharply lower from Friday’s close at around 4 percent, while the euro was down 2 percent against the yen as the news emerged. U.S. stocks are expected to open around 1 percent lower Monday, according to recent stock futures data.
What could be most important for those worried about contagion from the Greek crisis is how Portuguese, Spanish and Italian government bonds perform in Monday morning trade.

This could potentially become a “trigger event” that unleashes a wave of financial panic all over Europe.  And once financial panic begins, it is very difficult to end.
If the EU and the IMF want to avoid a crisis, they could just give in to the new Greek government.  But that would be politically risky for certain high profile European leaders.  For instance, Angela Merkel would face a huge backlash back home if she conceded to the new Greek government now.  And other German leaders are already calling the referendum result a “disaster”

German politicians branded the result a ‘disaster’, with the country’s economy minister Sigmar Gabriel Sigmar accusing Tsipras of ‘tearing down the last bridges on which Greece and Europe could have moved towards a compromise’.
He added: ‘Tsipras and his government are leading the Greek people on a path of bitter abandonment and hopelessness.’

So at this point it is all up to the EU and the IMF, and in particular the focus will be on the Germans.
What will they decide to do?
Will they give in, or will they force the Greeks to leave the euro?
If the Greeks do transition from the euro to a new currency, it will be a process that takes months (if not longer).  You just can’t change ATMs, computer systems, cash registers, etc. overnight.  So a move to the drachma  would not be as simple as many are suggesting…

And if Greece does leave, it will be a massive shock for global financial markets.  Faith in the European project will be shattered, the euro will drop like a rock, bond yields all over the continent will rise to unsustainable levels and major banks all over Europe will fail.
I think that the following quote from Romano Prodi sums things up quite well
Romano Prodi, former chief of the European Commission and Italy’s ex-premier, said it is the EU’s own survival that is now at stake as the botched handling of the Greek crisis escalates into a catastrophe. “If the EU cannot resolve a small problem the size of Greece, what is the point of Europe?

Meanwhile, we should all keep in mind that a financial crisis has already erupted over in Asia as well.  Chinese stocks have lost 30 percent of their value in just the last three weeks.  In fact, the amount of “paper wealth” wiped out in China over the past three weeks is approximately equivalent to “10 times Greece’s gross domestic product”

The great financial collapse of 2015 is well underway, and it should be a very interesting week for global markets.
But no matter what happens this week, we all need to keep in mind that this is just the tip of the iceberg.
A “perfect storm” is on the way, and we all need to get prepared for it while we still can.

Early indications of the official result suggest the result is a “No” by a comfortable margin. What happens next?

First, it will be important to see the tone of the immediate political responses both within Greece and outside. We would expect the tone to be somewhat more conciliatory on both sides. Hollande and Merkel are to meet tomorrow night to discuss the issue, and as we understand it, the Eurogroup is scheduled to meet on TuesdayWe expect that a split is likely to emerge in the coming days.  The Commission and France (and possibly others) will argue that negotiations should resume immediately with an aim of finding agreement. Others will find it more difficult to return to negotiations with a newly emboldened Tsipras in short order.

In the German case, for example, the Bundestag has to be consulted before Mr Schauble can enter into discussions about a new program for Greece (as requested on 30th June). However, the Bundestag has just broken for summer recess, so any such vote will require a recall. We have seen reports that talks at a technical level between Greece and the creditors may restart tomorrow (Monday), but we can imagine that the Bundestag will express its displeasure if it feels those discussions are in-progress without their express consent.

Second, there are reports of an emergency meeting between the ECB, Bank of Greece and Finance Ministry tonight, and at the latest the ECB will likely have to take a decision about ELA support tomorrow (if not tonight). Our base case is that the ELA total will simply be rolled on a day-to-day basis for now. It is extremely difficult for the ECB to justify increasing the region's exposure to Greece at this point. That effectively means that the Greek banks are likely to run increasingly short of cash, and the acceptability of electronic forms of payments will diminish rapidly.

This suggests that what we see next will be a race between two forces: political pressure to move toward an agreement despite resistance from a number of northern European parliaments, versus the increasingly unpleasant implications of a dysfunctional banking system on the other.

Our base case is that the pressures coming from a dysfunctional banking system in Greece will shorten the time horizon to negotiate a deal to a handful of weeks. As that pressure builds, there is likely to be a temptation to call a referendum in Greece on euro membership, and for the state to begin issuing I-O-Us or similar and giving these some status as legal tender. To the extent that pensioners and public sector employees find themselves being paid with such instruments, it takes the banks further away from solvency (they have liabilities in euros, but will have loans to individuals being paid or receiving “i-o-u” s which will be worth a lot less). Meanwhile, we expect at least some countries in the rest of the region (not least Germany) will not hurry over the design of a new program, and will find it difficult to get parliamentary assent for any such program.   
This is a path that suggests to us that there is now a high likelihood of Greek exit from the euro, and possibly under chaotic circumstances. Perhaps the rest of the region will agree to a reasonably quick deal, or the ECB will raise ELA enough to retain minimal viability in the payments system. Perhaps the pressures of dysfunctional banks will force Mr Tsipras to stand down, and a deal is subsequently made. But for now, we would view a Greek exit from the euro as more likely than not.

Stock trader Gregory Mannarino says Greece is the tip of the debt iceberg.  Mannarino explains, “Never in history have we been so overwhelmed and buried underneath a mountain of debt.  I believe we are at a top in regard to the debt.  What does this mean?  We could see a domino effect where all this starts cascading down and correct to fair market value.  It will, whether it’s today, tomorrow or next week.  There is no way out of it, and that is what people need to keep in mind.”

Mannarino goes on to say, “I think people are being distracted by the mainstream media saying this is just a Greek problem or this is just a Puerto Rico problem.  This is a global problem.  It is insurmountable.  It can never be paid back in any possible way.  It’s too huge.  It’s the mechanism of the system that simply demands the relentless acquisition of debt in perpetuity.  Once we admit we can’t borrow anymore, we have a debt crisis.  That is what we are seeing here.  How are they trying to fix it?  The same old way by fueling it with debt.  All this is doing is growing the Frankenstein, the monster of debt even larger.”

The take away here from Mannarino is the days of ever expanding debt are numbered.

The entire system is based on the premise that it will function on confidence.  It’s a belief that the system will work.  Once that confidence is shaken, then it’s party over, that’s it.  So, we have confidence in the financial system now being shaken.  We have the credibility of central banks being put on the line by the central bank of central bankers.  Once the confidence is lost, it is party over and that is really what the issue is here with Greece.”

This is a global problem that has no solution.  There is no way you can continue to inflate the debt and the problem be fixed.  Again, it is the mechanism of the system that is being called into question, and I believe we have to be close. . . . Just look at the writing on the wall everywhere.”

The European Union is facing its worst crisis since the formation of the euro after Greece voted decisively against accepting the terms of its eurozone bail-out deal. 
Early results suggested that around 61 per cent of Greeks had voted to reject the deal, compared to just 39 per cent in favour, despite opinion polls saying right until the eve of polling that the result was too close to call.

The scale of the No vote took European leaders by surprise, and led to panic in the financial markets. German Chancellor Angela Merkel spoke to Alexis Tsipras, the Greek prime minister, and is due to meet the French President, Francois Hollande. 
EU leaders have said that a “No” vote would see Greece crash out of the eurozone, dealing a sharp blow to Brussels' blueprints for closer European political and financial integration.

The vote was hailed as a huge symbolic victory by backers of Greece's ruling Syriza party, whose coalition of radical Leftists came to power in January on a promise to fight Brussels-imposed austerity measures. 
The move sent shockwaves across Europe with financial markets braced for their worst period of turmoil since the height of the eurozone crisis three years ago.

David Cameron and George Osborne, the Chancellor, will hold an emergency meeting to discuss how to deal with the Greek crisis and ensure that Britain's economic recovery is not adversely affected. 
The Prime Minister is on Tuesday expected to attend a summit meeting of EU leaders in Brussels as they discuss how to prevent Greece's possible exit from the eurozone causing economic turmoil across the continent.
However, there are fears that chaos in the EU if Greece leaves the eurozone could strengthen the hand of eurosceptics pushing for a British exit.

EU leaders have already made it clear that a "No" vote would be interpreted not as a mandate for better bail-out conditions, but a message that Greece no longer wanted to be part of the eurozone. 
The country's banks, which are almost empty already, will collapse imminently unless the European Central Bank agrees to extend an emergency financial lifeline.

Italian foreign minister, Paolo Gentiloni, appeared to argue for compromise. "Now it is right to start trying for an agreement again," he said. 
The landmark vote marked the culmination of the increasingly bitter five-year stand off between Greece and the demands of creditors in the eurozone and the IMF.

Iranian Ground Force Commander Brigadier General Ahmad Reza Pourdastan said that even if a nuclear deal comes to fruition in Vienna, where Iranian and western negotiators are currently trying to reach an agreement by a Tuesday deadline, Tehran and Washington will not become friends.

"The US might arrive at some agreements with us within the framework of the Group 5+1 (the US, Russia, China, Britain and France plus Germany), but we should never hold a positive view over the enemy,"  Iran's Fars News Agency quoted Pourdastan as saying.

"Our enmity with them is over the principles and is rooted because we are after the truth and nations' freedom, but they seek exploiting nations and putting them in chains," he explained further.

Pourdastan's comments came as differences still remained between the two sides over the country's disputed nuclear program ahead of Tuesday's deadline for a final agreement to end a 12-year-old dispute.

The heightened security that surrounded the Fourth of July weekend in the U.S. is "the new normal" because of the threat posed by the Islamic State of Iraq and Syria (ISIS), CBS News contributor Michael Morell said on "Face the Nation" Sunday.
Morell, the former deputy director of the CIA, said that officials were on alert for three reasons over the holiday weekend: The large number of Americans who have been radicalized by ISIS; the group's call to arms during the month of Ramadan, which goes from mid June to mid July; and the symbolic importance of the July 4rth holiday in the U.S.
"Two of those remain after this weekend, till mid July, and one will remain for the foreseeable future, so I do think this is the new normal," Morell said. 
He said ISIS poses a bigger threat to the U.S. in terms of its size and social media reach
"They can radicalize people here at home so easily, you could have a series of attacks here," he said.

Russia’s Aerospace Defense Forces are working hard to secure their country’s frontiers in the Arctic by deploying a fully automatic radar station and additional air defense systems, a top Air Force commander said on Saturday.

“Of course we are going to build up…our forces there with a radar and flight control area and active missile air-defense systems too,” Major General Sergei Babakov told Russian News Service radio.

In the past few years Russia has been actively developing its northern territories, engaging in oil and gas extraction, and exploring the Northern Sea Route, which is now seen as an alternative to traditional links between Europe and Asia.

The military has played a part in the significant efforts which are being madeMuch effort, including military, is being made to secure Russia’s interests in the Arctic, in lightview of the NATO countries’ increased attention to in thise resource-rich region.
In the Arctic region, Russia has already deployed air defense missile and artillery systems. The Defense Ministry also plans to deploy MiG-31 interceptor aircraft to protect Russian vessels sailing along the Northern Sea Route.

Also see: 


Unknown said...

As scott brings up Daniel today that's pretty much where we stand till the lid gets blown off.

kamum said...

King of south and north is rising. We are looking at a clash in the near future. I will write this in my website keep your eyes peeled

ally said...

As Bob Dylan once said "when you've got nothing, you've got nothing to lose" The Greeks may like to party but they are a very hard working tough people who fiercely believe in God. And Greece has huge national pride so they might hold out.
But we also know when money gets shaky, nations go to war.
Even tho we all watch like crazy, I almost can't believe how nuts it's gotten lately.
And still the church sleeps, tho she is starting to rustle.
What will it take for her to awaken from slumber? I'm not sure. But me thinks we are about to find out.
Still with my mom in hospice. We can feel your prayers strongly!!!!
Keep standing!!!!!!! We are almost done. The trumpet will sound soon