(MENAFNEditorial)
The ancient Greeks invented democracy. Have modern Greeks just manipulated democracy to commit suicide – or to kill the Euro currency destroy a united Europe and undermine America’s economy as well?
On Sunday July 5 Greeks voted “No” by roughly 61 percent in a national referendum to as the New York Times put it “reject bailout terms in rebuff to European leaders.”
In fact European leaders had said that their offer to rescue a Greece drowning in debt would automatically end at midnight on June 30 if Greece failed to make a required debt payment. The ruling radical leftist Syriza Party called this strange vote on a European bailout offer that had already been withdrawn five days earlier.
To further confuse matters Greek Prime Minister Alexis Tsipras gave voters two contradictory reasons to vote “No” – (1) to reject any further tax and austerity demands from Europe that would show Greece intended to pay its debts or (2) to “strengthen my hand” in negotiating a better agreement that would impose higher taxes and more austerity on Greece.
By voting “No” Greeks could have been voting either Yes or No to accept a conditional European bailout. And to further tilt the outcome Syriza violated the traditional ballot order in Yes-No votes by making its preferred “No” the first not customary second box to check on Sunday’s ballot.
German and French leaders announced Sunday that they will “respect” the wishes of Greek voters and called for a Tuesday European Union summit on Greece which is officially “in arrears” not “in default” or bankrupt.
A Weak Hand
Mr. Tsipras may have won but he continues to play a very weak hand. Greece after all is a nation of fewer than 11 million people with an economy as Nobel laureate economist Paul Krugman describes it “about the size of metropolitan Miami.”
Greece however lacks the economic vitality of Miami. In Greece roughly 26 percent of working-age adults are unemployed a jobless rate that rises to around 52 percent for young workers. Of those with jobs 28 percent work for the government – approximately double the rate in the U.S. – and are a huge tax drain on private sector workers companies and would-be investors.
Greece’s 11 million people have run up debts of €320.4 Billion ($353 Billion) – more than a third of a trillion dollars – with a profligate politicized welfare state that let workers in any of 1200 “dangerous” occupations including radio announcers and hairdressers retire at age 50 with a pension equal to 80 percent of their peak lifetime annual pay.
Before capital controls on its banks limited account holder withdrawals to $67 per day a national bank run was draining more than $2 Billion from its banks every three days. Even with such controls without more bailout money from the European Central Bank (ECB) Greece’s banks will begin running out of money by Tuesday.
Looting Bank Accounts
Without an ECB rescue banks and the Syriza government might then begin “bail-ins” seizing depositor accounts to cover bank shortfalls as happened in March 2013 in the Greek-speaking Mediterranean island of Cyprus. We explained such “bail-ins” in our 2014 book and our latest FREE Research Paper: .
The Syriza government also quietly enacted laws allowing it to confiscate citizen retirement accounts to cover bank and government expenses. Shocking as this violation of our trust in banks might seem most Western welfare states – including the United States – have stealthily been putting such powers into effect as Don’t Bank On It! documents.
Truth be told the out-of-control debt and instability in Greece is not exceptional. Its economic collapse is merely a foretaste of what soon could happen here. Western nations are now carrying the heaviest burden of debt in 200 years.
Holding Greeks Hostage
Syriza’s current tactic is to hold the Greek people hostage. Its leftwing media comrades are flooding the West with images of elderly Greeks who now face losing their pensions homes savings and food – blaming the hard-hearted Germans and other creditors for selfishly demanding that Greece keep its promises to repay what it borrowed.
The liberal media seldom mentions that Greece has already been given huge gifts. In May 2010 the Eurozone and International Monetary Fund (IMF) gave Greece a “rescue package” worth €110 Billion ($148 Billion). In 2011 a second bailout was given amounting to €130 Billion ($173 Billion) in a deal that included a 53% reduction in Greek debt to private creditors and a giveback to Greece of any Eurozone central bank profits on Greek debt.
Greece promised huge cuts in government in lavish welfare and pensions and its other profligate spending….and then spent the money while reneging on its promised belt-tightening.
Greece is what columnist George Will calls a “spend and extend” culture that built a plush welfare state by constantly demanding new loans to pay the minimum on yesterday’s debts. Like the U.S. it now has a huge deficit in both money and creditor trust.
The Unpayable Debt
On Sunday Greece balked at the belt-tightening Europe wants in exchange for yet more bailout billions. Trouble is as a recent IMF study concludes even if Greece did everything the Eurozone wants and if the best possible scenario followed Greece by 2022 would still owe 124 percent of its Gross Domestic Product – and more likely by 2030 would still owe 118 percent of GDP.
In other words Greece is mired so deep in debt so deep and has an economy so weak that it has almost zero chance of ever working scrimping and saving its way out.
Instead Greece’s Syriza rulers could play different cards. Until now Greece has supported a lavish welfare state and stuck nations such as Germany and its taxpayers with the bill. Greece likely will demand that its “unfair” debts be cancelled – or at least be repackaged into a long-term gimmicky obligation note that will gain new bailout money now and postpone debt repayment for decades….or forever.
Unleashing the PIIGS
Greece’s creditors are reluctant to play this game a third time even if it lets them pretend their never-to-be-paid loans are still good. Greece’s economy is only two percent of the Eurozone but giving this deadbeat nation a pass could bring demands for similar debt forgiveness from Europe’s other high-debt PIIGS nations – Portugal Italy Ireland and Spain.
This Greek contagion might start an avalanche of falling dominos as other countries renege on their debts and threaten to leave the Euro and return to their old currencies such as the Greek Drachma. A “Grexit” (Greek Exit) could influence PIIGS nations to leave the Eurozone Great Britain’s upcoming referendum to exit (“Brexit”) the European Union (EU) and France’s potential exit (“Frexit”) from both the Euro and EU if Marine LePen’s nationalists come to power.
This could shatter the unity Europe has been trying to build around the Euro as a rival to the U.S. Dollar.
The Euro was an effort doomed to fail Nobel laureate economist Milton Friedman warned before the new currency was launched because Second and Third World nations such as Greece cannot be equal allies with First World economic powers. The stronger powers that control the currency will economically colonize and dominate the weaker.
By lying about its financial obligations to gain admission to the new Eurozone in 2001 Greece lost its ability to wipe out debts simply by printing mountains of paper Drachmas. By adopting the Euro that it could not print what Greece gained instead was vast amounts of credit from banks that assumed Germany would cover Eurozone debts to protect the Euro (which as we have explained in past books is really the German Deutschmark in disguise as Germany’s third attempt in the 20th Century to conquer Europe….this time economically).
As a Euro nation Greece was given enormous credit – and it borrowed wildly like teenagers with whisky car keys and their parents’ unlimited credit card.
From NATO to GreBRICS?
Speaking of cards the radical left Syriza government in Athens has one more poker card to play. On July 8 the BRICS [Brazil Russia India China and South Africa] nations meet in Moscow. Will Prime Minister Tsipras be there? Will these economic rivals to the United States invite Greece to join them and create GreBRICS? Will Greece a member of the West’s Cold War military alliance NATO threaten to provide Mediterranean ports for Russian and Chinese warships?
This game of chicken between the two Gs – Greece and Germany – did not end with Sunday’s vote. It continues to have the potential to undermine Europe and the Euro. It could become the tipping point that shifts the global balance of power away from the United States and our dollar by beginning a rush of other nations into the BRICS power bloc.
shows why and how your bank account now faces the same kind of risk the people now locked out of their money are facing. What would you do if your bank savings were suddenly inaccessible your credit cut off and your paper dollars were plummeting in value?
Before currency controls bail-ins and other money seizures happen here learn from the example of Greece and read our book to see ways you can help protect yourself your family and the security of our society.
To schedule an interview with Craig R. Smith or Lowell Ponte contact: Bronwin Barilla at 800-950-2428 or email .
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