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Just when you think things can’t get any crazier, they always do. The Guardian reports on unpublished Troika documents that show Greece is only too right in asking for debt relief. That for the Syriza government to sign what the Troika wants to force them to sign would see Tsipras et al plunge their country into a financial hell hole.

What’s potentially even weirder is that all German MPs have received the documents, because a vote on them was supposed to take place, but none have said a thing about them. Good thing one at least was awake enough to send them to the press.

So they have these docs, and then yesterday Merkel says no more talks until after the referendum, and total silence follows. Boy, has she fallen from her pedestal. We know the Troika are composed of lackeys to the banking system -and this proves it once and for all-, but Merkel is worse. And she has the entire Bundestag wrapped around her finger. Some democracy, that Germany.

But the documents were also part of a package that was sent to Greece and everyone else. But still debt relief remained off the table? What am I missing here? How could Tsipras have signed off on this? He could see the Troika’s own numbers, and still they refused to take them into account and make them part of the deal?!

The Guardian gives the write up a half-ass title, but the contents are clear enough.

IMF: Austerity Measures Would Still Leave Greece With Unsustainable Debt

Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors. The documents, drawn up by the so-called troika of lenders, support Greece’s argument that it needs substantial debt relief for a lasting economic recovery.

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

Why Greeks Still Want to Keep the Euro, in One Chart

July 1, 2015

Why Greeks Still Want to Keep the Euro, in One Chart

As of midnight European time, Greece has become the first developed country in history to fall into arrears on payments to the IMF. It’s not that much money, by today’s standards: €1.6 billion. But for Greece, which is totally out of money, it’s an unreachable amount. The last time a country did such a thing was in 2001: Zimbabwe.

However the IMF ends up calling it in its institutional mumbo-jumbo, Greece has now defaulted on part of its debt. No one knows what’s going to happen next. Another emergency meeting is planned for Wednesday, so maybe….

Greeks have seen this coming months ago. So they yanked their money out of Greek banks with increasing determination, while they still could, starting last year. They have every reason in the world not to trust their banks. The withdrawals morphed into a “jog on the banks” last week.

When the central-bank spigot that had funded these withdrawals was turned off over the weekend, it brought the banks to their knees. The government, afraid of what would happen next, closed the banks for six working days. But re-opening the banks on day seven is going to be tough, unless new funding arrives in the interim. And Greeks now can’t get their money out, except in small amounts at the ATMs.

Whatever money they have left in the banks is now largely stuck there. All they can do is hope that they’ll get it back someday, in euros, not in drachmas, and not in form of equity in the banks.

But despite the deprivations, they still trust the euro and want to keep it. In the latest poll, done over the weekend during perhaps the greatest financial chaos Greece has seen in recent years, 57% of the respondents wanted to keep the euro and wanted their government to make a deal with the creditors; only 29% wanted a rupture from the Eurozone.

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

How Greece Crisis Could Drag Oil Prices Down

June 30, 2015

How Greece Crisis Could Drag Oil Prices Down

The Greek tragedy is reaching its climax.

The discussions between Greece and its European creditors broke down over the weekend, with the two sides still at an impasse. Greek Prime Minister Alexis Tsipras balked at deeper austerity cuts to the Greek economy, cuts that are a prerequisite for further help from Berlin and Brussels.

As a result, Greece is approaching the precipice. With a massive debt payment due on June 30 to the IMF, Greece could default. The extent of the fallout is anybody’s guess, but Greece could see the value of its bonds plummet, putting its banks in crisis, and ultimately the country could be ejected from the Eurozone. The Greek government declared a bank holiday for six days in order to stop the cash exodus from the Greek financial system.

The crisis is dragging down global equity and commodity markets. Greece is not a major oil producer or consumer, so it won’t have much sway over oil markets directly. But the spillover could have two immediate effects on oil apart from supply and demand fundamentals.

First, the calamity is spooking investors who fear a broader contagion. While Europe has had several years to insulate itself from Greece’s problems, the mess is still weighing on the bloc’s economic prospects. That will likely pull down oil prices a bit.

A second effect comes in the form of currency fluctuations. Greece’s calamity, and the rising prospect that it leaves the Eurozone, will damage the value of the euro. As the euro takes a hit, the U.S. dollar looks better by comparison, both as a safe haven and as an investment vehicle. If the dollar appreciates, that will push down oil – since oil is priced in dollars, a stronger dollar makes it more expensive.

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

The Limits to Growth and Greece: systemic or financial collapse?

June 30, 2015

The Limits to Growth and Greece: systemic or financial collapse?

The results of the “standard run” (or “base case”) scenario of “The Limits to Growth” 1972 study. Could it be that the ongoing Greek collapse is a symptom of the more general collapse that the model generates for the first two decades of the 21st century?

So, we have arrived to an interesting point, to be intended in the Chinese sense of a curse. It is the point where the people of Greece are being asked to choose between starvation and slavery and this is supposed to be a triumph of democracy.

As the tragedy unfolds, people take sides, aiming their impotent rage at this or that target; the Euro, the bureaucrats of Brussels, the Greek government, Mr. Tsipras, some international conspiracy, and even Mr. Putin, the usual bugaboo of everything.

But, could it be that all the financial circus that we are seeing dancing in and around Greece be just the effect of much deeper causes? The effect of something that gnaws at the very foundations not only of Greece, but of the whole Western World?

Let’s take a step back, and take a look at the 1972 study titled “The Limits to Growth” (LTG). Look at the “base case” scenario, the one which used as input the data that seemed to be the most reliable at the time. Here it is, in the 2004 version of the study, with updated data in input.

Despite all the criticism that the LTG study received over the years, its basic soundness was repeatedly demonstrated, for instance in “The Limits to Growth Revisited.” The LTG calculations were based on a number of assumptions, the main one was that the increasing costs resulting from the gradual depletion of the world’s natural resources would bring an increasing burden on the industrial system, forcing it to slow down its growth and, eventually, to start an irreversible decline.

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

The Greek Bank Holiday: This is What an Economic Collapse Looks Like

June 30, 2015

The Greek Bank Holiday: This is What an Economic Collapse Looks Like

A “bank holiday” sounds like such an innocuous thing, doesn’t it? Playful, a well-deserved rest, maybe even fun. If you’d like to learn more about the fun of such a holiday, look no further than the streets of Greece, where people have been informed the banks will be closed for the next week.

Why?

Because the European Central Bank has stopped sending in the money that was keeping the Greek financial system afloat. Had people been able to go to the bank and withdraw their money, the banks would be unable to function. So, the banks said, “Nope, you can have $60 if you want to wait in line for long enough to get it.”

Yes, you’re understanding this correctly: the banks are keeping afloat using the money from people’s accounts. The Greek stock markets did not reopen today. This is a last-ditch effort from the Greek government to prevent total economic collapse.

The situation there is dire, and much like Venezuela, it’s a case study for anyone who believes that an economic collapse of our own financial system is imminent here in America.

We need to pay attention to what’s going on in Greece. This is what a real economic collapse looks like. It isn’t a Mad Max scenario or a scene from some other post-apocalyptic movie.

It’s quiet desperation, long lines, and a sick feeling in the pit of your stomach as you wonder how you’ll feed your kids and keep a roof over their heads. It’s the discovery that you thought you had been doing the right thing financially, but you were deceived. It’s the realization that everything you worked for your whole life is gone.

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

The Global Template for Collapse: The Enchanting Charms of Cheap, Easy Credit

June 30, 2015

The Global Template for Collapse: The Enchanting Charms of Cheap, Easy Credit

Cheap, easy credit has created moral hazard and nurtured magical thinking throughout the global economy.

According to polls, the majority of Greek citizens want the benefits of membership in the euro/EU and the end of EU-imposed austerity. The idea that these are mutually exclusive doesn’t seem to register.

This is the discreet charm of magical thinking: it promises an escape from the difficulties of hard choices, tough trade-offs, the disruption of vested interests and most painfully, the breakdown of the debt machine that has enabled the distribution of swag to virtually everyone in the system (a torrent to those at the top, a trickle to the majority at the bottom, but swag nonetheless).

If we had to summarize the insidious charm of magical thinking, we might start with the overpowering appeal of using credit to ease all difficulties.

Need money to fund various healthcare/national defense rackets? Borrow the money. Need to keep people employed building ghost cities in the middle of nowhere? Borrow the money. Need to keep buying shares of the company’s stock to push the value of each share ever higher? Borrow the money.

The problem with cheap, easy credit is Cheap, easy credit destroys discipline. Thelifetime costs of debt taken on to fund bridges to nowhere, healthcare/national defense rackets, ghost cities, stock buybacks, etc. are never calculated. Theopportunity costs are also never calculated.

When credit is costly and hard to get, marginal borrowers can’t get loans and nobody dares borrow at high rates of interest for low-yield, high-risk schemes.When credit is costly and hard to get, what doesn’t pencil out doesn’t get funded.

When credit is cheap and easy to get, every scheme and racket gets funding because hey, why not? The cost is low (at the moment) and the gain might be fantastic. But even if the gain is unknown, the kickback/campaign contributions make it worthwhile even if the scheme fails.

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

16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World

June 30, 2015

16 Facts About The Tremendous Financial Devastation That We Are Seeing All Over The World

As we enter the second half of 2015, financial panic has gripped most of the globe. Stock prices are crashing in China, in Europe and in the United States. Greece is on the verge of a historic default, and now Puerto Rico and Ukraine are both threatening to default on their debts if they do not receive concessions from their creditors. Not since the financial crisis of 2008 has so much financial chaos been unleashed all at once. Could it be possible that the great financial crisis of 2015 has begun? The following are 16 facts about the tremendous financial devastation that is happening all over the world right now…

1. On Monday, the Dow fell by 350 points. That was the biggest one day decline that we have seen in two years.

2. In Europe, stocks got absolutely smashed. Germany’s DAX index dropped 3.6 percent, and France’s CAC 40 was down 3.7 percent.

3. After Greece, Italy is considered to be the most financially troubled nation in the eurozone, and on Monday Italian stocks were down more than 5 percent.

4. Greek stocks were down an astounding 18 percent on Monday.

5. As the week began, we witnessed the largest one day increase in European bond spreads that we have seen in seven years.

6. Chinese stocks have already met the official definition of being in a “bear market” – the Shanghai Composite is already down more than 20 percent from the high earlier this year.

7. Overall, this Chinese stock market crash is the worst that we have witnessed in 19 years.

8. On Monday, Standard & Poor’s slashed Greece’s credit rating once again and publicly stated that it believes that Greece now has a 50 percent chance of leaving the euro.

9. On Tuesday, Greece is scheduled to make a 1.6 billion euro loan repayment. One Greek official has already stated that this is not going to happen.

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

The Mood On The Ground In Greece: “Some Have Raised The Prospect Of Civil War”

June 30, 2015

The Mood On The Ground In Greece: “Some Have Raised The Prospect Of Civil War”

Earlier today, John O’Connell, CEO of Davis Rea, spoke to Canada’s BNN from what may be Greece’s top tourist attraction, the island of Santorini, to give a sense of the “mood on the ground.” Not surprisingly, his feedback was that, at least as far as tourists are concerned, nobody is worried. After all, it is not their funds that are capital constrained plus should the Drachma return as the local currency, the purchasing power of foreigners will skyrocket.

What he did point out, however, that was quite notable is the diametrically opposing views between old and young Greeks when it comes to Grexit. According to O’Connell, “the old people want to vote for Europe cause they have a lot to lose, they have their pensions, but the younger population – they are already poor, they are already unemployed – and they don’t have much to lose. Their attitude is it’s going to be tough, it’s already tough, and so why not just move on go back to the Drachma, and they’re ok with that. Their attitude is in 5 to 10 years I’ll be better off. They believe there’s a lot of misinformation. They believe they’re being pressured by European countries particularly Germany that are holding them to very difficult terms.”

He continues: “whatever the polls may way, the young population is going to vote to leave the Euro and deal with the problems long-term.”

Finally, his take on capital controls and tourism: “You are going to see a big, big drop off in tourism because people are not going to want to come here. People are going to worry that if people do come here with a lot of Euro, are they going to be allowed to leave with those Euros. It’s going to have a dramatic impact on the Greek economy at some point, a lot of the people that live here are underestimating how bad it could get in the short term.”

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

ECB, Monetarism and a Greek Half-Decade

June 30, 2015

ECB, Monetarism and a Greek Half-Decade

Greece really should not matter, at all, outside of the tragic plight of the Greeks themselves. You’ll see that message echoed particularly inside the US where the status quo takes a contradictory turn toward reasonableness in order to justify further what isn’t. This is all about asset prices and how they have been so skewed almost everywhere that when one part of that systemic imbibing threatens to pull back the curtain the rest works overdrive to convince that it doesn’t matter.

Just fourteen months ago, then-Prime Minister of Greece, Antonis Samaras, went on Greek television and confidently proclaimed, “Today, Greece took one more decisive step to exit the crisis. Confidence in our country was confirmed by the most objective judge – the markets.” Going further, then-Deputy Prime Minister Evangelos Venizelos objected to any other interpretation, “The bond issue proves the debt is sustainable, otherwise the markets wouldn’t have bought it.”

Obviously, those were political statements intended to send a political message in that the “objective” market was on the side of that current Greek political makeup and the “austerity” track into which they proclaimed to be amalgamated, inextricably within the euro currency. Under rational expectations theory, of course, the price with which the Greeks floated that bond was believed to be “correct” and thus efficient. The 4.95% yield at the auction, 20 times oversubscribed, certainly seemed to suggest that it was “market clearing” in at least that respect.

The problem with all of that view is apparent right now. The 5-year bond, after having a pretty good week last week with all the false deal rumors, is yielding this morning almost 23%. The losses embedded in that yield and its price were uniquely predictable, which is what is so damning about Greece as it relates to everything outside of the “small country on the Aegean.”

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

Greece and the Marxism of Syriza

June 30, 2015

Greece and the Marxism of Syriza

Has the Leopard Really Changed its Spots?

Back in February, a brief article at the BBC remarked on the seeming transformation of Syriza from a bunch of Marxist dreamers into (shudder..) quasi-“Blairites”. To be sure, we also approved of the signs of pragmatism that emerged at the time. The party had seemingly ditched its previously implacable opposition to privatizations and didn’t even try to tax the country’s shipping magnates. The tax exemptions enjoyed by the latter strike many as unjust, but the fact is that they provide around 7% of Greek employment and their assets are out at sea. It is up to them under which flag said assets are sailing and it would be self-destructive to chase them away.

hammer_and_sickle_in_star_2_fav_wall_paper_background-1979px

Given the stunt Mr. Tsipras just pulled (note that the Greek negotiators learned of his referendum announcement via Twitter – they were not privy to what was about to happen), we are not so sure that the leopard has really changed its spots. We are not critical of a referendum as such, on the contrary. However, the timing and the way Tsipras has gone about it, suggest that he is really trying to arrange for a “Grexit” and one cannot help getting the impression that this may have been the intention all along. As noted previously, a referendum could have been held months ago already – why wait until it is almost too late for all practical purposes?

A reminder was provided by a mail correspondent of ours in Spain, who pointed out that the parties voting in favor of Tsipras’ plan were Syriza, ANEL and Golden Dawn. As to the Stalinist KKE, he noted “[the] KKE is against everything (as usual), but I still have hope in their “No” vote, closing the circle: from the Nazis to the Communists, all united against a free Europe, in a “Molotov-Ribbentrop v2.0″.

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

Varoufakis Confirms Greece Will Default To IMF Today

June 30, 2015

Varoufakis Confirms Greece Will Default To IMF Today

May as well spoil the ending of what happens at midnight local time today. Nothing (as previously reported). From Reuters:

GREEK FINANCE MINISTER SAYS GREECE WILL NOT PAY IMF ON TUESDAY.

Visually:

And:

U.S. STOCK INDEX FUTURES PARE GAINS SLIGHTLY FOLLWING GREEK FINANCE MINISTER’S COMMENT THAT GREECE WILL NOT PAY IMF ON TUESDAY

The default may be in the books, but the bluff continues: can Greece default in the Eurozone as Varoufakis has claimed all along, or will the collapse of the Greek banking system tomorrow after the ECB makes the ELA illegal topple the government? Find out in a few short days.

Greece Will Default To IMF Tomorrow, Government Official Says

June 29, 2015

Greece Will Default To IMF Tomorrow, Government Official Says

Earlier today, as the exchange between Greece and its creditors got increasingly belligerent, Estonian Prime Minister Taavi Roivas told public broadcaster Eesti Rahvusringhaaling in interview that a possible Greek decision to leave euro area wouldn’t soften stance of other EU countries and that Greece’s debt would still remain outstanding and creditors would expect this money back.”

“If Greece leaves, the value of their new national currency would decline very fast, so their solvency would still worsen further. They will either have to cut spending or improve their tax revenues. There are no other options.”

So did this latest antagonism change the Greek mind? According to a flash headline by the WSJ released moments ago, not all. In fact, Greece just made it official that it would default to the IMF in just over 24 hours.

WSJ Breaking News @WSJbreakingnews

Greece won’t pay IMF tranche due Tuesday, government official says http://on.wsj.com/1IFg2Tc

12:14 PM – 29 Jun 2015

Paul Craig Roberts Warns Greek Government May Be Assassinated In This Crisis If They Pivot East To Stop World War III

June 29, 2015

Paul Craig Roberts Warns Greek Government May Be Assassinated In This Crisis If They Pivot East To Stop World War III

With people around the world worried about the escalating crisis in Greece and conflicts in the Middle East and Ukraine, today former U.S. Treasury official, Dr. Paul Craig Roberts, warned King World News that the Greek government may be assassinated if they pivot East to stop World War III.

Former US Treasury official Paul Craig Roberts (below) says Greece may maneuver to stop World War III

Dr. Paul Craig Roberts: “The Greek people and the Greek government have before them the unique opportunity to prevent World War III. All the Greek government needs to do, if the Greek people will get behind the government, is to default on the loans, resign from the EU and from NATO, and accept the deal that the Russians have offered them.

“This would begin the unraveling of NATO. Very quickly Spain and Italy would follow. So southern Europe would desert NATO and so would Austria, Hungary and the Czech Republic. NATO is the mechanism that Washington uses to cause conflict with Russia. So as the EU and NATO unravel, the ability of Washington to produce this conflict disappears.

The Greek government understands that what is being imposed on Greece is not workable. Since the (implementation of) austerity the Greek economy has declined by 27 percent. That’s a depression. And they keep hoping that the Germans wake up one day and realize that austerity is not the way you cure debt, and that the Greek government cannot agree to conditions that drive the Greek population into the ground. They (the troika) are talking about (a) genocide (of the Greek population).

The Russians understand that Greece is being plundered by the West and met with the leader of Greece and offered him a deal. They said, ‘We’ll finance you. But not to pay off the German and Dutch banks, the New York hedge funds or the IMF.’”

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

Greek debt crisis: ‘Something awful’ this way comes

June 29, 2015

Greek debt crisis: ‘Something awful’ this way comes

The next “final” twist in the exhausting Greek drama is upon us, and it’s looking like “something awful” is about to befall the country’s banking system, Citigroup analysts said yesterday.

A deal was on the table Friday, but the ECB’s move over the weekend to freeze emergency loans for Greek banks has led to capital controls and, in turn, has increased the odds of a Greek exit from the euro zone. For investors, it means a battered euro, wrecked equities and maybe, just maybe, a more reluctant Fed when it comes to ramping up interest rates.

So far, the U.S. stock market is starting this holiday-shortened week with a sound thrashing. It was even worse in Asia, where the Shanghai CompositeSHCOMP, -3.34% broke lower into bear-market territory despite a surprise interest-rate cut over the weekend. Technology, in particular, was slammed.

While the butterfly wings in Greece seem, at least to some degree, to be rattling markets all over the world, one hedge funder and blogger is hardly sweating the Hellenic end game.

“There’s a lot we can’t know. But there’s also a lot we do know, and pretty much all of it has changed for the better,” Mark Dow, author of Behavioral Macro, wrote. “When I look at Grexit, I see a world in much better fundamental position to avoid the cascading systemic contagion we (rightly) feared as recently as a year ago. Now is the time to do what the system could not handle in 2010: get Greece off the toxic medication and onto a path of growth and dignity.”

Key market gauges

Dow YMU5, -1.01% and S&P ESU5, -1.03% futures are down about 1%. EuropeSXXP, -2.06% is also faltering in the early going while Asia ADOW, -1.86% closed with deep cuts after an abysmal stretch last week. The euro EURUSD, -0.3761% is moving lower, as expected. Gold US:GCM5 was higher, but oil CLU5, -1.12% fell into the red.

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

A Week of Crisis for Greece and Global Markets

June 29, 2015

A Week of Crisis for Greece and Global Markets

After years of false starts it appears that the ‘Grexit’ is finally in motion. Yet when the dust finally settles, this week will be remembered for its market volatility – not as the time when Greece kicked itself out of the euro zone.

Cooler Heads Not Prevailing

Shrewd negotiating is what brought us to this point. Both sides are in a difficult position, and both would rather salt their own fields than be seen as bending to their opponent’s demands.

Luckily it’s not totally up to the politicians. The Greek people are poised to be the ultimate deciders of this latest act of a seemingly unending drama. Early polling shows clear support for accepting the Eurogroup’s offer in the upcoming July 5 referendum. One poll conducted over the weekend by Alco, a Greek newspaper, found 57% in favor of a deal, and another conducted by Kapa Research found 47% in favor and 33% opposed.

As far as Prime Minister Tsipras is concerned it’s a win-win situation, and this is something that has undoubtedly influenced his negotiating style. Many believe that his Syriza party wanted to default and exit the euro zone from the very beginning, though it had to drop this unpopular platform in order to be voted in by a Greek electorate still largely in favor of remaining in the euro zone. Walking away from the table in the early rounds was never an option; Tsipras had to appear like he was negotiating in good faith. But by driving an exceedingly hard bargain on Greece’s bailout conditions, he could either break the cycle of austerity or induce a ‘Grexit’ under circumstances that would rally Greeks against a cruelly vindictive Brussels establishment.

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

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