View Full Version : About the Greece and the Euro issue

19th June 2010, 07:50
Some time ago I asked some members what they think about some comments of mine about the Greece issue. I received some interesting answers and I'd like to put them on display. I think they are very educational. Obviously I won't reveal their source.

At first I cited Bloomberg:

May 4 (Bloomberg) -- Greece’s bailout “might collapse” and the nation’s debt crisis makes it “hard to see” how the euro will survive in its current form, former Bank of England policy maker Charles Goodhart said.
“If this financing deal should collapse, and it might for one reason or another, then there would be a question of what the Greeks could possibly do. Default would be totally disastrous for them and leaving the euro would equally be disastrous.”

And then I commented:

1. Default would be totally disastrous for them. Look at Argentina. It doesn't seem that they are doing so badly.

2. A defaut would it be a desaster for Greece or for the creditors? (That means for those banks and hedge fonds that have speculated over the high yield rates of Greece bonds?)

3. the nation’s debt crisis makes it “hard to see” how the euro will survive in its current form... Nothing will boost the euro more than Greece leaving it.

19th June 2010, 07:52
I'm truly not sure how Greece's situation will affect the Euro long term. Personally I thought The U.S. problems would be more in play by now than anything going on in Europe.

Debt is Debt and being over-extended is usually very painful at some point.
The #3 answer makes alot of sense to me. If the Euro loses the Southern participants it would be very strong in my mind but then again, what the heck do I know?

19th June 2010, 07:54
The Greece situation is a smaller concern than other sovereign debt problems, namely the US. The Greece situation will destabilize the Euro in the short run but it will cause a small devaluation in the long run relatively speaking.

1. Greece has to default on its debt one way or another the manner is irrelevant because one way or another it will devalue the Euro whether it be bailout or non-payment of debt.

2. Again the scope of the Greece problem is dwarfed by others but it could cause some small losses to speculators.

3. The Euro model is challenged by the Greece default but the finality and certainty of Greece being detached from the Euro would be good for the Euro in the long run.

My advice is ignore Greece in the long run and try to anticipate the crowds reaction to news about Greece but remember it is the US and UK and other major countries who will crumble the world econonmy with their shitty currencies and huge unfunded social programs. Inflation will be the means of transfering wealth from savers to government social program beneficiaries.

19th June 2010, 07:55
I'm not sure which would be the worst for them or us for that matter of fact..

It will definatly hurt the creditors the most which is the banks, I.E. us. We financed 17% of their bailout and we weren't even givin' a choice.

At some point we will be there, the way things are going, all we can do is to try and prepare the best we can, while we can...

19th June 2010, 07:57
Hello Goldsilber,

Actually the default in Argentina WAS disastrous for its citizens. While inflation was a big problem in the 90's, deflation became the problem of the early 21st century. Actually it was a case of government inflicted deflation and made matters worse! RE: http://mises.org/daily/890.

#1.....Recovery from the crisis has resulted in strong economic growth....but that has come with very high rates of inflation!! "Argentina has managed to return to growth with surprising strength; the GDP jumped 8.8% in 2003, 9.0% in 2004, 9.2% in 2005, 8.5% in 2006 and 8.7% in 2007. Though average wages have increased 17% annually since 2002 (jumping 25% in the year to May 2008),[3] consumer prices have partly accompanied this surge; though not comparable to the levels of former crises, the inflation rate was 12.5% in 2005, 10% in 2006 and is believed by private economists to have approached 15% in 2007 and to exceed 20% during 2008 (citation needed)(even if the Ministry of Economy refuses to acknowledge inflation greater than 10%)" RE: http://en.wikipedia.org/wiki/Argenti...2%80%932002%29

Economy Roberto Lavagna considers that the average inflation in Argentina between 2005 and 2009 was 17.8%. RE: http://en.mercopress.com/2010/01/05/...te-consultants

Goldsilber this is not good! They are on the verge of hyperinflation again!

#2.....I think some clarity about what terms mean is needed here.
Creditors....Those who have issued the loans (debt) Government, banks etc.
Greece.....do you mean citizens or government?
Speculators.....financial institutions/individuals who have directly purchased the debt for return on investment

The issues around the Greece debt does not end here. There are institutions who have issued securities (like Mortgage backed securities and Credit default swaps) related to the debt. These are called derivatives. So there also this problem of derivatives....that is those who are making bets on a default and the failure of the Greece's currency as well as its negative effect on the Euro. In reality the problem is not simply debt. It is the domino effect (creating another systemic shock) of the failure of those Derivatives that demands the EU to bail out Greece. If Greece isn't bailed out the derivatives will fail and bring down the system. If Greece is bailed out, all others in the EU will have to be bailed out. It is a lose lose situation. Through the IMF, the US will provide $100 billion in bailout funds. The US is on course to experience a Hyper-inflationary Depression!!!
RE: http://www.theaureport.com/pub/na/6199

This is what Trader Dan has to say....http://jsmineset.com/2010/05/07/the-canary-is-dead/

This is what JSinclair had to say today......
Main Street Is In The Hands Of A Roulette Wheel
Posted: May 07 2010 By: Jim Sinclair Post Edited: May 7, 2010 at 10:10 pm

Filed under: General Editorial

Dear Extended Family,

The solution is the problem. To quote Bill Carletonís album, Squeeze the People, "Main Street is in the hands of a Roulette Wheel." He is so correct.

The name of the "Roulette Wheel" is Credit Default Swaps. It does not matter what the G-7 or the G-20 does. It does not matter what the IMF, ECB and Fed under a beard do. Mrs. Merkelís foolish political strategy fits right into the equation.

CDS are going to take down every major currency, making trillions for the players. It will in time turn on the USA as it is already operating against the financially weaker Illinois and New York debt.

The dollar, as it gains ground due to the mirror image of the euro, becomes weaker and weaker due to overvaluation with no fundamental legs. The dollarís time will come.

The OTC derivative credit default swap is about to clean the clock of the world. Der Spiegel is right but the debt is there. It will not go away but only grow bigger. The situation is in the cross hairs of the richest people on the planet hell bent on getting richer. That is the message of the Dow dropping 1000 points regardless of how it happened.

Nothing the G-7 or G-20 does will stop the predetermined avalanche in the world of fiat currency. Armstrong is right in that when it comes time for the great coming apart it will be akin to the Big Bang.

You are either ready now, or there will be no chance of readiness. Right now ready means gold and gold equivalents. The last currencies to be attacked will be the Cando and the Swiss Franc.

It is all over. The fat lady has sung.


I hope I have given you a different look into the debt problems......unlike Argentina in 2002, we (the world) is now all in the same sinking fiat currency boat!

19th June 2010, 08:01
Since I don't want to overload you I'm going to give you a digestion pause ...

2nd July 2010, 08:31
Ultimately, these conjectures (?) all point to the same thing...Euro destruction. For Greece, they will probably benefit greatly from going back to the Drachma. Historical monies likely still exist in quantity, and there are some with Ag/Au bases, I believe.

For the Euro, it is likely that it, along with the dollar, are slated for brutal inflation/devaluation, in concert. I do not believe that any "regional" fiat currency will survive this, nor, do I believe that they were ever intended to. The rate of disintegration of these currencies is progressing pretty fast...so fast, in fact, that I believe the PTB were semi-surprised about it. Other currencies have been teased about, like the Amero design...but insertion of this broader basis would be VERY awkward, just now.

Instead, it looks as though they (yes, the infamous "they") will try to tailor the SDR, used by the IMF, to fit this need. Already, many countries are adopting the SDR as their reserve currency...even though it is a "concept" more than it is an actual currency.

...just my thoughts.

2nd July 2010, 08:32
Howdy GS,
Sorry for the late reply. I had a computer malfunction and the site changed its format and I just now got to figuring out where (ok, I forgot to even CHECK pm's) to view pm's from the silver buds.
I like the points you raise.
The whole "disastrous" thing would depend upon what strings are attached to the default. Would creditors bleed
Greece for the rest of eternity or run screaming into the night not wanting to ever here of fried food again?
I think going solo at the moment, or from the moment could be a plus to anyone not wanting to taste disaster pie.

Please share any interesting responses you've gotten. I find the current times to be "HISTORY" (said in EPIC voice) in the making.

2nd July 2010, 08:33
I think you are entirely correct in your assessment of the Greek debt crisis in each respect.
It is patently obvious to me that the central banks and financial establishment have successfully set the tone and the terms of the debate, framing it in such a way that whatever would hurt THEIR interests, as opposed to the interests of the Greek people (or indeed, the people of the whole Eurozone) is automatically construed as "unacceptable", "catastrophic" or "unthinkable". EVERY action taken thus far, in the USA and Europe, has been in the best interests of the banks and governments, and NOT in the best interests of everyone else.

Yes, you are astute in pointing out that the world did not end for the common man in Argentina after they defaulted, although their citizens still paid a heavy price. Default is "unthinkable" for the establishment, because that puts the losses primarily on the bondholders, who are NOT the average citizen, and although such defaults have negative effects that would surely impact the population, would those effects be worse than the hyperinflation that I believe is looming instead? Undeniably, no.

I hope my limited insights may have been of some value to you, and thanks for your message.

2nd July 2010, 08:35
I think everything you say here makes sense. And Greece will NOT survive at all no matter what they do.

2nd July 2010, 08:36

2nd July 2010, 08:43
Hello Goldsilber,

I just reread my pm to you and I have an additional comment regarding derivatives and the Greek bailout situation....some of the money that Greece has been guaranteed....to avoid default....will be used to pay off the derivative holders. This money will be pocketed by the financial institutions will go on their books as a trading profit. In other words billions of dollars targeted to the bailout will not go towards resolving Greece's debt problem.

The Greek bailout is once again an attempt to save the banking system. While not yet so obvious, it is essentially what the Fed did in 2008 with Bear Stearns and AIG. 300 billion taxpayers dollars went to pay off the holders of the derivatives which went bad. AIG is estimated to still be holding another $200 billion in derivatives gone bad.

Whereas Bear Stearns was not saved, AIG had written so many derivative contracts that allowing it to fail would have been devastating to the banking system. Thus the term too big to fail. Of course the bankers did not want THAT to happen and Congress was panicked into giving the bankers 700 billion dollars to save their system. And that was just the beginning of the many "public" bailouts to come. The Fed has taken other actions which remain secret. All of these things public and secret do one thing.....create money out of nothing. Debt problems cannot and will not be solved by creating/issuing more debt.

2nd July 2010, 08:44
To be continued...

12th July 2010, 12:35

REGARDLESS, POPULATION REDUCTION APPROACHES. NATURALLY OR OTHERWISE 20%//80% Germany should abandon the Euro and start the beginning of the end. It is all paper bullshit as you well know. I wish you and the people of your country well.

12th July 2010, 12:37
For your reading pleasure. Not to be read before bed.

If you want REAL reporting, you have to go outside the US MSM.


12th July 2010, 12:38
I haven't been following the latest financial news as much as I have done in recent years so I am not as up on the Greece situation as I would like to be. In general I would say it is wise to view anything coming from the central bankers or the media with much skepticism and caution. They have many various pressures being exerted on them and are often constrained in what they can say in public.

12th July 2010, 12:39
Argentina had the benefit of generally good times worldwide when they repeatedly screwed up their finances, but the situation is different now and who will bail America out when eventually we have to face the consequences of our profligate ways ?

Europe may be glad to let Greece go but still must deal with the rest of the PIIGS. It is soothing and comfortable to just sit back and say that it is those irresponsible Southern European and Latin America types who can't handle their money, but the reality is that America, Britian, and even Japan are in just as bad shape and may being the world down with them if or when the TSHTF.

12th July 2010, 12:40
I think that living here in the U.S. it is really none of my business. But since you asked me and you are from Germany then I think Germany ought to pull out of the EU while it still can.

12th July 2010, 12:41
I think EVERYONE should just default and start over. Better to just get it over with than continue with the slow controlled boil. I don't think anyone should be bailed out anywhere for any reason. Iceland has it right. They voted to NOT bail out the banks. Whether their government actually does what they want remains to be seen.

12th July 2010, 12:42
Hey sorry I just saw this PM. I am not used to getting and checking PM's. I will have to pay attention to that more often.

1. I know this is late but default would be very painful. It wouldn't be the end of the world for them, and just may be a better solution than trying to dig out of the hole they are in. Just starting over.

2. A default would be worse for the creditors and the EU. If Greece clears the field, they would of course not be available for loans or much at all for a long time if ever. TBH though that may be a good thing for Greece so they are forced to learn how to live within their means, and the society can adjust to become more self sufficient and independent.

3. The euro may lose much top heaviness in terms of debt to assets but Greece defaulting may just start a chain reaction which crumbles this quicker than it already will. I believe this type of system will fall anyway, so asking me it is better to go through hard pain and get it over with and start building the right way now rather than later.

There are too many monetary systems which creates money out of nothing, and you can not do that with out consequences. I think we are seeing just how this is unstable because they are running out of ways to hide it. Similar to the paper gold/silver deal. I believe last October GATA published an article talking about there is 160,000 tonnes of gold in the world but including ETFs there is 210,000 tonnes. That is 50,000 tonnes that is not physical, only paper, but is satisfying demand.

I think the time of illusions are coming to an end relatively shortly, and only real things will be left standing. It just be very painful because of how the world is tied together and just how many "assets" or "wealth" is really illusion.

I went off topic and sorry, but in short, the game is up and so it is more just a question to take it on the chin now or later? Greece is a focal point of attention, but most nations are facing this relatively shortly. Only so many of these "cards" can fall before the whole house comes down.

Again sorry so late, I will check more often for my PM's. Also with this new site, I know now to go over my name at the top when logged in and it will show me.

12th July 2010, 12:44
You make some good points .. As to 1 and 2 .. it could work to Greece's favor IF the people would accept both the losses to their own personal wealth/ entitlements and the opportunity to rebuild... you would need inspired leadershiip or a rebirth of Nationalism. The Greeks would have to become Greeks again and stop being Europeans in more than just name... in spirt as well.

3 .. Lot of Big Interests would get hurt outside of Greece....I don't think Argentina was quite as counterparty entangled.. yeah they had debts, but even just 10 years ago the CDS/CDO spiderweb was not near as thick and Argentina was an Independant Country not the member of a Union. A Lot would depend on how badly Greece's counterparty's got burned and how much of that pain fell outside the corporate world and onto private citzens in other countries.. Greece imports 3 times as much as it exports.. the only thing that they have to offset that imbalance is Tourism.. that means some good will need to be maintained.

The Euro, IMHO, is very fragile and the structual problems with the Euro go way beyond Greece. If Greece leaving created a tipping point that destroys the Euro before the Euro could benefit from losing some of the southren tier drag and structual imbalance caused by Greece and other southern tier nations it would obviously be bad for the "Euro" but if the Euro could survive thru the transition the better the Euro would be the more harmonious the economies within the Euro Zone.
I think the odds are the Euro itself would do a complete come apart before it could benefit from losing the southern tier.

12th July 2010, 12:50
... and that was it.
I thank heartily those who have partecipated to this poll.
I think the reading of these messages is very educational and you enjoyed it.
Have a nice time