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Why Europe can’t let Greek economy crumble: Don Pittis
EU must find solution that does not propose stripping elderly of pensions
There are vultures in the financial community snapping their beaks and waiting for a Graccident.
If you haven’t heard the term before, Graccident is the latest rhetorical bastardization of the English language after Grexit, wherein you attach the first letters in Greece to something bad.
In this case, Graccident means that despite everyone’s best intentions to patch up a solution to the Mediterranean country’s economic woes, at some point things will go horribly wrong. The Greek financial house of cards will fall and the country will crash out of the eurozone, sending Greece spinning into bankruptcy and a perilous future.
- Greece promises bailout deal by Sunday, EU not so sure
- Greece says it has no plans for capital controls as debt crisis deepens
- Greece raids reserves to make IMF debt payment
While Greece’s leaders will suffer if the country accidentally collapses, the reputational damage for the European Union will be much worse.
And worst of all, the only ones who will benefit if it happens are those financial vultures betting fortunes on bond spreads and other derivatives that will make them a pile if everything goes sour.
“A precarious situation in Greece is getting worse and the probability of an accident in which governments both in Greece and the rest of Europe lose control is high,” said well-known economic commentator Mohamed El-Erian on the business TV network CNBC earlier this month.
Playing chicken
When two sides in a financial negotiation are playing chicken, there is always a possibility that both will think the other will give way at the last minute. Accidents do happen.
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Pray For Graccident—–It Will Trigger The Demise Of The ECB And The World’s Toxic Regime Of Keynesian Central Banking
Pray For Graccident—–It Will Trigger The Demise Of The ECB And The World’s Toxic Regime Of Keynesian Central Banking
It is not surprising that in a few short months Yanis Varoufakis has proven himself to be a thoroughgoing Keynesian statist. After all, what would you expect from an economics PhD who co-authored books with Jamie Galbraith? The latter never saw an economic malady that could not be cured with bigger deficits, prodigious printing press “stimulus” and ever more intrusive state intervention and redistribution.
In what is apparently a last desperate game theory ploy, however, Varoufakis has done his countrymen, Europe and the world a favor. By informing his Brussels paymasters that they must continue to subsidize his bankrupt Greek state because it is the only way to preserve the European Project and vouchsafe the Euro, the Greek Finance minister blurted out the truth of the matter, albeit perhaps not intentionally:
“It would be a disaster for everyone involved, it would be a disaster primarily for the Greek social economy, but it would also be the beginning of the end for the common currency project in Europe,” he said.
“Whatever some analysts are saying about firewalls, these firewalls won’t last long once you put and infuse into people’s minds, into investors’ minds, that the eurozone is not indivisible,” he added.
He sure got that right. People who believe in democracy and economic liberty anywhere in the world should pray for a Graccident. During the next several weeks, when $1.8 billion in IMF loans come due that Greece cannot possibly pay, there will occur a glorious moment of irony for Syriza.
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