The Greeks Get It - Chris Hedges

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The Greeks Get It - Chris Hedges

Postby seemslikeadream » Mon May 24, 2010 10:23 am

The Greeks Get It

By Chris Hedges

Here’s to the Greeks. They know what to do when corporations pillage and loot their country. They know what to do when Goldman Sachs and international bankers collude with their power elite to falsify economic data and then make billions betting that the Greek economy will collapse. They know what to do when they are told their pensions, benefits and jobs have to be cut to pay corporate banks, which screwed them in the first place. Call a general strike. Riot. Shut down the city centers. Toss the bastards out. Do not be afraid of the language of class warfare—the rich versus the poor, the oligarchs versus the citizens, the capitalists versus the proletariat. The Greeks, unlike most of us, get it.

The former right-wing government of Greece lied about the size of the country’s budget deficit. It was not 3.7 percent of gross domestic product but 13.6 percent. And it now looks like the economies of Spain, Ireland, Italy and Portugal are as bad as Greece’s, which is why the euro has lost 20 percent of its value in the last few months. The few hundred billion in bailouts for other faltering European states, like our own bailouts, have only forestalled disaster. This is why the U.S. stock exchange is in free fall and gold is rocketing upward. American banks do not have heavy exposure in Greece, but Greece, as most economists concede, is only the start. Wall Street is deeply invested in other European states, and when the unraveling begins the foundations of our own economy will rumble and crack as loudly as the collapse in Athens. The corporate overlords will demand that we too impose draconian controls and cuts or see credit evaporate. They have the money and the power to hurt us. There will be more unemployment, more personal and commercial bankruptcies, more foreclosures and more human misery. And the corporate state, despite this suffering, will continue to plunge us deeper into debt to make war. It will use fear to keep us passive. We are being consumed from the inside out. Our economy is as rotten as the economy in Greece. We too borrow billions a day to stay afloat. We too have staggering deficits, which can never be repaid. Heed the dire rhetoric of European leaders.

“The euro is in danger,” German Chancellor Angela Merkel
told lawmakers last week as she called on them to approve Germany’s portion of the bailout plan. “If we do not avert this danger, then the consequences for Europe are incalculable, and then the consequences beyond Europe are incalculable.”

Beyond Europe means us. The right-wing government of Kostas Karamanlis, which preceded the current government of George Papandreou, did what the Republicans did under George W. Bush. They looted taxpayer funds to enrich their corporate masters and bankrupt the country. They stole hundreds of millions of dollars from individual retirement and pension accounts slowly built up over years by citizens who had been honest and industrious. They used mass propaganda to make the population afraid of terrorists and surrender civil liberties, including habeas corpus. And while Bush and Karamanlis, along with the corporate criminal class they abetted, live in unparalleled luxury, ordinary working men and women are told they must endure even more pain and suffering to make amends. It is feudal rape. And there has to be a point when even the American public—which still believes the fairy tale that personal will power and positive thinking will lead to success—will realize it has been had.

We have seen these austerity measures before. Latin Americans, like the Russians, were forced by the International Monetary Fund and the World Bank to gut social services, end subsidies on basic goods and food, and decimate the income levels of the middle class—the foundation of democracy—in the name of fiscal responsibility. Small entrepreneurs, especially farmers, were wiped out. State industries were sold off by corrupt government officials to capitalists for a fraction of their value. Utilities and state services were privatized.

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What is happening in Greece, what will happen in Spain and Portugal, what is starting to happen here in states such as California, is the work of a global, white-collar criminal class. No government, including our own, will defy them. It is up to us. Barack Obama is simply the latest face that masks the corporate state. His administration serves corporate interests, not ours. Obama, like Goldman Sachs or Citibank, does not want the public to see how the Federal Reserve Bank acts as a private account and ATM machine for Wall Street at our expense. He, too, has helped orchestrate the largest transference of wealth upward in American history. He serves our imperial wars, refuses to restore civil liberties, and has not tamed our crippling deficits. His administration gutted regulatory agencies that permitted BP to turn the Gulf of Mexico into a toxic swamp. The refusal of Obama to intervene in a meaningful way to save the gulf’s ecosystem and curtail the abuses of the natural gas and oil corporations is not an accident. He knows where power lies. BP and its employees handed more than $3.5 million to federal candidates over the past 20 years, with the largest chunk of their money going to Obama, according to the Center for Responsive Politics.

We are facing the collapse of the world’s financial system. It is the end of globalization. And in these final moments the rich are trying to get all they can while there is still time. The fusion of corporatism, militarism and internal and external intelligence agencies—much of their work done by private contractors—has given these corporations terrifying mechanisms of control. Think of it, as the Greeks do, as a species of foreign occupation. Think of the Greek riots as a struggle for liberation.

Dwight Macdonald laid out the consequences of a culture such as ours, where the waging of war was “the normal mode of existence.” The concept of perpetual war, which eluded the theorists behind the 19th and early 20th century reform and social movements, including Karl Marx, has left social reformers unable to deal with this effective mechanism of mass control. The old reformists had limited their focus to internal class struggle and, as Macdonald noted, never worked out “an adequate theory of the political significance of war.” Until that gap is filled, Macdonald warned, “modern socialism will continue to have a somewhat academic flavor.”

Macdonald detailed in his 1946 essay “The Root Is Man” the marriage between capitalism and permanent war. He despaired of an effective resistance until the permanent war economy, and the mentality that went with it, was defeated. Macdonald, who was an anarchist, saw that the Marxists and the liberal class in Western democracies had both mistakenly placed their faith for human progress in the goodness of the state. This faith, he noted, was a huge error. The state, whether in the capitalist United States or the communist Soviet Union, eventually devoured its children. And it did this by using the organs of mass propaganda to keep its populations afraid and in a state of endless war. It did this by insisting that human beings be sacrificed before the sacred idol of the market or the utopian worker’s paradise. The war state provides a constant stream of enemies, whether the German Hun, the Bolshevik, the Nazi, the Soviet agent or the Islamic terrorist. Fear and war, Macdonald understood, was the mechanism that let oligarchs pillage in the name of national security.

“Modern totalitarianism can integrate the masses so completely into the political structure, through terror and propaganda, that they become the architects of their own enslavement,” he wrote. “This does not make the slavery less, but on the contrary more— a paradox there is no space to unravel here. Bureaucratic collectivism, not capitalism, is the most dangerous future enemy of socialism.”

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Macdonald argued that democratic states had to dismantle the permanent war economy and the propaganda that came with it. They had to act and govern according to the non-historical and more esoteric values of truth, justice, equality and empathy. Our liberal class, from the church and the university to the press and the Democratic Party, by paying homage to the practical dictates required by hollow statecraft and legislation, has lost its moral voice. Liberals serve false gods. The belief in progress through war, science, technology and consumption has been used to justify the trampling of these non-historical values. And the blind acceptance of the dictates of globalization, the tragic and false belief that globalization is a form of inevitable progress, is perhaps the quintessential illustration of Macdonald’s point. The choice is not between the needs of the market and human beings. There should be no choice. And until we break free from serving the fiction of human progress, whether that comes in the form of corporate capitalism or any other utopian vision, we will continue to emasculate ourselves and perpetuate needless human misery. As the crowds of strikers in Athens understand, it is not the banks that are important but the people who raise children, build communities and sustain life. And when a government forgets whom it serves and why it exists, it must be replaced.
“The Progressive makes History the center of his ideology,” Macdonald wrote in “The Root Is Man.” “The Radical puts Man there. The Progressive’s attitude is optimistic both about human nature (which he thinks is good, hence all that is needed is to change institutions so as to give this goodness a chance to work) and about the possibility of understanding history through scientific method. The Radical is, if not exactly pessimistic, at least more sensitive to the dual nature; he is skeptical about the ability of science to explain things beyond a certain point; he is aware of the tragic element in man’s fate not only today but in any collective terms (the interests of Society or the Working Class); the Radical stresses the individual conscience and sensibility. The Progressive starts off from what is actually happening; the Radical starts off from what he wants to happen. The former must have the feeling that History is ‘on his side.’ The latter goes along the road pointed out by his own individual conscience; if History is going his way, too, he is pleased; but he is quite stubborn about following ‘what ought to be’ rather than ‘what is.’
Mazars and Deutsche Bank could have ended this nightmare before it started.
They could still get him out of office.
But instead, they want mass death.
Don’t forget that.
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Re: The Greeks Get It - Chris Hedges

Postby JackRiddler » Mon May 24, 2010 7:25 pm

thank you!
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Re: The Greeks Get It - Chris Hedges

Postby Joe Hillshoist » Mon May 24, 2010 11:27 pm

And to think, it was only a couple of years ago that people were talking about using the euro to relace the US dollar hegemony...
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Re: The Greeks Get It - Chris Hedges

Postby anothershamus » Mon May 24, 2010 11:56 pm

Goldman Sachs Lloyd Craig Blankfein should:

Image

Here he is:

Image
)'(
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Re: The Greeks Get It - Chris Hedges

Postby smiths » Tue May 25, 2010 12:31 am

there is a concept in international law called odious debt

http://en.wikipedia.org/wiki/Odious_debt

my proposal is coalitions of the public taking control by force, repudiating sovereign debts based on the principles of odious debt, jailing the banksters on an island with the pedophiles (ha ha, only joking)
and then getting on with rebuilding civilized society for the benefit of most people
the question is why, who, why, what, why, when, why and why again?
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Re: The Greeks Get It - Chris Hedges

Postby smiths » Tue May 25, 2010 12:34 am

Burden of Irish debt could yet eclipse that of Greece

IT IS no longer a question of whether Ireland will go bust, but when. Unlike Greece, our woes do not stem from government debt, but instead from the government’s open-ended guarantee to cover the losses of the banking system out of its citizens’ wallets.

Even under the most optimistic assumptions about government spending cuts and bank losses, by 2012 Ireland will have a worse ratio of debt to national income than the one that is sinking Greece.

On the face of it, Ireland’s debt position does not appear catastrophic. At the start of the year, Ireland’s government debt was two- thirds of GDP: only half the Greek level. (The State also has financial assets equal to a quarter of GDP, but so do most governments, so we will focus on the total debt.)

Because of the economic collapse here, the Government is adding to this debt quite quickly. However, in contrast to its inept handling of the banking crisis, the Government has taken reasonable steps to bring the deficit under control. If all goes to plan we should be looking at a debt of 85 to 90 per cent of GDP by the end of 2012.

This is quite large for a small economy, but it is manageable. Just about. What will sink us, unfortunately but inevitably, are the huge costs of the bank bailout.

We can gain a sobering perspective on the impossible disproportion between the bailout and our economic resources by looking at the US. The government there set aside $700 billion (€557 billion) to buy troubled bank assets, and the final cost to the American taxpayer is about $150 billion. These sound like, and are, astronomical numbers.

But when you translate from the leviathan that is America to the minnow that is Ireland, it would be equivalent to the Irish Government spending €7 billion on Nama, and eventually losing €1.5 billion in the process. Pocket change by our standards.

Instead, our Government has already committed itself to spend €70 billion (€40 billion on the National Asset Management Agency – Nama – and €30 billion on recapitalising banks), or half of the national income. That is 10 times per head of population the amount the US spent to rescue itself from its worst banking crisis since the Great Depression.

Having received such a staggering transfusion of taxpayer funds, you might expect that the Irish banks would now be as fit as fleas. Instead, they are still in intensive care, and will require even larger transfusions before they can fend for themselves again.

It is hard to think of any institution since the League of Nations that has become so irrelevant so fast as Nama. Instead of the resurrection of the Irish banking system we were promised, we now have one semi-State body (Nama) buying assets from other semi-states (Anglo) and soon-to-be semi-States (AIB and Bank of Ireland), while funnelling €60 million a year in fees to lawyers, valuers and associated parasites.

What ultimately matters for national solvency, however, is not how much the State invests in its banks, but how much it is likely to lose. It is alright to invest €70 billion, or even €100 billion, to rescue your banking system if you can reasonably expect to get back most of what you spent. So how much are the banks and, thanks to the bank guarantee, you the taxpayer, likely to lose?

Let’s start with the €100 billion of property development loans. We’ll be optimistic and say the loss here will be one-third. Remember, Anglo has already owned up to losing about €25 billion of its €75 billion portfolio, so we have almost reached that third without looking at AIB and Bank of Ireland. I think the final loss will be more than half, but we’ll keep with the third to err on the side of optimism.

Next there are €35 billion of business loans. Over €10 billion of these loans are to hotels and pubs and will likely not be seen again this side of Judgment Day. Meanwhile, one-third of loans to small and medium enterprises are reported already to be in arrears. So, a figure of a 20 per cent loss again seems optimistic.

Finally, we have mortgages of €140 billion, and other personal lending of €20 billion. Current mortgage default figures here are meaningless because, once you agree a reduction of mortgage payments to a level you can afford, Irish banks can still pretend that your loan is performing.

Banks in the US typically get back half of what they loaned when they foreclose, but losses here could be greater because banks, fortunately, find it hard to take away your family home. So Irish banks could easily be looking at mortgage losses of 10 per cent but, to be conservative, we will say five.

So between developers, businesses, and personal loans, Irish banks are on track to lose nearly €50 billion if we are optimistic (and more likely closer to €70 billion), which translates into a bill for the taxpayer of over 30 per cent of GDP. The bank guarantee may have looked like “the cheapest bailout in the world, so far” in September 2008, but it is not looking that way now.

Adding these bank losses on to the national debt means we are facing a debt by late 2012 of 115 per cent of GDP. If we are lucky.

There is more. The ability of a government to service its debts depends on its tax base. In Ireland the proper measure of tax base, at least when it comes to increasing taxes, is not GDP (including profits of multinational firms, who will walk if we raise their taxes) but GNP (which is limited to Irish people, who are mostly stuck here). While for most countries the two measures are the same, in Ireland GDP is a quarter larger than GNP. This means our optimistic debt to GDP forecast of 115 per cent translates into a debt to GNP ratio of 140 per cent, worse than where Greece is now.

And even this catastrophic number assumes that our economy does not contract further. For the last two years the Irish economy has not been shrinking, so much as vaporising. Real GNP and private sector employment have already fallen by one-sixth – the deepest and swiftest falls in a western economy since the Great Depression.

The contraction is far from over, to judge from the two economic indicators I pay most attention to. Redundancies have been steady at 6,000 per month for the last nine months. Insolvencies are 25 per cent higher than this time last year, and are rippling outwards from construction into the rest of the economy.

The Irish economy is like a patient bleeding from two gunshot wounds. The Government has moved competently to stanch the smaller, budgetary hole, while continuing to insist that the litres of blood pouring unchecked from the banking hole are “manageable”.

Capital markets are unlikely to agree for much longer, triggering a borrowing crisis for Ireland. The first torpedo, most probably, will be a run on Irish banks in inter-bank markets, of the sort that sank Anglo in 2008. Already, Irish banks are struggling to find lenders to leave money on deposit for more than a week.

Ireland is setting itself up to present an early test of the shaky EU commitment to bail out its more spendthrift members. Probably we will end up with a deal where the European Central Bank buys Irish debt and provides continued emergency funding to Irish banks, in return for our agreeing a schedule of reparations of 5-6 per cent of national income over the next few decades.

To repay these reparations will take swingeing cuts in spending and social welfare, and unprecedented tax rises. A central part of our “rescue” package is certain to be the requirement that we raise our corporate taxes to European levels, sabotaging any prospect of recovery as multinationals are driven out.

The issue of national sovereignty has for so long been the monopoly of republican headbangers that it is hard to know whether ordinary, sane Irish people still care about it. Either way, we will not be having it around much longer.

We have long since left the realm of easy alternatives, and will soon face a choice between national bankruptcy and admitting the bank guarantee was a mistake. Either we cut the banks loose, or we sink ourselves.

While most countries facing bankruptcy sit passively in denial until they sink – just as we are doing – there is one shining exception: Uruguay. When markets panicked after Argentina defaulted in 2002, Uruguay knew it could no longer service its large external debt. Instead of waiting for a borrowing crisis, the Uruguayans approached their creditors and pointed out they faced a choice.

Either they could play tough and force Uruguay into bankruptcy, in which case they would get almost nothing back, or they could agree to reduce Uruguay’s debt to a manageable level, and get back most of what they lent. Realising Uruguay’s problems were largely not of its own making, and that it had never stiffed its creditors in the past, the lenders agreed to a debt restructuring, and Uruguay was able to return to debt markets within a few months.

In one way, our position is a lot easier than Uruguay’s, because our problem is bank debt rather than government debt. Our crisis stems entirely from the Government’s gratuitous decision on September 29th, 2008, to transform the IOUs of Seán FitzPatrick, Dermot Gleeson and their peers into quasi-sovereign instruments of the Irish state.

Our borrowing crisis could be solved before it even happens by passing the same sort of Special Resolution legislation that the Bank of England enacted after the Northern Rock crisis. The more than €65 billion in bonds that will be outstanding by the end of September when the guarantee expires could then be turned into shares in the banks: a debt for equity swap.

We need to explain that the Irish State has always honoured its debts in the past, and will continue to do so. However, the State is a distinct entity from its banks and, having learned the extent of the banks’ recklessness, we now have no choice but to allow the bank guarantee to lapse and to share the banks’ losses with their bondholders. It must be remembered that when these bonds were issued they had no government guarantee, and the institutions that bought them did so in full knowledge that they could default, and charged an appropriate rate of interest to compensate themselves for this risk.

Freed of the impossible bank debt, the Irish State could concentrate on the other daunting problems left by its decade-long credit binge: unemployment, lack of competitiveness and indebted households. The banks would be soundly capitalised and able to manage themselves free of political interference.

There are two common objections to sharing the banks’ losses with their bondholders, both of them specious. The first is that nobody would lend to Irish banks afterwards. However, given that soon nobody will be lending to Irish banks anyway, this is not an issue. Either way, the Irish State and banks are facing a period of relying on emergency funding. After a debt-for-equity swap, Irish banks, which were highly profitable before they fell into the clutches of their current “management”, will be carrying little debt, making them attractive credit risks.

The second objection is that Ireland would be sued in every court in Europe. Again wrong. Under the EU’s winding-up directive, the government that issues a bank’s licence has full power to resolve the bank under its own laws.

Of course, expecting politicians to sort out the Irish banks is pure fantasy. Like their British and American counterparts, Irish politicians have spent too long believing that banks were the root of national prosperity to understand that their interests are frequently inimical to those of the rest of the economy.

The architect of Uruguay’s salvation was not one of its politicians, but a technocrat called Carlos Steneri. The one positive development in Ireland in recent months is that control of the banking system has passed from the Government to similar technocrats.

This transfer did not take place without a struggle – one that was entirely missed by the media. When Anglo announced they wanted to take over Quinn Insurance despite the objections of the Financial Regulator, journalists seemed to view this as just another case of Anglo being Anglo. They should have remembered that Anglo cannot now turn on a radiator unless the Department of Finance says so, and what was going on instead was a direct power struggle between the Financial Regulator and the Minister for Finance.

Having been forced to appoint a credible Financial Regulator and Central Bank governor – first-rate ones, in fact – the Government must do what they say. Were either Elderfield or Honohan to resign, Irish bonds would straight away turn to junk.

Now you understand the extraordinary shift in power that lay behind the seeming non-headline in this newspaper last month: “Lenihan expresses confidence in regulator”.

The great macroeconomist Rudiger Dornbusch observed that crises always take a lot longer to happen than you expect but, once started, they move with frightening rapidity. Or, as Hemingway put it, bankruptcy happens “Slowly. Then all at once.” We can only hope that the Central Bank is using whatever time remains to us as an independent State to devise an intelligent Plan B – or is it Plan C?



http://www.irishtimes.com/newspaper/opi ... 88132.html
the question is why, who, why, what, why, when, why and why again?
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Re: The Greeks Get It - Chris Hedges

Postby JackRiddler » Tue May 25, 2010 1:17 am

Joe Hillshoist wrote:And to think, it was only a couple of years ago that people were talking about using the euro to relace the US dollar hegemony...


This may happen again faster than you think.
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Re: The Greeks Get It - Chris Hedges

Postby Joe Hillshoist » Tue May 25, 2010 3:08 am

2 Years ago I thought it may have happened by now.

I'm wondering about the whole attack on Greece, and other parts of Europe as being waged on behalf of the US. (Possibly the "bail out": was actually payment. Financial mercenaries.)
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Re: The Greeks Get It - Chris Hedges

Postby JackRiddler » Tue May 25, 2010 3:45 pm

Joe, there's material making that case in the Wall Street thread (Frank Biancherri's radio interview, for example).
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Re: The Greeks Get It - Chris Hedges

Postby Joe Hillshoist » Tue May 25, 2010 9:56 pm

No doubt there is (its an awesome thread that one, but really, keeping up with it? Ha.)

Cheers Jack I'll check it out.
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Re: The Greeks Get It - Chris Hedges

Postby anothershamus » Thu May 27, 2010 12:38 am

)'(
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Re: The Greeks Get It - Chris Hedges

Postby smiths » Thu May 27, 2010 12:50 am

I'm wondering about the whole attack on Greece, and other parts of Europe as being waged on behalf of the US

we do have to be careful about our terminology,
greece, like all european countries, has an elite and a mass
america has no interest in attacking europe per se,
the anglo/american/european elite has an interest in destroying its middle class so as to try and level the playing field with china, asia, russia and brazil
everyone in europe thought that we would try and raise third world living standards,
what is only just occurring to small numbers of them is that it is far easier to lower peoples living standards than raise them
the question is why, who, why, what, why, when, why and why again?
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Re: The Greeks Get It - Chris Hedges

Postby Joe Hillshoist » Thu May 27, 2010 5:15 am

Fair point - I dunno if I used the right terms.

Perhaps I should have said: "...on behalf of the US dollar hegemony."

Cos thats what I meant.

Not necessarily the US in terms of the nation.
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Re: The Greeks Get It - Chris Hedges

Postby JackRiddler » Thu May 27, 2010 7:37 am

Joe Hillshoist wrote:Fair point - I dunno if I used the right terms.

Perhaps I should have said: "...on behalf of the US dollar hegemony."

Cos thats what I meant.

Not necessarily the US in terms of the nation.


Joe, yeah. Sorry about directing you to a 9000 post thread. Here's the bit in which Biancherri argues that Anglosphere-based players are trumping up Greece as a means of attacking the euro, and that this is because UK and US bankruptcy are inevitable:

viewtopic.php?f=8&t=21495&start=435#p338011

Follow to the post after that, where Auerback represents the position on the contrary that all nations that can print their own currency are in a different position vis a vis debt than those that cannot (US is not Greece argument).

How this is going to turn out is not clear cut.

I think there is no doubt there is an attack on the euro by bond vigilantes, and that this will continue, because they can, until such time as Europe controls its currency or establishes a unified economic policy to match the unified currency. This is independent of what the economic "fundamentals" may be. They do it because they can, it makes money.
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