Greece Should Default and Go Broke With Dignity
by Bill Bonner: Bubble
to Bubble, Dust to Dust
stocks went up. Gold went up. And bonds went down.
It was a risk
but not so much of one that you could draw any
conclusion from it.
had the Greek debt crisis on their minds. But they seemed to have
gotten tired of worrying about it. All the financial sweepers in
Europe are working around the clock, trying to get the mess under
the carpet or out the door. By the looks of the markets, they were
not over yet. Youll remember that we gave some advice to the
financial officials who are in charge of bailing out Greece? We
told them to take a page out of Gerald Fords book. Just tell
the Greeks to drop dead.
Today, we give
advice to the Greeks. Tell the bankers to drop dead.
A vote is expected
which will tell us something. The Financial Times
says it could be a suicide vote. That is, the governor
of Greeces central banks says the Greeks will be committing
financial suicide if they dont go along with the plan.
to The Financial Times, Mr. Provopoulos expressed concern
that Greeces economic crisis had been played down by politicians
over the past 18 months as the country lurched towards a possible
have never really had a debate in this country about what went
wrong. In Portugal the new government has come in and said that
there will be a difficult two years ahead. We have not had that
kind of talk here, he said.
For parliament to vote against this package would be a crime
the country would be voting for its suicide.
the heat, Olli Rehn, the EUs top economic official, dismissed
German suggestions that the eurozone was contemplating a Plan
B in case the Greek parliament failed to approve the austerity
cuts. The future of the country and financial stability
in Europe are at stake, Mr Rehn said. I trust that
the Greek political leaders are fully aware of the responsibility
that lies on their shoulders to avoid default.
not so sure. From what weve been able to make out of the rescue
plan, theyd be better off rejecting it. Not that were
in favor of people who dont play fair. But this deck was always
stacked. And the dealer had a few aces up his sleeve at the get
go. The way we figure it, the politicians, the banks notably
Goldman Sachs, as well as the big French banks were in on
the whole thing from the get-go. It would be considered rude to
mention it, for example at a champagne-swilling reception hosted
by Christine Lagarde, but the whole deal was always corrupt. Goldman
Sachs helped the Greeks disguise their debt so they could get in
the EU system. Then, more or less the same bankers, advising pension
funds, the IMF and the European Central Bank, urged them to buy
Greek debt. And then, when the debt went bad, they organized a rescue
which spared the lenders any losses. And then, when the rescue
went bad, they set to work figuring out the terms of a new rescue
warning the Greek people that if they dont go along, theyll
have to face Armageddon.
would be better off calling their bluff.
could go broke with some dignity. They wouldnt get any more
credit. But more credit is the last thing they need. Besides, each
time they are rescued, they end up in worse shape, with more debt
and higher interest rates to pay on it.
So tell the
bankers to drop dead.
the Greeks themselves were as corrupt as the bankers. They took
their opportunities, too, as they came along. If they could get
paid for not working, they didnt work. If they could get a
subsidy and not have to compete in the real world economy, they
took the subsidy. If they could retire early, or get something for
nothing, or hoodwink investors with some nonsense figures
course, they did it.
a pot. And theres a skillet. Both are as black as a tax collectors
heart. And now they are both colluding to make sure neither has
to reckon with his greed and errors.
thats not the way it works. Debt doesnt go away just
because a knave and a fool decide they dont want it. Its
still there. Like grinning death. It knows it will have its way.
see how things are going in the US.
here in South Florida
where consumer confidence is falling,
just as it in the rest of the nation.
Hey, if there
were a recovery, how come consumer confidence is falling?
is simple: there aint no recovery and consumers know it. The
feds can babble about anything they want, but the typical consumer
knows he is in a tough spot
and its getting tougher.
The good news:
gasoline prices are falling. But so are home prices in South
Florida, says the Palm Beach Post. House prices rose
in 13 cities says the latest news. But not in Miami
in Palm Beach county.
Over on page
4 it says Fla. Seniors insecure about income. They ought
to be. Theyve lost purchasing power for the last 10 years.
thats just a part of the story. As we keep saying, the last
10 years has been a lost decade for Florida seniors
as well as just about everyone else, except the rich. The middle
classes have lost ground on every front.
are now back to 1990s prices.
incomes have actually gone down.
portfolios too have lost value in real terms.
And the job
market offers them fewer jobs than it did in 2000.
A gallon of
gasoline costs only $3.64 in Palm Beach County, down from $3.85
a month ago. But its up from $1.30 in 2000.
will keep their wallets closed until they feel a heightened level
of confidence, says a source interviewed by the Palm Beach
When will that
be? No one knows, but if present trends continue Florida seniors
will have turned up their toes long before they turn up their confidence.
with permission from the Daily
Bonner is the author, with Addison Wiggin, of Financial
Reckoning Day: Surviving the Soft Depression of The 21st
The New Empire of Debt: The Rise Of An Epic Financial Crisis
and the co-author with Lila Rajiva of Mobs,
Messiahs and Markets (Wiley, 2007). His
latest book is Dice
Have No Memory.
Since 1999, Bill has been a daily contributor and the driving force
behind The Daily Reckoning.
© 2011 Daily Reckoning
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