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Greece Teeters on Brink of Default

Greece Teeters on Brink of Default

Endgame…

The new left-wing leaders in Greece have done little to stem the country’s growing financial crisis and even members of the Obama administration are now urging them to act.

NBC News reports:

Greece Debt Crisis: U.S. Warns Athens to Reach Deal or Face ‘Decline’

ATHENS, Greece — The United States turned up the heat on the Greek government over its debt crisis Saturday, urging it to reach a deal with creditors as wearied citizens braced for a national default.

Treasury Secretary Jack Lew said in an interview that the government in Athens should make tough fiscal decisions or risk devastating both the country’s economy and people.

“I think we’re at a moment now where the burden is on Greece to come back with a response that’s the basis for reaching an agreement as quickly as possible,” he said in an episode of CNN’s “Fareed Zakaria GPS” program that will air on Sunday, according to a transcript provided to Reuters.

“It’s clear that within Greece, the consequence of a failure here would mean a terrible, terrible decline in their economic performance,” he said. “It will hurt the Greek people. They will bear the first brunt of a failure here.”

Billions of dollars a day are being withdrawn from banks, raising the prospect that the country might have to limit ATM transactions among other capital controls.

As the situation has worsened, some are calling for the let it burn strategy.

Barry Ritholtz of Bloomberg:

Let Greece Go

The never ending sturm und drang over the state of Greek debt, membership in the euro zone and the potential shocks of a debt default have moved from tragedy to comedy to monotony.

The solution is simple. It won’t be fast, it won’t be easy, but it will be a huge improvement for all concerned.

Let Greece go.

Hey Greece — if anyone is listening — just default on the debt and start anew. The rest of Europe has caused the country and everyone else enough agita: just let Greece leave the euro zone in peace. Sure, it will be a long torturous process, but at least Greece — and maybe the euro region — will start moving in the right direction.

The Guardian reports that the Greek prime minister is scrambling to avoid default:

The race to save Greece from economic collapse has intensified as the country’s beleaguered leader conducted a flurry of behind-the-scenes negotiations before an EU summit on Monday that is expected to decide the country’s fate.

Alexis Tsipras, the prime minister, met senior officials on Saturday in an attempt to devise a package of reforms that would secure emergency funds and avoid the nation defaulting on its massive debts. It will be the third such proposal that Athens has made to its creditors in as many weeks.

“We will try to supplement our proposal so that we get closer to a solution,” Greece’s minister of state, Alekos Flabouraris, told broadcaster Mega TV. “We are not going [to the summit] with the old proposal. Some work is being done to see where we can converge, so that we achieve a mutually beneficial solution.”

According to Zero Hedge, it may already be too late:

“Bank Holiday” Preparations Begin In Greece, Lines Form At Athens ATMs

The writing has been on the wall for quite sometime.

Deposit flight from Greece’s ailing banking sector has been running north of €500 million per day this week as the threat of capital controls casts a pall over the Greek government’s efforts to reassure the public and head off a terminal bank run.

Featured image via YouTube.

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Comments

Here’s an idea of what’s to come:

http://www.coastergallery.com/2000/pki36.html

Let it burn. Let it’s pyre stand as a signal to all delusional people everywhere.

Wow. If the low info types havn’t gotten all their cash out of the bank by now, I doubt there will be anything in the ATM except IOU’s. I understand Zimbabwe just offed it’s “money”. The were exchanging 175 quadrillion notes for a US dollar. Maybe the Greeks can use $20-30 and get enough “cash” to suffice until the new billion drachma notes are ready.

Epicureanism meets its maker.

Bitterlyclinging | June 21, 2015 at 4:39 pm

“We don’t need no steenkin’ austerities!”
Aint it amazing how both Germany and Japan, their economies, technologies, and infrastructures devastated, their populations horrifically depleted by wartime losses came roaring back becoming the economic powerhouses they are today, whereas Greece, its population pampered, coddled, and fed from a silver spoon just drifted ever further into the economic swamp.

As I said six years ago before the ECB stepped in with their “final” bailout plan, the numbers don’t add up no matter how you play with them. Greece’ revenues aren’t nearly enough to run their government and service their debts, it isn’t even close. It isn’t in the ballpark. It’s not on the continent.

Default has always been inevitable, but it is also Greece’ only hope for recovery. There will be severe pain for a year or two. It can’t be avoided and putting it off has made it worse and will continue to make the eventual pain worse if another “bailout” comes.

– –

But within a couple of years, the dust will begin to settle. There will be opportunities, and outside capital will pour in to fight for them. Greece may or may not have learned a lesson, but this way they have a chance.

You cannot beat math.

Maybe the Greeks can grab some of those abandoned migrant boats and use them to flee to North Africa.

Wrong. The Greeks refuse to be victims of the global BSD 1%er MBA Managers’ theft any longer. Good for them. They should imprison the banksters like Iceland did, and send assassins against the chicken-poop BSD 1%er MBA Manager banksters who won’t face justice.

    Ragspierre in reply to Chem_Geek. | June 22, 2015 at 8:37 am

    Up late making friends and influencing people…by showing your ass again?

    I really have to wonder if you are THIS stupid.

The Greeks have been making a lot of noise about defending themselves from their “oppressors”, striking symbolic blows for debtors everywhere, blah blah, all of it so absurd it couldn’t deceive even the most doctrinaire communist.

But Greece must have some reason to believe that its evident desire to continue to live a life of luxury at the expense of the rest of Europe may actually happen. In other words, Greece thinks it has the rest of Europe over a barrel. But does it?

Some European banks may still hope that their loans will be repaid sometime in the future (if not by Greece then by somebody else), and that Greece should be coddled along until that magically happens. But Greece seems to be making no effort whatever to bring its spending in line with its honest revenues, meaning that the forseeable future is loans, followed by more loans, ad infinitum. And why not? If Europe is willing to throw money at Greece, Greece will be happy to do its part by spending it.

Another barrel is the spectre of genuine Greek collapse. When a socialist state goes bankrupt, most social functions come to a halt, and there’s nothing to take the State’s place. Electric power plants, telephone exchanges, railroads, hospitals, police stations, air traffic control towers—all of these stop working when the State can no longer pay employees to show up. Cities can’t survive such conditions; starvation and disease take only a few days to appear. That means refugees. Is Europe prepared for a flood of Greek refugees?

Greece is also trying to bamboozle Europe with the fantasy that it can find a sugar daddy in Russia, and become a sort of Mediterranean Cuba. But the days when that was a real concern are ancient history. The key country in that region is Turkey. Throughout the Cold War, Turkey, right on the Soviet border, was a useful and loyal ally of the West. Greece, not so much—the only reason Greece was even in NATO was because its arch-enemy, Turkey, was. But that never meant that Greece and Turkey were of equal geopolitical importance. Greece simply wasn’t all that important then, and it’s even less important now.

But the big barrel is most likely the fact that, unlike, say, Argentina, Greece isn’t dealing with real investors, but with political institutions such as the IMF and ECB. Making wise and profitable business investments is not the goal of such institutions; perpetuation of their own offices and the chimera of European pseudo-unity are the goals. How much are these organizations willing to pay to maintain the illusion that “Europe” is a real entitity with global clout?

The big prize for Europe is the hope that it can prop up the cardboard facade of the Eurozone. For Europe, things just haven’t been the same since 1914, and they must really miss those days, when one European country or the other could screw over some remote part of the world with impunity. But with an incredible inability to avoid even the most obvious looming calamities, Europe bungled it all by blundering into a truely pointless world war, and then to show that that faux pas wasn’t a fluke, made an even more complete pig’s breakfast of the whole thing a mere twenty years later. Europe has been a sideshow since then, and obviously some Europeans don’t like that. But if somehow they could get all those crappy little European countries together into one political unit, they could pretend to be a big country, a real world-beater once again. The common European currency is part of that illusion. The common currency never made much sense economically, and it makes even less as time goes on. But politically, it’s still useful, to the degree that it helps to make Europe look less fractious and feeble than it really is.

So, how much is Europe willing to pay for the illusion of geopolitical power? Greece is counting on it being willing to pay rather a lot.

The financial and rational business solution for the rest of Europe seems pretty clear; cut Greece loose, and the sooner the better. But this issue will not be decided on financial or rational business lines, but on political ones. And for daffy politics, Europe still has the US beat.

Not a chance they Greece will go bankrupt. Too late for that. However, they will be bailed out for sure. No worries!!!

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