News & Analysis
EU/Greek Situation Continues to Decline
Greek Finance Minister George Papaconstantinou said Saturday that Greece was exploring the possibility of having a European bailout fund buy its debt if the government is unable to access capital markets again next year. "The markets continue to disbelieve in our country," Mr. Papaconstantinou told reporters. "We have to plan our next steps for 2012, for 2013." This could mean turning to the European Financial Stability Facility if the Greek government is still unable to issue debt in capital markets in 2012 as planned ... At the root of Greek concerns is a lack of investor confidence regarding its debt outlook, making new borrowing possible only at prohibitive cost. Yields on two-year Greek bonds have topped 23% on persistent fears that the country will have to restructure its debt at some point, forcing investors to absorb heavy losses on their holdings. ING bank analysts said in a report that Greek bonds maturing in five years or more price in around a 50% loss of principal to investors who bought them at face value. – Wall Street Journal
Dominant Social Theme: Greece debt payments will be lengthened, austerity will be rationalized and all this nonsensical talk about the Greeks leaving the EU will cease.
Free-Market Analysis: We have long-predicted the possible break-up of the EU in these modest pages. As we have written many times in the past few years, the EU experiment is not a logical one and at this point its disadvantages far outweigh its advantages. The "immoveable rigor" of the Eurocrats keeps the whole disaster afloat, much as the various compartments of the Titanic allowed that great doomed ship to ride the waters for a number of hours even after it was fatally wounded. Eventually it sank.
But even immoveable rigor has its limits. It is easy to demand that others sacrifice – as the top Eurocrats do – while jetting from country to country and paying no heed to their generous carbon emissions. But when confronted with the determined desperation of their victims – Greece being a prime example – even immoveable rigor gives way to feverish rejiggering designed to inflict further misery on reeling PIGS populations while still allowing the EU to function as a whole.
We continue to believe it probably will not work. Every additional compromise made by the Eurocrats comes at the expense of the Northern EU countries that have benefited from the EU even as the Southern ones have not. It is the Northern countries that are actually the problem. The Finns have just overthrown their government in an attempt to remove themselves from the EU. The German Iron Lady Frau Angela Merkel is bleeding continually at the edges of her coalition as she commits more and more German taxpayer money to the cause of salvaging Southern finances. There is a constitutional challenge to her activities that continues to progress.
The Eurocrats are apparently in denial about these issues. Used to ignoring the sentiments of the electorate (or demanding re-votes when inevitable) EU Grandees continue to come up with clever compromises that seem to provide hope for the EU as a whole. The supine mainstream media trumpets these deals as if each one were a definitive solution to the rolling, roiling EU debt crisis. None of them are.
Eventually, the EU electorate itself will have its way. Eastern Europe is growing increasingly hostile to the EU concept. Then the real pushback shall begin. One wonders for instance how long German unease shall be contained. The issue is far beyond clever compromise, as elections will continue most likely to vote EU-centric politicians out of office.
Now the Greeks may ask the European Union to buy their debt since the market will not; but once again no one mentions whether the Germans (or the Finns) will stand for it. The argument is trotted out that Greece will have to put up "collateral" to guaranteed the additional loans. Worse and worse. So the Germans shall pay tax dollars to bail out Greece and if it doesn't work out the German government shall end up owning part of the Parthenon.
In fact, this is a big question. Exactly who will receive this collateral in case of Greek's seemingly inevitable default? The taxpayer losses are tangible. The idea that Germans or other Northern EU states will receive compensation for their losses via the sale of such collateral seems to us a kind of bad joke. If we can see through it without knowing the details, far more sophisticated anti-EU forces in the EU's North will likely take apart these proposals quickly and ruthlessly.
Meanwhile, there is no free-market left that we can see. The EU's supposed purpose continues to degrade. We have returned to an age of quarreling nation states. The idea that the EU is actually a facilitation of free-markets is not even honored rhetorically anymore. The Greek crisis is just one more evidence among many that the union is unworkable, that its policies are undemocratic and its outcome is one that is continually substituting misery for prosperity.
From the standpoint of freedom, nothing is more desirable than the breakup of this authoritarian monstrosity that crushes culture and makes increasingly absurd laws for hundreds of millions at a time under the laughable pretense of keeping them "safe." The EU itself is an increasingly risible entity. At the top is responsible to no one and has not even been officially audited in a decade or more as those responsible for the numbers will not sign off on its evident and obvious corrupt practices. This is the institution that presumes to make financial decisions for others.
As far as the EU's larger problems are concerned, there is no more pretense that issues involve economies; the action is focused on nation-states that cannot pay their obligations. The state itself has accrued the debt; its citizens pay with austerity and unappointed leaders gather together in (presumably smoke-free) back rooms to apportion resources as they see fit.
Was this the intended outcome after all? We are always of two-minds of this. We look at the huge financial resources controlled by the monetary elite and we wonder if the whole EU crisis is manufactured, designed to impose maximum "austerity" on European populations to distract them from the authoritarian cage being constructed around them.
On the other hand, the EU seems constantly on the brink of some sort of dissolution – and the EU powers-that-be scramble around in a panic to make sure that the worst does not occur. Maybe there are competing agendas, as we have suggested in the past. The Anglo-American elites have inflicted maximum damage on Western economies but do not want the results to undermine its globalization efforts. Thus competing agendas, even within the larger aims of those who run these statist agglomerations.
There is no doubt that the Eurocrats, despite the misery that the world's central-banking economy has inflicted throughout the West, do not want to see a break-up of the EU. It is one of the building-blocks of world empire. That is not merely a rhetorical stance. When Der Spiegal, the German magazine, wrote last week that Greek leaders were considering leaving the EU, a weekend meeting of various finance chiefs was organized in Greece with startling rapidity. Here's some more from the article:
U.K. Chancellor of the Exchequer George Osborne said Sunday that European Union countries will spend the next several weeks discussing ways to provide Greece with more financial aid as the country struggles to reduce its debt burden. "I think it's inevitable that we are going to look at the Greek package and see what they can do to get through next year, but that might involve additional assistance from, for example, the euro zone," he said in an interview with BBC television.
Mr. Osborne said the chance of Greece being unable to regain access to capital markets next year has been recognized as a problem. But he said he doesn't think it is inevitable that Greece will default on its debt."There are some very difficult questions that Greece has to address now," Mr. Osborne said. "Because the whole assumption when the euro zone put together a rescue package last year was that Greece would come back into the market and borrow. The market is quite skeptical about this happening."
The U.K. isn't one of the 17 euro-zone countries sharing the euro currency, but government bailout decisions require approval from all EU countries. The possibility that Greece will be unable to meet financial payments next year without more external aid was the focus of a top level meeting of European Union officials in Luxembourg late Friday. At that meeting, Greece asked its euro-zone partners to ease the country's deficit targets as it struggles to comply with strict austerity terms set under last year's financial bailout agreement, a senior euro-zone government official said Saturday.
The senior official said Greece acknowledged that it was unlikely to be able to return to the bond market next year and might need to tap the EFSF for funding. A German proposal to possibly extend the maturities of Greek debt falling due in 2012 also was discussed, this person said. Athens has a long-term borrowing requirement of €27 billion ($39 billion) in 2012.
The deal is not done, of course. But it looks to be on track. Greece will likely receive easier terms (because its must) despite grumbling. Then Greek leaders will pledge to provide the necessary collateral and redouble austerity efforts, which include high-tech spying on the swimming pools of wealth citizens who may not have paid enough taxes.
The results shall be twofold. More Northern political leaders shall be voted out of office by enraged voters while the Greeks themselves shall take to the streets in redoubled fury. EU officials remain in denial. Surely something will be worked out. "We are not discussing the exit of Greece from the euro area, this is a stupid idea and an avenue we would never take," Eurogroup President Jean-Claude Juncker said Friday. "We have excluded any restructuring of Greek debt." (Good luck with that.)
Conclusion: The good news is that the world-spanning plans of the Anglosphere power elite are under attack as never before. From Afghanistan, to the EU to America, its strategies are seemingly foundering and world government does not seem to us to be assured, especially not in the near future. However, we try not to be predictive in this publication. We point out elite dominant social themes and their foundering; lately there has been more and more damage to them in our opinion. It surely seems as we have often written that the 21st century is considerably less kind to elite globalist ambitions than the 20th. Time will tell. Right now, insofar as the EU is concerned, in some instances anyway, it does not seem to be on the side of the globalists.
Posted by cat writer on 05/15/11 06:29 AM
Hitler did NOT do that! The German Empire was organized in 1871 with the Prussian king as the Emperor. That was the Second Reich. The first was Charlemagne's Holy Roman Empire (800-1806) and Hitler's was the Third.
Perhaps the EU can be counted as the Fourth.
Posted by sparky on 05/10/11 09:35 PM
The Anglo Elite's are appearing with every passing day to suffer more set backs than victories. As in America with the Tea Party movement. This movement is NOT meeting my expectations. However, as this movement came literally out of no where largely organized through the internet.
This movement will continue to morph and change and as voters get no results the process WILL continue. This is a process and the process IS underway. These Anglo Elite's are NOT invincible and their recent disjointed seemingly hurried actions only serve to underscore this reality.
Posted by Wayne on 05/10/11 09:26 PM
"Actually, they are stealing as much as they can, in the futile hope it will not be lost in the defense and, simultaneously painting bulls eyes on themselves."
Oh well, another faulty program that has the users stuck in a do-loop!
Where have all the competent programmers gone?
To Galt's Gulch, of course.
Posted by rossbcan on 05/10/11 08:32 PM
"They are just whistling past the graveyard now."
Actually, they are stealing as much as they can, in the futile hope it will not be lost in the defense and, simultaneously painting bulls eyes on themselves.
Posted by dotti on 05/10/11 08:30 PM
The thing that I keep coming back to again and again when I read of these bailouts is that it is really the banksters who are being bailed out. Let THEM eat cake.
Posted by Helix on 05/10/11 08:26 PM
Re: [i]"Eventually, the EU electorate itself will have its way. Eastern Europe is growing increasingly hostile to the EU concept. Then the real pushback shall begin. One wonders for instance how long German unease shall be contained. The issue is far beyond clever compromise, as elections will continue most likely to vote EU-centric politicians out of office."[/i]
So what? Who will they vote for? Meet the new boss. Same as the old boss. Thinking that the "electorate" has one iota of influence over economic policy is like thinking that it was medieval commoners who faced down King John at Runnymede.
The bottom line is the bankers make the policy and the heads of government sell it to the public -- if they know what's good for them. The German public be damned. The German banks have made huge loans to the PIIGS, and by God, they're going to collect on those loans one way or another. Period.
The [i]public[/i]... Good grief...
Posted by Wayne on 05/10/11 07:56 PM
Why, You can't be suggesting that "reality" exists, regardless of how anyone else wants to see it/fantasize it.
How cold and judgmental on your part.
A lot of pain is the forecast now.
Too many cookie eaters, Too few cookie makers.
Here's a link you might find informative.
Click to view link
Seykota explains exactly how much of our seed stock/capital stock we have already eaten.
Since modern politics is based on increasing the unearned gifts/theft to the cookie eaters,there is no way out other than a complete collapse of the system, and the leadership knows it.
They are just whistling past the graveyard now.
Posted by Bischoff on 05/10/11 12:38 PM
I believe you can find the interview on the topic under my name on the "Think Tank" page of this "The Daily Bell" site.
Posted by Bret on 05/10/11 12:31 PM
I somewhat recall your discussion on this topic from a while back. What was the title or the date that it was posted on The Daily Bell?
Posted by Bischoff on 05/10/11 11:17 AM
"From Afghanistan, to the EU to America, its strategies are seemingly foundering and world government does not seem to us to be assured, especially not in the near future. However, we try not to be predictive in this publication."
Why not...??? Is it to left to the feebbackers to do so...???
Ok, I will make a prediction.
Free market capitalism requires equal access to "Land" (natural resources). The U.S. Constitution and the constitutions of the separate states were designed to guarantee equal access to "Land". Varies practices and legal decisions have whittled down the effectiveness of this guarantee. Proposition 13 was the most serious attack on it.
With the exception of early Anglo Saxon England, and lately of Denmark, New Zealand, parts of Australia, Hong Kong and Taiwan, the populations of the rest of the world never experienced equal access to "Land". The strive and wars over the ages has always been over "who owns the land".
Unless the question "Who owns the land?" is answered, there will be continued strive and wars. It will always be the "elite", which wants to control exclusive access to "Land", against the rest of the world population, which struggles for "equal access".
Central banking and central government, along with the propaganda required to justify their existence, is a phenomenon in the struggle over the control for access to "Land", as are the current revolutions and unrests across the globe.
The answer of course is "Land Value Taxation". I predict that unless governments guarantee equal access to land via a land rent, aka "Land Value Tax", as have Denmark, New Zealand, Hong Kong and Taiwan, there will only be continued war and exploitation.
The "meme" of the elite insists that "Land Value Taxation" offends the right to "private property". This assertion is absurd on the face of it. There is no such right to private ownership of "Land". There cannot be, unless of course one accepts that there are different classes of humans, and that "NOT all men are created equal".
Posted by boatman on 05/10/11 09:23 AM
far from being manufactured, the coming breakup of the EU, or most of it(and the resulting world plummet into depression) , is the worst case scenario for the Eurocrats.
but if u want to go back to the inception of the EU, they have caused it and it was inevitable.
Posted by rossbcan on 05/10/11 08:40 AM
GP: "The markets continue to disbelieve in our country,"
Since states are just the sum of their peoples, the logical consequence of welfare, entitlements and unproductivity for "deadbeat peoples" is "deadbeat states".
I would paraphrase GP:
"The markets have concluded that what cannot go on, must end and refuse to provide resources to a financial black hole"
If GP gets his way and receives further EU bailouts or insulation from the financial reality of "no free lunch", well, the logical consequences are "Deadbeat EU".
Thank gawd for Germany and their still fresh memories / terror of Weimar hyperinflation. Their "intransigence", if they manage not to be subverted may yet salvage some hope for a viable European economy which requires the EU to be put out of everyone's misery and relegated to the "memory hole", just like the USSR, for the same economic, anti freedom reasons.
It is the grim reaper of "Mathematics of Rule" determining inevitable consequence to bad choice that is driving events:
Click to view link
The sooner everyone aligns to provable reality, the less pain for all of us.
Posted by Mountainview on 05/10/11 07:59 AM
The PE knows exactly that Greece should exit the EURO and refinance debt.. The bickering now is about the terms... There is a huge involvement of French, Swiss and German banks. The lobbists of these banks know that you should not confront the electorate with a new banking crisis only 2 1/2 years after the subprime disaster. Nevertheless, the unavoidable will prevail...you can pretend and extend for a while but now free market forces are fully aware of the depth of the failure and they will drive governments to the wall...
Reply from The Daily Bell
Very good point.
Posted by cosmos on 05/10/11 06:07 AM
Amazing that the Germans have forgotten that Hitler dissolved the German states and homogenized them under one big happy family (see the EURO)and here they are falling for it again.
"One world currency = One world government"
Posted by Reader on 05/10/11 06:00 AM
Time will tell indeed. Here is LEAP's latest. A mainland Europe-phile take on whats coming up for the US, the UK and the rest of the world.
Posted by Wayne on 05/10/11 12:47 AM
No worries, mate!
Click to view link