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One Reaction to the Greek Debt Crisis

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It will be interesting to see how this plays out. Have the producers had enough of the moochers? Eventually, trade in the world will be cash and carry, for idiotic defaulters like Greece. Will one week of bank closings matter? It will just as going out on a cloudy day without an umbrella changes one's habits.

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I already have a good idea how it plays out.

Brazil went through it when I was down there. Back then, Brazil had the world's largest foreign debt and probably the most state-owned and mixed economy companies. The rhetoric against international creditors, IMF, World Bank and so on was identical with this Greek lady.

So they elected a crazy young charismatic dude (Fernando Collor) who said he was going to stick it--really stick it--to the IMF and the ruling elite. After taking office, he stuck it to the citizens of the country big-time with a massive confiscation of everyone's money--paid back by the government over a couple of years, and also dismantled half of the government's entitlement programs. This got international creditors appeased enough to wait and see.

The citizens got pissed enough to throw him out of office and a ruling elite technocrat who was privatization-happy and capitalism-friendly got elected (Fernando Henrique Cardoso). He got the country back on its feet and put Brazil back into favor with international money people. After that they elected Lula, a dude with leftist rhetoric and right-wing tendencies.

And Brazil prospered.

I expect to see something similar happen to Greece. First a crazy person will get power to make a big-ass mess and leave everyone (good folks and bad) without any capacity to do anything. Nothing. Just scramble to survive. After a couple of years of that, then someone more reasonable will step in who is in line with the rest of the world and start fixing things. Then someone who will look like the past, but act like the present will get office and Greece will become just one more growing country with normal ups and downs.

I'm curious to see if that happens.

Michael

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Michael wrote: I expect to see something similar happen to Greece. First a crazy person will get power to make a big-ass mess and leave everyone (good folks and bad) without any capacity to do anything. Nothing. Just scramble to survive. After a couple of years of that, then someone more reasonable will step in who is in line with the rest of the world and start fixing things. end quote

That sounds very, very scary. I clipped a brief story from the internet a few minutes ago and it resides at the end. Too close to home? It is good Obama and his minions are such great jugglers. The Great Depression, and big recessions and downturns such as in 2008 WILL happen in America if something is not done. One dirty bomb or an atomic bomb going off in American cities could bring the house of cards down.

SAN JUAN, Puerto Rico (AP) -- The governor warned that Puerto Rico can't pay its $72 billion public debt as international economists released a critical report Monday on the island's economy. The news from Gov. Alejandro Garcia Padilla delivered another jolt to the recession-gripped U.S. island, as well as a world financial system already worrying over Greece's collapsing finances. Garcia is scheduled to air a pre-recorded televised address late Monday afternoon as legislators continue to debate a $9.8 billion budget that calls for $674 million in cuts and sets aside $1.5 billion to help pay off the debt. The budget has to be approved by Tuesday. The governor hopes to defer debt payments while negotiating with creditors, spokesman Jesus Manuel Ortiz said late Sunday, confirming comments by Garcia that appeared in a report in The New York Times published that evening.

"There is no other option. I would love to have an easier option. This is not politics, this is math," Garcia is quoted as saying in the Times.

Puerto Rico's bonds were popular with U.S. mutual funds because they were tax-free, but hedge funds and distressed-debt buyers began stepping in to buy up debt as the island's economy worsened and its credit rating dropped. Garcia's comments will likely not have much impact on Wall Street, said economist Jose Villamil, a former U.N. consultant and CEO of an economic and planning consulting firm.

"The markets are clear that Puerto Rico is heading to a direction of a restructuring or default," said the economist, adding that a voluntary restructuring by bondholders might be the best option. "The last four administrations have kicked the can down the road," said Villamil. "At this point, there is no more can to kick. So we're going to take some very strict measures and some very profound measures. It's going to hurt, but there's no way out."

A report released Monday by a former World Bank chief economist and others found that Puerto Rico's fiscal debt is larger than originally thought and urged the government to act quickly.

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The EU and ECB worry about Greece because the euro serves many countries all with euro debts. The US can handle Puerto Rico without breaking a sweat. It has nothing to do with threatening the dollar. Now each US State has its debt burden but that too doesn't threaten the dollar itself. The EU is trying to preserve its economic power over member states. Puerto Rico is not going to reject the dollar and start its own currency as if it were a sovereign country. One by one each euro country will take back its sovereignty from Brussels over the decades to come. The last euro country might be Germany. It's the only country that can afford it. Milton Friedman said the euro would last until a severe recession. Regardless, it won't last.

--Brant

banking is not a house of cards as central banks are committed to keeping them in a basic state of liquidity--Greek banks are because of all the political nonsense which threatens breaking with its central bank

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Brant wrote: Puerto Rico is not going to reject the dollar and start its own currency as if it were a sovereign country. end quote

I did not know that. You don't know what youve got until its gone and going off the dollar seems like a way to shoot yourself in the foot. Who is going to give them credit? Whoever is holding their bonds might in the chance that they will get the money owed them back, but after that minor transfusion? From 2nd world to 3rd world status.

Breaking news from Yahoo! Get ready for some "Flava In Ya Ear" because Bad Boy Records had the reunion to end all reunions on Sunday, June 28, at the 2015 BET Awards. The lengthy performance featured the companys founder Sean "Diddy" Combs rapping some of his biggest hits like "I Need a Girl: Part 2" and "It's All About the Benjamins. The audience roared when Lil' Kim popped up from a trapdoor (the same one Diddy fell into earlier in the evening).

Damn. I missed that moment in history. But I will be there when Greece and Puerto Rico fall through the trapdoor. On the sidelines it will be interesting to see which players get tackled and receive concussions. With the new rules the referees may not be let back into the game.

I suppose it is a bit much to say I told you so. Say, Brant, how did you learn so much about banking? I had not heard that about the Euros probable collapse.

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Greek debt 'illegal, illegitimate and odious'

I considered putting this in the Humor forum and Horror File forum.

God... that's so funny! :laugh:

The "reality" of the left is surreal enough to be in the Onion.

Imagine that... a country of failures who produce nothing with 30% of them leeching off of the government like useless parasites, actually demanding that they don't have to pay off their debts.

You couldn't make up this kind of feminized leftist insanity if you tried.

Greg

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Not collapse--contract.

I read hundreds of investment and financial commentary every week.

--Brant

"Contract" is when it's other people's money... "collapse" is when it's yours. :wink:

You can already see the confluence of events coming together for the perfect storm in September. Watch for the sudden unforseen trigger event that reverts everything back to the reality of capital from the fantasy of debt. It's high time for the sheep to get sheared again! :laugh:

From September 17, 2001... to September 29th, 2008... to September 13th, 2015... each return to reality greater than the last.

Greg

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Greek debt 'illegal, illegitimate and odious'

I considered putting this in the Humor forum and Horror File forum.

God... that's so funny! :laugh:

The "reality" of the left is surreal enough to be in the Onion.

Imagine that... a country of failures who produce nothing with 30% of them leeching off of the government like useless parasites, actually demanding that they don't have to pay off their debts.

You couldn't make up this kind of feminized leftist insanity if you tried.

Greg

Greece has been continuously defaulting for a hundred years. I can understand the EU taking them in--sort of--but when they gave them the euro and cheap credit they were looking at an exploitable political situation, not economics. The purpose of the euro is political power through economic bribery. The euro won't last for European nations are too diverse from high productivity to low. It was like giving a bunch of people with credit scores all over the map the same high credit scores and telling them to spend away (and be responsible!).

--Brant

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Greek debt 'illegal, illegitimate and odious'

I considered putting this in the Humor forum and Horror File forum.

God... that's so funny! :laugh:

The "reality" of the left is surreal enough to be in the Onion.

Imagine that... a country of failures who produce nothing with 30% of them leeching off of the government like useless parasites, actually demanding that they don't have to pay off their debts.

You couldn't make up this kind of feminized leftist insanity if you tried.

Greg

Greece has been continuously defaulting for a hundred years.

I understand... aspiring to become a deadbeat is regarded as a virtue in their culture.

Greg

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Well our own country under the guidance of the current administration is in more trouble than is realized by those who still have jobs.

The unemployment rate is officially touted as about 5.4%, an asserted improvement over the nearly 10% when O took office years ago. Actually, according to John Williams of Shadowstats it is closer to 22% and much higher for inner city minorities.

The national debt has doubled from 9T to 18T although there are off budget items such as the promises made to the baby boom cohort which is entering eligibility for receiving Social Security and Medicare benefits at the rate of 10,000 newly eligible every day from now on for the next ten years!

Lawrence Kotlikoff estimates the actual national debt as a consequence to be $240,000,000,000,000 or 240T, which in order to be paid would require the tax rate to be over 50% and/or mandatory expenditures cut. Our own handout recipients are at least as adamant in their willingness to riot in the streets as those in Greece who do not tolerate austerity programs which cut their handouts.

Forty eight million Americans are on food stamps. A significant chunk of high school graduates who do go on to college have to attend remedial courses in mathematics and English. Graduates of Law School are finding it harder to find job offers. Those college graduates who do find jobs find that they do not earn enough money to marry, have a child and save enough for a down payment for a house, because of the payments they must make to pay off their student loans.

The stock market has been overvalued and remains so because the cost of money has been so cheap for the last six years at nearly zero, ZIRP, it is an interest rate policy of zero.

In 1934 FDR signed into law the Gold Stabilization Act which authorized the gold market to be manipulated as it still is to this day. In 1970 an amendment to that law authorized the government to manipulate all markets. In 1971 Nixon famously closed the gold window, no longer exchanging gold for US dollars which Americans spent overseas which were being redeemed by foreign governments.

The Constitution held that only gold and silver coins were tender for payment of debts in Art 1 Section 10. Ten SCOTUS monetary decisions have disemboweled that so now a paper fiat currency is forced upon citizens. There turns out to not be enough of the stuff in the form of paper dollars you can hold in your hand around as most is in the form of digital entries on bank ledgers and the like. Cash is on the verge of being outlawed across the country.

If you rely on the main stream media you will find a fairy tale in which the recession is long gone and we are supposed to be in a recovery, with falling unemployment, growing corporate profits, an ever rising stock market, a promise of a reduction in health care costs because of the ACA, and the Federal Reserve in competent hands of an unelected person with the authority to manipulate the money supply and interest rates as if she knew what she was doing, which she doesn't.

To watch the Greek fiasco is to look at a microcosm of the state of our own fiscal nightmare.

Ludwig von Mieses wrote many books which were recommended by Ayn Rand half a century ago. They are not being read by presidential advisors rather by college students who are fortunate enough to have discovered Students For Liberty or Young Americans For Liberty both of which encourage reading and learning with the advice of The Atlas Society and Foundation for Economic Education and The Independent Institute and Institute For Humane Studies.

So there is hope.

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How the times change! Greece, Hellas, once the birthplace of science, philosophy and axiomatic mathematics has now become a steady state beggar and moocher. That is a damned shame!

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The difference between the $18 trillion "official" debt and Kotlikoff's $240 trillion is that the former is only the monetized part. For it the U.S. Treasury has issued and sold debt to meet cash needs. Much of the $222 trillion difference is due to future obligations assumed for Social Security and Medicare. There is no immediate cash needed to pay such obligations, so it is debt that hasn't yet been monetized.

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Well our own country under the guidance of the current administration is in more trouble than is realized by those who still have jobs...

You tidily summed up the present situation... and I can only add that the current administration was created by those who don't have real jobs.

Greg

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If politicians decide that it is virtuous to reduce the federal debt and obtain power and start in on that it will precipitate a recession by pulling money out of the active economy. If they persist that will turn into a depression comparable to the 1930s. Since WWII, if not during WWII, the economy has been fueled by a combination of private capital and artificial debt created by federal money creation, the ratio between the two more and more biased to the latter. The private capital--it doesn't matter where it came from--piled up during the war for lack of things to spend it on and the end of the war unleashed it.

This debt-based economy has to continue or we end of like the 1930s, but it's been over-done to the extent there are too many carrots in front of too few horses. More and more stimulus is causing less and less result. Ultimately we'll end up like Greece, but the creditors won't exist for Washington is not a true creditor. It can make money at will to roll over if not expand its official debt. All the financial obligations of the Federal government, real and imagined, are dischargable when put to it. 24 trillion or 240 trillion. It doesn't matter. Just roll it over or pay it off. It's electronic digits. Push a button.

One can avoid the death throes of this elephant but it's silly to operate on the assumption of a radical solution that will save--I kid you not--not you but the elephant. Take care of yourself. Avoid being a welfare recipient for psychological reasons, economic reasons, moral reasons, etc. or try to make welfare less and less part of your life. The practical reason--one--is those "benefits" will be worth less and less over time. They'll be inflated down and the rules changed. The current Social Security "benefit" has been reduced by changing the official CPI. The old one would result in increasing on average each "benefit" by a third. That's nothing compared to what has happened to medicine and will happen to it. The entire profession is being wrapped up by the python of socialization and ingested. Obamacare is Obamadeath.

(On a personal level, for privacy and other reasons, I decline to go into detail about my finances or financial history with two exceptions: One, I have been the sole beneficiary of three estates over more than two decades. None great and none insignificant, all roughly equivalent. Two, this concerns being in the army and coming home from Vietnam: I had savings equivalent to $15,000 to $20,000 today. It didn't seem like that much then in terms of buying power, but that's another matter. It got spent, to no regret, not used as working capital. I didn't like that money. It was blood money. Literally. The moral basis of the Vietnam War was not in the US government but only in those who fought in it, but the result was cross contamination and I needed to be cleaner in my head. I was somewhat successful. If the war had been about and for freedom I would have kept going back in one capacity or another, but the freedom to vote yourself into tyranny? Gimme a break.)

--Brant

(Sinner, but the cancer is contracting [it ain't easy], and little or no guilt is involved anyway, never has been: if you're dirty take a shower; there's no need to stink unless you're a stinker)

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There are many haunting parallels to the crash of 1929 and the Great Depression. Even though this is called the "great recession", in historical retrospect it will be identified for what it is... a depression.

https://en.wikipedia.org/wiki/Recession_of_1937%E2%80%9338

"By the spring of 1937, production, profits, and wages had regained their 1929 levels. Unemployment remained high, but it was slightly lower than the 25% rate seen in 1933. The American economy took a sharp downturn in mid-1937, lasting for 13 months through most of 1938. Industrial production declined almost 30 percent and production ofdurable goods fell even faster.

Unemployment jumped from 14.3% in 1937 to 19.0% in 1938.[1] Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels.[2] Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. In most sectors, hourly earnings continued to rise throughout the recession, which partly compensated for the reduction in the number of hours worked. As unemployment rose, consumers expenditures declined, thereby leading to further cutbacks in production."

It's deja vu all over again... :wink:

Greg

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I actually considered Puerto Rican bonds about eight months ago. They were paying higher than average because of the risk. The US wouldn't let them default, would they??? About two or was it three years ago I mentioned on OL I was investigating gold. If I had put money into gold or silver I would have lost money. Day trader on the stock market? Same story. I no longer trust my hunches.

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In the last Greek crisis, the Greek government agreed to the lenders’ austerity measures and other economic reforms. They were meant to lead to a 4% annual growth. Look what happened to Greece.


GreekGDP.jpg


Noted economist, Joseph Stiglitz recently wrote:


The economics behind the programme that the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country’s GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.

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Debt that suffuses the economy creates a variation on the tragedy of the commons. Get as much as you can; don't worry about any default. Greece reached the tipping point to its disaster years ago. Most countries are still on the other side. In spite of the damage, they're still standing--crookedly.

--Brant

those that don't work, don't eat, unless they get treats

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Dennis Edwall wrote: In the last Greek crisis, the Greek government agreed to the lenders austerity measures and other economic reforms. They were meant to lead to a 4% annual growth. Look what happened to Greece. end quote

Obama claims the US unemployment rate is 5.8%. Scientifically inclined economists say it is 22%. Pun intended: go figure.

Our Commodore in Chief just interrupted The Price Is Right to talk about opening up Cuba. I wonder what will happen there? Will his dream become reality? When Commodore Perry forced the Japanese government to open up their ports to trade, Japanese commerce soared. They began to export huge amounts of goods to the US and other markets. Their standard of living rose. They did become freer so will the same happen in Cuba?

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David Icke, my favourite commentator.

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Here is my reaction to the Greek crisis: it may be a coincidence, but my crazy old Greek landlord has gone over there since it happened, and I am assuming that he is informing the government that the country has collapsed because they did not keep it clean enough, which is what he told me about the freezer on my 17-year-old fridge. (The rest of the fridge , equally squalid indeed moreso, continued to work fine)-- upon cleaning my oven of even more antique vintage. I broke the old corroded element and rendered it unusable-- how can I confront him with this catastrophe? AH, the isles of Greece, the isles of Greece, where burning Sappho loved and sung--where grew the arts of war and peace--stay over there, where you were young!

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11751444_10153152815333842_6064253659422

Vee make them good in the Vaterland, nicht wahr????

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