Greeks lining up at ATMs
 

The situation with Greece sounds ominous, but there doesn't seem to be much reaction from the markets. Do you think that a Greek exit from the Euro has already been costed into the market, or is optimism that a solution will be found ruling the day? Pull out your crystal ball, what do you see?

Greece Debt Crisis: Lines Form at ATMs as PM Seeks Referendum on Bailout - NBC News

It's largely already baked in. I doubt too many investors with Greek holdings honestly think they're ever getting that money back. High-risk, high potential return but also a high risk of no return or a loss. That's the game.

Greece is effed. It's a socialist model gone amok - promise everyone everything on someone else's dime, nobody work, nobody innovate. That's the problem with soclism - eventually you run out of other people's money.

+1 with one exception
It's a socialist model gone to the inevitable end as usual.

You're right - gone amok and then to its inevitable conclusion. :p

How is it socialist?
When we were there everyone was moving fast and working hard. I didn't see many people slacking. The Acropolis is an expensive venture but it is going forward anyways. The main gripe I heard from people was that taxes were not being collected for wealthy real estate (at least) and there were some pretty palatial estates. Everyone was saying "if you buy a house here, don't pay taxes because nobody does". There were also a lot of half-built houses which had something to do with the RE tax structure as well.

Umm, because the public sector expenses have been outstripping the private sector's ability to produce for a long time, forcing deficit spending and borrowing and (when they were under the drachma) money-printing / currency devaluation?

Sound familiar?

Never been to Greece but I'm a second gen Greek. I have allot of Greek friends. Don't confuse the American Greek work ethic from the homeland. Here, we are hardworking wanting to do better. No culture simulated into America faster than the Greek Americans, especially from the great wave in the early 1900's. Im my community, the homies are perceived to be lazy, socialist and anarchists. We were all holding are breath when Greece held the Olympics because no one believed the Greeks would finish it. They had allot of help especially from the Germans.

I don't weep for Greece. It is all their doing.

Debt has been shifted from private banks to governments, so I can see that it is not affecting private markets as much. But the rest of the Europeans are going to foot the bill and the Euro is being devalued to pay for it.

IMHO much of this debt has been racked up by Greece buying weapons (from Germany and France mainly), so they were happy to lend the money and now are looking at not getting paid for some of this.

What kills me is that Greece is what, 8 million people? That's the size of LA. And there is all this racket.

The current administration there is a bunch of gangsters IMHO.

I am a big fan of the European cause - remember, until recently they would consistently bash their heads in every couple decades. They have come a long way. It is unfortunate the Euro currency experiment has failed in bringing people into the union who always had issues with their government financing and used devaluation as a vehicle over decades before coming into the Euro. They should have limited it to countries that were a bit more financially responsible (meaning to exclude Italy, Spain, Portugal and Greece).

All this may be a bit naive and certainly opinionated - I am not a Euro expert ...

G

Back in the '80s, Newsweek Magazine ran an article on the comparisons of States' GDP's with that of foreign countries. I remember at that time, Greece's GDP was about the size of the State of Connecticut. An internet search comparing nations' GDP's with States seems to show about the same.

It's over... And the Greeks one way or the other will leave the Union.
Their economy, culture and way of life was never compatible with the Germans or French.

The Italians and Spanish will also leave and at the point the whole thing will fall apart.

It was always a STUPID idea. Thanks for that Germany :rolleyes:

............ The best thing the British did was to join the Union but keep their currency.
They'll be in the best position when it all comes to an end.

http://forums.pelicanparts.com/uploa...1435472698.jpg

The Greek Finance Minister is a realistic sharpe cookie.

All U Boyz have to offer is just how evil socialism is....what a fking self diddling joke that shows the true ignorance of this group. That is not the question that should be postulated and discussed. The real question is what is going to happen and the ramifications there of.

U can work through the various scenarios and think about the the outcome and ramifications of each.

The Greek deadline is looming and the DOW was up, SP and Nasdq basically flat for Friday....going into the weekend. This does not seem like anybody is on edge. Remember the FED has guaranteed to do what it takes to keep the economy stable...That is why nobody is running around like a chicken with der haids cut off. The Markets are sanguine awaiting what the "deal, deal" is gona be and more importantly what the FED is gona do about it...

My own guess is that Greece is going to have a structured exit from the EU...so that the feathers don't get too ruffled..In my way of thinking that would be the threading of the needle. A resolution.

Otherwise Germany might as well just take over Greece and keep paying out as if it were a Time Share...Greece is way beyond the point of repayment...The Germans should just pay off Greece to go away.

Is this in the end what democracy, as opposed to socialism, will do? Through majority rule force government to spend beyond its means to support a comfortable lifestyle for the populace.

A good observation and the jury is still out on that. I tend to suspect you're right unless (and only unless) the citizens / voters are smart enough to vote for their futures rather than the promise of easy money / handouts by their government - in other words uphold a democratic system rather than selecting / choosing a socialist one (because it's easier and promises better "free" schwag). As long as we continue to uphold democracy, self-reliance, accountability and economic responsibility / sustainability we're fine. Once we start taking the road of choosing whichever politician promises bigger handouts, we find ourselves on the road to socialist ruin. Socialism inevitably leads to collapse - either economic (Greece, USSR, etc.) or social (due to rebellion after abuse at the hands of a despot or "ruling class").

I'm quite disheartened by what I've seen in recent years. I think we're following this trend now - stupidly voting for whichever corrupt politician promises us more of our own money the government has stolen from us. I love America and our model of government - even with its flaws - is the best in the history of the world. Consider the alternatives. I fear that we're (rapidly) dismantling the system our forefathers put in place with the hope that ther descendants (we) would never have to know the horrors of being voiceless subjects in a totalitarian system. I fear we're quickly morphing from a representative democracy into a socialist state. From there it's a very, very short road to a totalitarian system, whether under a despot (monarchy or dictatorship) or a group of them (communist model). Once that happens there is a potentially long period of suffering, de facto slavery, hopelessness, despair and outright oppression and subjugation until there is a rebellion or economic collapse.

In the context of our world today this is scary because it opens the door to backwards idiocy and false hope of the sort provided by religion (Islam - ISIS in particular) which has the potential to destroy untold millions of lives and hold back human advancement for decades if not centuries. Religion loves poverty and despair. It's easy to sell false hope to people in such situations and control them by claiming you have the key to ending it all (in some future life, if you do exactly what we say...). A theocracy could also result from the disintegration of democracy - with no better result for those living under it than a dictatorship or communist totalitarian society.

Maybe this is a bit dour but I don't know that it's all that far-fetched. We need to collectively get our you-know-what together and stop the march towards socialist collapse and ruin if we're to have any hope of a good future for our kids and grandkids. The potential consequences are exactly what I describe - it's all happened before.

I'll offer what a couple of bright guys have said about this and leave it open for further discussion:

"Liberty is not for these slaves; I do not advocate inflicting it against their conscience. On the contrary, I am strongly in favor of letting them crawl and grovel all they please before whatever fraud or combination of frauds they choose to venerate... Our whole practical government is grounded in mob psychology and.. the Boobus Americanus will follow any command that promises to make him safer." - H. L. Mencken

"The state — or, to make matters more concrete, the government — consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get, and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time it is made good by looting ‘A’ to satisfy ‘B’. In other words, government is a broker in pillage, and every election is a sort of advanced auction on stolen goods." - H. L. Mencken

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." - Alexis de Tocqueville

A relative just posted this on Facebook. Says it all IMO.

Είναι πια ολοφάνερο σε αυτή την Ευρώπη όχι μόνο η Ελλάδα αλλά πολλές χώρες δεν μπορούν να επιβιώσουν με την πολιτική του άκρατου νεοφιλελευθερισμού. Η ΕΕ αποδείχτηκε ότι δεν έγινε για τους λαούς αλλά για τα κέρδη. Αυτό που συμβαίνει τώρα στη Ελλάδα δεν είναι ένα αριστερό παιχνιδάκι του Τσίπρα. Είναι ότι ο ασθενής που είναι 5 χρόνια στην εντατική αποφάσισε να βγάλει το σωληνάκι για κουράστηκε να ζει με τη χημειοθεραπεία, αργα η γρήγορα αυτό θα γίνοταν ,δεν είναι ένα παιχνιδάκι απλά, ειναι νομοτελειακή κατάληξη. Όπως και είναι νομοτελειακό ότι η Ευροζώνη δεν μπορεί να συνεχίσει να υπάρχει. Έτυχε στη Ελλάδα να κάνει το πρώτο βήμα προς την έξοδο. Αργά η γρήγορα η Ελλάδα θα είναι εκτός, μόνο που σε πολύ λίγο χρόνο θα ακολουθήσουν και άλλοι... Τελικά όσο γρηγορότερα τόσο καλύτερα...

It is now obvious that in Europe not only Greece but many countries can not survive with the policy of unrestrained neoliberalism. The EU proved that it was for the people but for profits. What is happening now in Greece is not a left breeze of Tsipras. Is that the patient who is five years in intensive decided to pull the tube to tired to live with chemotherapy, sooner or later it would happen, it is just a breeze, it is deterministic outcome. As is deterministic that the Eurozone can not continue to exist. He happened to Greece to take the first step towards the exit. Sooner or Greece will soon be out, only in very little time for others to follow ... Finally the sooner the better ...

So it begins....

Greek Banks will not open tomorrow

Greek Banks Will Not Open Monday - WSJ

So they'll be the first.

Any bets on who / when the next will be? Spain? Portugal? Ireland? All of them (the entire toxic PIIGS sector of the Eurozone)?

Anyone think France or Italy might ditch eventually? If that happens does the whole thing unravel and come apart? If it does, how long until European countries start attacking each other over stupid crap again? God, it's like watching every "peace" in the Middle East - you know it's doomed. You can't change who people are at their cores and the Europeans are hopelessly xenophobic, nationalistic and disconnected from each other at their cores.

I hope for their sake they hold it together. The strongest (and perhaps only) defense against the encroaching poison of Islam is a united Europe. A divided Europe will be a much easier target for the Allah-worshipping diaper heads to undermine and subjugate.

an American calling Europeans xenophobic?
that is rich.
SmileWavy

That can cut both ways. Rising nationalism in individual countries can also unleash strong anti minority/immigrant feelings.

True but sadly I see it more likely the ire would be directed at other former EU partners than the invading hoarde that really threatens them.

Heaven knows they haven't shown much interest in doing anything about it this far!

after the banks collapse what happens next in atlas shrugged?

S&P futures open down 37 points (1.8%) Euro below 1.10.

At the ever-accelerating rate we are going, we will be in the same boat as Greece in less than a decade.

We're already there: Detroit.
Doesn't CA's fiscal profile look similar?

U don't have a decade. 2018 to 2022 is about what you have.

Sorry but I'm calling BS... After everything that's happened over the last two decades the USA is still the richest country on Planet Earth.
You also still have the highest dollar value exports compared to any other country.

IF you go down the world goes down including China and India. That will never be allowed to happen.

And pray tell WHO is not going to "allow" it? This is presumptive in that you think that men are in control of their environment and destiny's. There is only an illusion of control as the pendulum of events usually swings in a short and stable arc. However at any moment that illusion can be swept away by cascading events.

And those "riches" are all built on CREDIT and DEBT...to the tune of 175,000,000, 000,000.00 USD. About 100T USD is an Accounts Payable called Social Security, Medicare and Prescription drugs. When those AP's come due and payable they will have to become interest bearing debt. The US GDP and thus Tax revenues are not growing fast enough to keep pace with the expenditures that are coming. The Chairman of House Budget Committee Paul Ryan quietly admits that the system is not sustainable as it stands. It according to Ryan is when and not if.

God only knows that there are a lot of guys out there that can see the deep shyte that the world is in fiscally and monetarily, That can put the numbers together and say, "OH MY GOD, there is trouble right here in River City!!!" For the most part they get the picture or at least part of the picture. The question for myself is can they keep and ongoing representation of that dynamic in their heads? So far as I can gather it still remains a question if one or two might be able to hold it as an ongoing proposition? For the most part they just can't do it.

As for oneself, I don't view it as a numbers game but as an organic living and breathing system. In that I would think that I am rather unique. I do see all events in the world as being interrelated and having linkages and as such can keep an ongoing visualization of those interrelationships. Mr Putin does not operate in a vacuum nor does ISIS or events in Baltimore. It is all part of a systemic whole. Let us just put it this way the "animal spirits" are deeply troubled and are growing uneasy with the continued turn of events. Nothing has been cured and the crisis's grow ever deeper and more frequent. The leadership in the world is at a loss as to what to do or say to calm the waters let alone quell the unease.

The system as it now stands is unsustainable and will lead to it's dissolution and collapse on the scale of a global French, Russian and or Chinese Revolution. This will result in unspeakable carnage as during each of the above subscribed Revolutions there remained areas of quiet calm stability in the world. Here the world will be thrown into chaos as systems collapse. The Chinese are well aware of these ramifications and have been doing their best to distance themselves and build firewall trade agreements. Perhaps with enough of time they will be able to succeed in building enough of an alternative system that can withstand the decline of the West economically. However there is a way to mitigate the coming change if not all of the effects if men have a will to do so. This will require a fundamental change in perspective as to what success and prosperity means. It is coming one or or another, no matter what Obama or anybody on TV says or does.

BTW I see them "animal spirits" and THEY even TALK to ME!!!

As far as my own soap box in Hyde Park rantings go, Steve Martin long ago said, "If you are good you will be found." What I have to say is well thought out, is articulate and in general is accurate and even beyond into being predictive by seeing the logical extension of existing conditions. So it isn't a stretch of the imagination to say that what I write goes far beyond these Pelican walls. It would be nice to get an affirmation and validation of that though. However when I started this endeavor long ago I said, "I will say what I have to say as going it alone is nothing new to me."

QUOTE: "What I have to say is well thought out, is articulate and in general is accurate and even beyond into being predictive by seeing the logical extension of existing conditions. So it isn't a stretch of the imagination to say that what I write goes far beyond these Pelican walls. It would be nice to get an affirmation and validation of that though."
_______________________

Just one more mint Tabs? It's just a tiny, thin one.

https://www.youtube.com/watch?v=rXH_12QWWg8

Yes I think Tabs is right. There is an inevitable collapse coming in the future. The present economy and inflated stock market will be good for a while. Looking at the debt to gdp ratio although the US is behind Greece it it is a deteriorating situation.

There will come a point when if the US wants to borrow more money the interest rates get a lot higher. There will be an inability for some levels of govt. to pay their obligations.

What to do on a personal level? Will your savings accounts be safe? Not sure. Stock market does not like any instability. Some gold I think is a good idea. Be diversified.
Your thoughts Tabs on where to put your hard earned money?

Fed
 

If you want to get a sense of the Fed’s involvement in Europe, watch the swap lines. Swap line data is published every Thursday afternoon on the Fed’s balance sheet, the H.4.1 release. If you look at the St. Louis Fed’s charts and data on swap lines, you’ll see the huge amount of swaps during the financial crisis, and then a smaller but still significant increase in swap lines during the first iteration of the Greek financial crisis back in 2012. While swaps have been relatively non-existent this year, there was a small blip back in April, likely Greek-related, and more importantly, another blip this week. While the amount, $114 million, is a drop in the bucket compared to what it has been in the past, this number needs to be watched. It could very well be an indicator of the Fed getting involved in Europe again. And if the doomsday scenario ends up taking place next week, expect that $114 million figure to skyrocket. The Fed seems to want the conversation to revolve around a possible upcoming interest rate hike, so it’s been relatively silent on the topic of Greece and its involvement in bailing out Europe. But even if the Fed doesn’t say anything about Greece, its money-printing to pump up the swap lines will do plenty of talking.



Speaking of Greece

In my crystal ball I see Greece issuing a new currency called Greek Euro, initially valued to one Euro…just a hunch.

To add to the discussion in this forum, IMHO the capitalistic system is the best one so far and the origin of the capitalistic system crises is corruption.
Corruption has led to constant public deficits and it is a huge set of hidden deals between people in the political parties, people in the public sector, bankers and private entities; all resulting in wasted public spending.
The Capitalist systems need to be perfected to include more controls to admissions and promotions in the public sector and to public spending.
Jose

How much gold can you, or any of us mortals afford to buy? In Tabs' scenario you may need a gold ounce to get a bag of flour. If the Tabs' apocalypse does happen everyone, or at least 99% of everyone will broke so what's the point?

Can't remember Atlas Shrugged, but in this case, I think there is a 75% chance they will use this week to reinstate the drachma whilst reneging on their debt.

If I were them, I would do a forced exchange of all bank accounts to drachma's at parity, restate their debts in drachma's unilaterally and of course issue currency.

The drachma will deflate like crazy, they will be shut out of capital markets but they will now be able to use currency deflation to erode their debt significantly, all the while blaming the intransigence of the EU as the root cause behind all this.

EU will scream their heads off, but practically, they will have exited the EU in all but name and will pick and choose how they impose their laws as a sovereign nation.

At some point within about 6 months, the drachma will stabilize and, I suspect with Chinese or Russian money, have enough forex to do trading to keep the economy from totally dying.

Net effect is the same as if the EU had done what it had to do, namely realize that the current Greek debt, even after the haircut of a few years back, is probably only worth 50 cents on the euro, and so they ought to just write off that amount which the Greeks would accept but which would cause no end of grief with the other crappy economies who should have never been included in the EU zone.

Difference for the Greeks is that their way, with the new drachma, they now are more masters of their own destiny, and will join the Czech's and the UK as having a relationship with the EU but without the madness of following the insane federalists in Brussels as they continue to try to regulate minutia.

The Greek leaders have more balls than the dickless wonders that inhabit most of the G20, they're not always that bright, but brave for sure.

...don't worry, the US and other economies are perilously close to this kind of meltdown, only difference is the US dollar as reserve currency and the size of the relevant economies (Greece is probably smaller than New York in that respect).

Thankfully, I also think this is the end of the globalization madness and a movement to what hopefully becomes a healthier balance of nationalism against globalism. It also will mark the end of the US hegemony in the financial markets, due likely to the insertion of China and/or Russia into this. Putin certainly has the balls to enter this fray, Xi has them, but ultimately the Chinese will want to see an upside for them financially ("financially unwise Chinese" being an oxymoron). Putin will play for positional advantage, Xi will play for ultimate financial advantage. Obama will play 18 holes...

Dennis

Little thought exercise for you.

Calculate the budget hit for the US (state and federal) if interest rates went to more normative levels of, say, 2.5% over inflation, call it 5%,

Debt service cost would effectively double.

Now, take every mortgage, loan and outstanding debt in the US and add 4%...say double a good mortgage rate to 7% from its current 3.4%. How big of a hit will that make to the average American's home budget.

Now, take the loss of revenue that your mortgage deductibility effects on US tax receipts.

Cry a lot...and perhaps start buying gold.

What I am describing is not madness, but the practical levels that ought to be in place had we not done this idiocy called quantitive easing and if we would have been able to avoid the sub-prime crisis. It is the "norm" we ought to have....and yes, it would foment a crisis that would whack our economies for the rest of our lives, much the same way as the 30's influenced the mindset of a whole generation.

Dennis

You can see a lot of hard earned money flow into the collector car markets, high end art, antique and or collector guns. While I have not followed collector silver as of late one would think that that market has done well. One thing to note about collecting Flatware and Hollowware is that it is Sterling which has the Bullion price as a base line. English Gentry of the 17TH and !8TH century during good times would melt their silver coin and make flatware and hollowware, during hard times they would melt it back into coinage. Another hard asset might be high end watches and some jewelry (if bought right).

As stated the idea is to be diversified, you have to play the game of musical chairs as if it were going to go on forever. However I think it would be prudent to diversify some money into a hard asset that will withstand a shock to the system. With cars, it is a big ticket item that might be hard to turn in a depressed economic environment. Really high end art will always be tradeable. Guns when push comes to shove have a utilitarian value which causes them to hold value. Silver Hollowware, flatware and coinage has the precious metal aspect that can be weighed. US Gold coins ditto.

Since 2008/2009 I have seen strong prices paid in collector markets, it is as if people would rather have the asset than the cash.


Perhaps a good investment would be a piece of land somewhere, where you can raise your own fruit, vegetables and a few chickens. A lot of people even in urban environments did exactly that during the Depression of the 1930's.

Change is coming whether with a bang or a whimper, what we consider to be normative is going to HAVE to go by the wayside. The Western Industrialized world has spent itself into oblivion and how does that way of life sustain itself? The inflection point was in 1968 when LBJ started borrowing from the SS Trust fund to pay for Guns and Butter policies. The second inflection point was with the advent of Ronald Reagan who swept the structural malaise of the American economy under the rug for a "new morning in America." For which we are now about to pay for.

I think that the music stops some place between 2018 and 2022 because SS, Medicare and Prescription drugs are going to cause by the CBO's estimation a 1T USD deficit every year by 2018. The US Treasury will try and sell the new debt and sooner or later there will be no takers so the FED will print money to buy that debt and sooner or later the value of the USD will plummet. What other options do they have? Can the government default on the SS, Medicare entitlements that you have paid into for your entire working life? To renege on that promise is akin to defaulting on the debt as the US government's credibility will be zero. You would have a Million old folks marching on Washington. As far as tax revenues increasing, the economy is not growing at a large enough rate for those increases to pay for the shortfalls that are on the horizon. No matter how you slice and dice it there is a Catch 22 scenario that causes the can to bounce back and hit the policy makers in the head. The system that we now have is not sustainable.


The Western MC consumer society is over.

Very well-written, insightful and entirely plausible, Dennis. I could very well see something like this happening - or that they issue new drachmas at a 0.1:1 ratio to the Euro or something like that so they can obviously devalue it to write off a lot of their debt. Total shenanigans but hey, it's not like everyone doesn't know it's coming.

It'll be a good time to buy Euros soon - and go on a nice vacation to Greece methinks. :)

I have long said that the USD is a WMD. It is a way of having a nuclear winter without the bombs.

I have long said that as US power/ hegemony recedes fragmentation and chaos would follow in the wake as other powers would rise and compete for regional power. Further I have said that the American Empire is aka Globalization. Here instead of armies conquering territory the US has used capitalism and financial instruments (USD) to conquer with the US military to act as policeman to enforce the rules of internationalism or if you will the American way of doing business.

If the American Empire is no more so ends all the benefits that are accrued to the American people. The American MC can call itself what it likes but in reality it will be poor. In the end people will adjust and life will go on.

Well said Dennis.

Well said Tabs.