from The Wealth Watchman:
End of an Era
Folks, as the hours go by, it’s becoming painfully obvious to anyone paying attention, that no matter what path Greece takes in the days ahead, what’s happening right now spells the end of “business as usual” in Europe. The leaders of Syriza have managed to doggedly stand firm in their main pledge(at least to date): to force Brussels and Germany to reduce the debt burden upon the Greek people.
The new Greek Prime Minister, Tsipras, has gunned down any banker hopes that this EU ultimatum(to either accept further bailout debt, or to leave the EU) is going to be successful in bringing them to heel. Varoufakis, the new Finance Minister, has now reiterated Syriza’s position, so that no one can possibly mistake their intentions.
Amazingly, Brussels has(for now) still chosen to pull up a chair at the poker table, and play tough with Greece.
E.U. leadership is still insisting that the debt isn’t negotiable.
They’re still insisting in hardliner fashion, that the bailout terms are somehow…sacrosanct.
They’re still, hilariously, maintaining that debts must always be repaid(when we know that debts are defaulted upon all the time)!
The E.U. has played a dangerous hand here with Greece, because I believe they’re acting under 2 disastrous assumptions:
1)They’re assuming that they hold all the ace cards in this scenario, and
2)They’re assuming that the Greek government stands to lose everything, should they be expelled from the Euro.
But are those assumptions really true? Does Brussels really hold the hand that they think they do? Let’s examine this together.
What Cards do They Hold?
First, It seems that everyone who has dealt with the Greek government has been saying the same thing. They all seem to believe that somehow leaving the EU would simply be too painful for any ruling party in Greece to go through with. The Troika keeps mentioning the horrible bank runs that Greece would be hit with, or that all public and private lending would instantly dry up.
“Greece can’t leave the E.U., because she would be almost certainly rendered a ‘failed state’”, that’s the line that’s repeated, over and over again.
Personally though, whatever else that Syriza believes, I think we can all agree with them that extending further bailout funding is the opposite of “constructive” for the Greek people. Greece is an insolvent debtor, and austerity is a non-solution for any insolvent debtor.
Remember that bailouts are monetary heroin! They are a debilitating drug which ensnares any insolvent institution which tries them(be they banks or sovereigns). Bailouts have led Greece to a spiraling path of economic disintegration and depression. This is important, because Brussels has been shocked to learn that so many in Greece wouldn’t want their financial “assistance”.
Brussels has failed to understand, that what they view as this:
Greece looks upon as this:
Greece has experienced an extraordinary depression for the last 3 years, all to save large European banks. Their islands, their shipping industries, everything they really own has come under the chopping block at auctions. Unemployment among the youth there has regularly been upwards of 60%! General unemployment has stayed well above 20%. There has been so little cash to even pay for day to day expenses, that Greek neighborhoods and communities have had to resort to complex bartering for goods and services. Suicide has become rampant, and crime has skyrocketed.
To the average Greek, the Euro has been nothing but trouble, representing oppressive government by German banks. Many in Greece have wished that they’ never joined the Euro. The Greeks have abandoned hope, during this bailout arrangement. They know where it leads, and they’re ready to look anywhere else for another option.
The Unseen Factor
Enter Russia and the Eurasian Economic Union, onto the scene.
Remember, several weeks ago, I wrote about the real unseen danger of this whole Greek situation: that if Greece left the EU, that Russia would be all too happy to pick up the pieces, and establish a sovereign, Orthodox foothold to trade with, right on the European mainland. With that in mind, there’s an obvious question, that I can’t seem to shake in all this:
What if the Greek government isn’t just “talking tough”? What if Brussels has completely misread their opponents? What if Syriza’s confidence springs, not from obstinate brinksmanship, but from the knowledge of what they stand to gain with their new burgeoning, geo-political partnerships?
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