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Greece is saved? All over the planet, news headlines are boldly proclaiming that a “deal” has been reached which will give Greece the money that it needs and keep it in the eurozone. But as you will see below, this is not true at all. Yesterday, when I wrote that “there never was going to be any deal“, I was not exaggerating. This “deal” was not drafted with the intention of “saving Greece”. As I explained in my previous article, these negotiations were all about setting up Greece for eviction from the euro. You see, the truth is that Greece desperately wants to stay in the euro, but Germany (and allies such as Finland) want Greece out. Since Germany can’t simply order Greece to leave the euro, they need some sort of legal framework which will make it possible, and that is what this new “deal” provides. As I am about to explain, there are all kinds of conditions that must be satisfied and hurdles that must be crossed before Greece ever sees a single penny. If there is a single hiccup along the way, and this is what the Germans are counting on, Greece will be ejected from the eurozone. This “deal” has been designed to fail so that the Germans can get what they have wanted all along. I think that three very famous words from Admiral Ackbar sum up the situation very well: “It’s a trap!”

So why is this “Greek debt deal” really a German trap?

The following are three big reasons…

#1 The “Deal” Is Designed To Be Rejected By The Greek Parliament

…click on the above link to read the rest of the article…

It Starts: Greeks Rebel Against Bailout, Risk Collapse

July 14, 2015

It Starts: Greeks Rebel Against Bailout, Risk Collapse

Greece’s union of civil servants, Adedly, called for a 24-hour strike on Wednesday, and for a series of demonstrations, the first one tonight at Syntagma Square, just below the Parliament, and another one on Wednesday evening, when Parliament is expected to vote on the new, even tougher, and immensely hated bailout package.

The union for local government employees, Poe-Ota, also called for a 24-hour strike on Wednesday, the AFP reported. Two other demonstrations against austerity and the “euro” are planned for Monday night, one organized via social networks, the other by Antarsya, an anti-euro party that didn’t make it into Parliament.

It would be the first strike against the leftwing Syriza coalition since it came to power six months ago. An ironic plot twist in this tragedy.

Syriza was the big force in the demonstrations against the two prior bailout packages, totaling €240 billion from taxpayers in other countries, conditioned on economic reforms pushed through Parliament by the conservative governments at the time. Now Syriza is looking at having to pass even tougher measures, including an increase in the Value Added Tax and pension reform, in return for only €86 billion in new money from taxpayers in other countries.

Syriza’s junior coalition partner, the Independent Greeks, is already getting cold feet.

“The agreement speaks of €50 billion worth of guarantees concerning public property, of changes to the law including the confiscation of homes… We cannot agree to that,”explained Panos Kammenos, the party’s leader, adding that the party would nevertheless remain in the coalition. With “confiscation of homes” he probably meant foreclosing on homes with defaulted mortgages.

Prime Minister Alexis Tsipras is already struggling with strong dissent within Syriza. But ironically, the pro-euro opposition parties, those maligned creatures that ran the show before, may support him in getting these despised measures passed.

…click on the above link to read the rest of the article…

Everything You Need to Know About the Greek Crisis and ECB Fascism in Two Paragraphs

July 14, 2015

Everything You Need to Know About the Greek Crisis and ECB Fascism in Two Paragraphs

Screen Shot 2015-07-13 at 4.15.12 PM

Yanis Varoufakis just sat down for his first interview since resigning as Finance Minister of Greece. He talked frankly with Harry Lambert of the New Statesman. Here are the two most important paragraphs from the transcript.

There is no democracy in Europe. None.

Varoufakis said that Schäuble, Germany’s finance minister and the architect of the deals Greece signed in 2010 and 2012, was “consistent throughout”. “His view was ‘I’m not discussing the programme – this was accepted by the previous [Greek] government and we can’t possibly allow an election to change anything.

“So at that point I said ‘Well perhaps we should simply not hold elections anymore for indebted countries’, and there was no answer. The only interpretation I can give [of their view] is, ‘Yes, that would be a good idea, but it would be difficult. So you either sign on the dotted line or you are out.’”

Any questions?

Check out more of the interview here, I strongly suggest it. Also read about Spain becoming a police state in:

The Beatings Will Continue Until Morale Improves – Spain Officially Becomes a Police State

Greek Pudding

July 13, 2015

Greek Pudding

The proof of the pudding is in the eating, the old saw goes. This one, alas, is a mélange of several old shit sandwiches bound in a liaison of subterfuge and seasoned with political absurdities. Having been fooled in this bistro before, citizen-patrons leave the table resigned to yet another bout of food poisoning as the music of universal upchuck rings across the European Union from Helsinki to Lisbon

What is on display more brightly and clearly than ever, though, is the utter fakery of international banking. The players have lost faith in their own shenanigans. They simply go through the motions now awaiting the political fallout, which is to say the revolt of the people who can still do arithmetic. So, now Greece can supposedly expect another $90Billion-equivalent in new loans on top of the $350Billion-equivalent already racked up. That’s rich. The loan repayment schedule must look like a map of Middle Earth.

Most perplexing — especially for those on summer hiatus in which time seems to be suspended — is the fact that the rescue package will take weeks, perhaps months, to gin up while Greece is right now so utterly paralyzed in bankruptcy that no goods can move, no bills can be paid, and the economy cannot deliver the necessities of daily life. The old refrain, “your check is in the mail” may not be so reassuring to folks who haven’t eaten for three days. Personally, I would expect the gasoline bombs to be flying around Syntagma Square before the middle of the week.

Has anyone noticed the eerie paucity of news emanating from the other hard-luck nations of the EU, namely Spain, Portugal, Italy, and Ireland? The money hole that these deadbeats are in makes Greece look like a dimple in the sand. What, I wonder, is the message to them from the Greek negotiation melodrama? (Lend more money to real estate developers to build more houses and condos that will never be sold? That’ll work!)

…click on the above link to read the rest of the article…

Greece Just Lost Control Of Its Banks, And Why Deposit Haircuts Are Imminent

July 13, 2015

Greece Just Lost Control Of Its Banks, And Why Deposit Haircuts Are Imminent

Yes, Greek banks may have been insolvent – something that was clear since the first bailout of 2010 – but at least the Greek state had control over them: as such it could have mandated mergers, recapitalizations, liquidity injections, even depositor bail-ins (perhaps the harshest lesson for the ordinary Greek population as a result of this latest crisis is that deposits are not “cash in the bank” but liabilities of insolvent financial organizations).

Starting on Wednesday that will no longer be the case.

Because while Greek banks will maintain their capital controls for months and withdrawals will be limited to €60 or less for months (the ECB is well aware that any boost to the ELA will result in a promptly surge in deposit outflows until the new ELA ceiling is reached, and so on ad inf) the one key change on Wednesday when the Tsipras government, whose coalition no longer has a majority in parliament and will have to rely on opposition votes, votes through the humiliating Greek “pre-deal” to unlock negotiations for the promised €86 billion in bailouts (which will be used almost entirely to repay the Troika) is that it will hand over the keys of Greek banks to the ECB.

Here is Reuters with this little known fact:

One of the preconditions imposed on Greece for a deal is that it signs into law European rules that would put euro zone authorities at the ECB and in Brussels, rather than Athens, in charge of identifying and closing or breaking up sick banks.

This in turn could lead to a shake-up of the sector that could see some banks close, with losses pushed onto bondholders and possibly even large depositors. In such circumstances, there would be little that Athens could do to prevent this.

…click on the above link to read the rest of the article…

Cashtration

July 13, 2015

Cashtration

Recently, we’ve witnessed the bank holiday in Greece, the limitation as to how much the Greek people can withdraw from their accounts each day.

Not surprisingly, the mainstream press have focused on images such as the one above – a queue at an ATM – and discussed the difficulty of the Greek people in trying to run their lives on the €50-€60 that they’re allowed to withdraw each day.

The press then comment poignantly that “Something needs to be done.” The implication is that “someone”, either the banks or the government, need to find a way to deliver these people more money, so that they can continue to function economically.

Of course, the problem, and the very reason for the bank holiday in the first place, is that the money simply doesn’t exist.

For many years, governments have been attempting to expand the economy by encouraging debt. Governments (most notably the EU and US) have borrowed far more than they ever have in history, to the point that they’re now facing insolvency.

Further, the average citizen has been programmed to think that he can get ahead through increased debt. As a result, personal debt has risen to an unprecedented level.

But in order for someone to borrow, someone must offer to lend, and, of course, the banks have been the lenders. Banks typically make their profits by taking in deposits, then loaning out that money to others, making their profits on the interest.

This is a system that began in Europe hundreds of years ago and, although it has repeatedly resulted in disaster, continues to be the standard by which banks operate.

Theoretically, it’s a workable idea.

…click on the above link to read the rest of the article…

Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal Terms

July 13, 2015

Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal Terms

Last night, when we concluded our overnight summary state of affairs we said that “we expect some resolution around first light this morning, and while another Greek can kicking and some last-moment “hope” is surely in the cards, we know two things: Greece is officially finished – there is no way the Tsipras or any other government can politically recover after such a humiliating spectacle when half of Europe made a mockery of the Greek people; and perhaps better, we finally have seen the true face of Europe: visible only when things are finally falling apart.”

Sure enough, just around 9am CET, after a 17-hour mammoth all-night session, Greece did manage to cobble together a “deal” if one may call this latest embarrassing can-kicking that, which was nothing short of total capitulation by Tsipras: a prime minister who 8 days ago was victorious cheering the passage of a referendum that rejected a far less draconian deal.

As part of the deal, Greece “surrendered to European demands for immediate action to qualify for up to 86 billion euros ($95 billion) of aid Greece needs to stay in the euro” as Bloomberg politely put it.

We would put it as follows: Greece agreed, at the cost of ceding its sovereignty to Europe, to allow the Troika to repay itself.

Worse, there is no actual deal term sheet on the table: while the summit agreement averted a worst-case outcome for Greece, it only established the basis for negotiations on an aid package, which would also include €25 billion euros to recapitalize its weakened financial system, money which would come from Greek asset sales.

The politicians were greatly relieved, perhaps most of all to be finally able to go to bed. Here is the statement by Euro president Donald Tusk:

…click on the above link to read the rest of the article…

Russia Readies Fuel Deliveries To Athens, Will Support Greek “Economic Revival”

July 12, 2015

Russia Readies Fuel Deliveries To Athens, Will Support Greek “Economic Revival”

Russia and Greece have a “special relationship of spiritual kinship and religious and historical affinity,” Vladimir Putin said yesterday, following the BRICS summit in Ulfa.

Over the course of the unfolding crisis in Greece, Athens has at various times gone out of its way to remind Angela Merkel that allowing the country to crash out of the currency bloc may force the Greeks to turn to their other international “friends” (to use Nigel Farage’s words) for assistance. Facing economic sanctions from the EU in connection with its alleged role in destabilizing Ukraine not to mention a spiteful anti-trust suit against Gazprom, the Kremlin has been more than happy to use the rising tensions between Athens and Brussels to its geopolitical advantage.

So far, discussions between Russia and Greece have revolved primarily around energy, and several months back, when negotiations between Athens and creditors began to deteriorate in earnest, reports began to surface that Moscow may consider advancing Greece some €5 billion against the future proceeds from the Greek portion of the proposed Turkish Stream natural gas pipeline.

Although the loan never materialized, the agreement on the pipeline did, and it was held up last week as proof that Greece is “no one’s hostage.”

Now, that contention will be put to the test as Greece faces the prospect of a “swift time-out” from the eurozone if PM Alexis Tsipras can’t convince parliament to agree to a new term sheet from creditors which seeks the implementation of a number of draconian measures in exchange for a third bailout. Of course, as we notedearlier today, a “time-out” is a polite way of saying “get the hell out,” and in the event of a messy exit and forced redenomination, an acute cash and credit crunch will likely mean a shortage of critical imports and, in short order, a humanitarian crisis.

…click on the above link to read the rest of the article…

The Greek “Choice”: Hand Over Sovereignty Or Take Five Year Euro “Time Out”

July 12, 2015

The Greek “Choice”: Hand Over Sovereignty Or Take Five Year Euro “Time Out”

For those who missed today’s festivities in Brussels, here is the 30,000 foot summary: Europe has given Greece a “choice”: hand over sovereignty to Germany Europe or undergo a 5 year Grexit “time out”, which is a polite euphemism for get the hell out.

As noted earlier, here are the 12 conditions laid out as a result of the latest Eurogroup meeting, which are far more draconian than anything presented to Greece yet and which effectively require that Greece cede sovereignty to Europe, this time even without the implementation of a technocratic government.

Streamlining VAT
Broadening the tax base
Sustainability of pension system
Adopt a code of civil procedure
Safeguarding of legal independence for Greece ELSTAT – the statistics office
Full implementation of autmatic spending cuts
Meet bank recovery and resolution directive
Privatize electricity transmission grid
Take decisive action on non-performing loans
Ensure independence of privatization body TAIPED
De-Politicize the Greek administration
Return of the Troika to Athens (the paper calls them the institutions… for now)

One alternative, generously presented to Greece, is for the country to put some €50 billion of assets – the best ones – in escrow to creditors. A more polite was of putting would be a Greek secured loan. This is how the Luxembourg FinMin Pierre Gramegna laid it out:

“A few new ideas were added to the table, especially one which is very important for some member states, which is that Greece would put a portion of its assets into a company that would be more independent from Greece.”

“More independent” from Greece and “more dependent” to Berlin.

Greece would place about €50 billion of state assets into an independent company. Those assets could serve as collateral against aid loans, Gramegna says. “It would act as a kind of guarantee. There is great hesitation from the Greek side and now the heads of state and government have to choose.”

…click on the above link to read the rest of the article…

Is Greece a Template for U.S. State & Local Government Debt Crises?

July 12, 2015

Is Greece a Template for U.S. State & Local Government Debt Crises?

The template of over-indebtedness as a response to soaring obligations is scale-invariant, and it always ends the same way: default.

When you can’t pay your bills, you can either cut expenses, borrow money or if you’re extraordinarily privileged, print money. If you borrow money without cutting expenses, the interest on the borrowed money piles up and you can’t pay that, either. Then not only do you have a spending crisis, you have a debt crisis, and so do those who lent you the money.

Because the funny thing about borrowed money is it’s a debt to you but an asset to the lender.

Not only is your debt listed as an asset on the lender’s books–it’s collateral that supports whatever financial leverage the lender might engage in.

If you default on the debt, not only is the lender’s assets impaired–all his leveraged bets built on the collateral of your debt are suddenly impaired, too.

The preferred solution nowadays to a spending/debt crisis is to borrow your way out of the crisis: if you can’t pay the interest and debt that’s due, just borrow more to cover the interest payments and roll the old debt into new loans.

In a variation that we can call The Japanese Solution, the lender decides not to list your defaulted loan as impaired–he places your loan in a special zombie debtcolumn–it’s neither a performing loan nor a defaulted loan; it is a zombie loan.

The other solution (again from Japan) is to roll the defaulted debt into new loans at near-zero rates of interest that allow the borrower to pay a nominal sum every month, just to maintain the illusion of solvency. If you owe the bank $10 million, the bank loans you $11 million at .01% rate of interest and you promise to pay $100 a month.

There–problem solved! The loan is now performing because the borrower is once again making payments. But is either the borrower or lender actually solvent? Of course not.

…click on the above link to read the rest of the article…

Tsipras Invites Schäuble To Fall Into His Own Sword

July 12, 2015

Tsipras Invites Schäuble To Fall Into His Own Sword

Too many voices the past few days are all pointing the same way, and I’ve always thought that is never good. A guessing-based consensus, jumping to conclusions and all that. Look, it’s fine if you don’t have all the answers, no matter how nervous it makes you.

What I’m referring to in this instance is the overwhelming conviction that Greece and Tsipras have conceded, given in to the Troika, flown a white flag, you get the drift. But guys, the battle ain’t over yet.

So here’s an alternative scenario, purely hypothetically (but so in essence is the white flag idea, always got to wait for the fat lady), and for entertainment purposes only. Let ‘er rip:

Tsipras, first through holding a referendum, and then through delivering a proposal that at first sight looked worse than what the Troika provided before the referendum, has managed a number of things.

First, his domestic support base has solidified. That’s what the referendum confirmed once more. Second, he’s given the Troika members, plus the various nations that think they represent them, something that was sure from the moment he sent it to them: a way to divide and rule and conquer the lot.

Tsipras has set the IMF versus the EU versus the ECB. Schäuble snapped at Draghi last night: ”Do you hold me for a fool?” Germany itself is split too, Merkel and Schäuble are at odds. Germany and France don’t see eye to eye anymore. The US doesn’t see eye to eye with any party involved.

Italy is about to tell Germany to stop its shenanigans and get a deal done. The True Finns may get to decide the entire shebang, with less than 1 million rabid voters calling the shots for 320 million eurozone inhabitants.

…click on the above link to read the rest of the article…

How Fascist Capitalism Functions: The Case of Greece

July 12, 2015

How Fascist Capitalism Functions: The Case of Greece

There is democratic capitalism, and there is fascist capitalism. What we have today is fascist capitalism; and the following will explain how it works, using as an example the case of Greece.

Mark Whitehouse at Bloomberg headlined on 27 June 2015, “If Greece Defaults, Europe’s Taxpayers Lose,” and presented his ‘news’ report, which simply assumed that, perhaps someday, Greece will be able to get out of debt without defaulting on it. Other than his unfounded assumption there (which assumption is even in his headline), his report was accurate. Here is what he reported that’s accurate:

He presented two graphs, the first of which shows Greece’s governmental debt to private investors (bondholders) as of, first, December 2009; and, then, five years later, December 2014. This graph shows that, in almost all countries, private investors either eliminated or steeply reduced their holdings of Greek government bonds during that 5-year period. (Overall, it was reduced by 83%; but, in countries such as France, Portugal, Ireland, Austria, and Belgium, it was reduced closer to 100% — all of it.) In other words: by the time of December 2009, word was out, amongst the aristocracy, that only suckers would want to buy it from them, so they needed suckers and took advantage of the system that the aristocracy had set up for governments to buy aristocrats’ bad bets — for governments to be suckers when private individuals won’t. Not all of it was sold directly to governments; much of it went instead indirectly, to agencies that the aristocracy has set up as basically transfer-agencies for passing junk to governments; in other words, as middlemen, to transfer unpayable debt-obligations to various governments’ taxpayers.

…click on the above link to read the rest of the article…

German FinMin Blasts Greek Proposal: Debt Restructuring Impossible, “Everyone Knows They Can’t Be Believed”

July 11, 2015

German FinMin Blasts Greek Proposal: Debt Restructuring Impossible, “Everyone Knows They Can’t Be Believed”

In the face of Latvia’s outgoing President’s comments, that debt writedowns for Greece will only come after the bankruptcy of the state…

“this [Greek] debt is so big that everyone understands that it won’t be repaid. Loans to Greece have just bought time so that those in power don’t have to take decisions. This is like a game: who can hold out longer by not showing that this money has been lost? This burden has become bigger and there obviously is no possibility to repay. The debt writedown of Greek debt will come after bankruptcy of state.”

German finance minister Schaeuble has once again gone on the offensive this morning saying that “we know from the Treaties that debt relief is not possible,” yet noting that “the need for help for Greece is obvious.” However, his concluding, seemingly ad hominem, remarks are the most troubling for those expecting smooth passage of Greek proposals and a renewed rally to record stock market highs… “Greeks won’t pay their bills… everyone knows they can’t be believed.”

Bloomberg headlines from Schaeuble’s tirade:

*SCHAEUBLE SAYS HE EXPECTS “EXTRAORDINARILY DIFFICULT TALKS”
*SCHAEUBLE: DEALING WITH FINANCE GAPS BEYOND THOSE OF PAST
*SCHAEUBLE: KNOW FROM TREATIES THAT DEBT RELIEF IS NOT POSSIBLE
*SCHAEUBLE SAYS GREEKS MUST SHOW `OWNERSHIP’ ON PROPOSALS
*SCHÄUBLE: WON’T PAY BILLS `EVERYBODY KNOWS CAN’T BE BELIEVED’
*SCHAEUBLE: GREEK GOVT DESTROYED HOPE AT `UNIMAGINABLE LEVEL’

More Europe means More Germany: is that really want Tsipras wants… actually not even Tsipras knows what Tsipras wants.

Just what exactly is Greece so enamored by that keeps them in this union – especially when friends are likely waiting to help post-Grexit.

Troika Says Greek Proposal Not Enough To Meet Targets, Serves As “Basis For Negotiations”

July 11, 2015

Troika Says Greek Proposal Not Enough To Meet Targets, Serves As “Basis For Negotiations”

Early on Saturday morning, the Tsipras government passed the Greek bailout proposal which it told the Greek people to reject – which they did – less than a week earlier. The grotesque farce continued until the very end when 15 Syriza lawmakers who voted yes said they nonetheless are against the reform package and expressed their opposition to the government’s proposal in a joint statement issued immediately after the vote in parliament.

Seemingly unclear how this “democracy” thing works in the country that supposedly invented it only to spawn its biggest mutant yet, the “dissenters” added that they voted for the proposal in order not to give an excuse for the undermining of Alexis Tsipras government. What they really meant is what the angry people finally crack down on yet another government, they hope to have a get out of jail card. Literally.

Other were far more vocal in their condemnation of the capitulation: Energy Minister Panagiotis Lafazanis, Deputy Labour Minister Dimitris Stratoulis as well as the speaker of parliament, Zoe Constantopoulou, all called “Present”, in effect abstaining from the vote and withholding their support from the government. “The government is being totally blackmailed to acquiesce to something which does not reflect what it represents,” Constantopoulou said.

At the end of the vote, the Tsipras government narrowly escaped the loss of a parliamentary majority, as 17 Syriza lawmakers, which holds 149 seats in parliament, abstained, were absent or voted no. Among legislators who were absent were former Finance Minister Yanis Varoufakis (who went on holiday earlier to his wife’s island vacation house), Speaker of Parliament Zoe Konstantopoulou (who penned the famous Greek “Odius Debt” declaration) and two cabinet ministers.

The ruling coalition’s parliamentary majority was saved by the deputies of the right-wing Independent Greeks, who hold 13 seats in parliament. Additionally the three opposition parties handed Tsipras the mandate to negotiate and bring back a debt deal.

…click on the above link to read the rest of the article…

This Week In Energy: Oil Prices Hinge On Two Financial Crises

July 11, 2015

This Week In Energy: Oil Prices Hinge On Two Financial Crises

It has been an eventful week. Two major financial crises are destroying the bullish case for oil.

The Greek crisis continues, although there are signs that some semblance of a solution is at hand. Europe had demanded a new proposal and set this Sunday as the absolute final deadline, ruling out any further extensions. Greek Prime Minister Alexis Tsipras offered a new proposal to European creditors on its debt situation and appeared willing to accept most European demands in exchange for some debt relief.

Greece has asked for a three-year bailout, and will make further concessions on austerity, cutting spending in key areas of its economy. But in perhaps a surprise move, creditor nations are looking at offering some debt relief. The international pressure on Europe has grown, with calls to offer some debt relief to a country that is mired in five years of recession (or depression), has 25 percent unemployment, and cannot pay its bills. Even the European Council’s President, former Polish Prime Minister Donald Tusk, has joined international calls for debt relief, as part of a loan package. The German Chancellor has been adamantly opposed to debt relief, but with the White House leaning on Europe to act, further austerity in exchange for some debt relief offers all sides a face-saving way out of the crisis. That could pave the way for a financial lifeline to Greece, hours before a hypothetical Grexit from the Eurozone.

Meanwhile, Greece announced a 2 billion euro plan with Russia over the Turkish Stream Pipeline, a natural gas pipeline that would run beneath the Black Sea, carrying Russian gas to Europe. Greece’s energy minister announced preliminary plans for the project on July 8, just as Greece was entering into the final days of its standoff with Europe over its debt mess.

…click on the above link to read the rest of the article…

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