Geopolitics Will Trump Economics in Greece
Here is a post sent to us from our friend Dan Kurs. Click here to visit the Euro Pacific Capital website where this was originally posted.
Based on the continued failure of the negotiating parties to make any substantive progress in the talks over Greek debt payments, the financial world is tied up in knots over a possible Greek exit from the European Union. The uncertainty has manifested in both high and low finance, with a sharp sell-off in bonds, particularly EU and Greek government debt, and heightened retail withdrawals from Greek banks as depositors become wary of capital controls that would be imposed in the case of an exit. All concerned parties should likely breathe easier. Despite Greece’s almost complete lack of financial integrity, neither NATO nor the EU can afford the political cost of a Greek exit from the EU.
Meet your next prez….
MAYBE BILL AND HILLY COULD LOAN THE GREEKS SOME MONEY ……
I can’t see Greece allowing the Russians to have the use of Piraeus port.
It would seriously affect tourism.
The actual Port area is rather complex.
To the west is a small horse shaped area used for the fishing fleet, which would be of no use for naval vessels. In the middle is the ferry terminals and cruise ship are, which could be used for naval vessels, but is needed for ferry transportation to many islands and for the tourism cruise ship industry.
Then to the east is the main port, which handles container ships and cargo transport to the islands. I just can’t see this main port or part of it sold to the Russians. Maybe possible in theory, but economy destroying in practice.
Horseshoe shaped not horse shaped!
I have to throw in with Browne…this is why Angela Merkel wants to re-inject herself in this fray. Don’t forget she is a protege of Helmut Kohl, who to the depths of his soul believed in European Union. So does she. Sad that this union has been given over to and is run by bankers; but in their minds, that’s all they’ve got. So they will try to keep Greece in at all costs.
Merkel and company actually have an opportunity to get out of this mess. The Tsipras government handed it to them on a platter. Demands for reparations for unpaid Nazi era debt owed Greece is more than sufficient to be used to extend current credit lines if Germany merely agreed to enter into talks to resolve those old unpaid debts. Nobody even needs to put a figure on it. A simple acknowledgment that funds are owed to Greek banks and that they remain outstanding is enough to end the default fears while giving the Tsipras government a win they can take back to their people even if a rectifying financial resolution is many years in the future. Doubtful that will happen though but the demands by Greece are not going away whatever happens and in time the European courts will likely side with them anyway. On what basis should Greece be obligated to pay off bonds 50 to 100 years in the future if Germany itself never made good on loans it took from Greece during wartime? A debt is a debt is it not?
In the end, it depends on whether Greece can pay back what they owe. If they can, everything will be fine. Otherwise it is a default. All the rest are either noise or delay tactics – a form of dishonesty.
If you start demanding debts for war reparations Germany will end up bankrupt, just consider all of the other countries that would have a claim. This was tried at the end of The First World War at The Treaty of Versailles and Germany had runaway inflation which led to a totalitarian regime and World War Two. Imagine what would happen if The US had to pay war reparations with the destruction they have caused, I think you can forget that idea. DT
In 1942, Germany forced Greece to loan it 11 billion dollars. That money was never repaid to the Bank of Greece. In current value dollars that amount would exceed 176 billion excluding interest payments. US interest rates at that time were 2.25% suggesting interest alone would now exceed 56 billion. I have no idea what the actual rate of interest was in Germany back then but I will bet it was higher than 2.25%……..so without attempting to calculate the present value of the interest which would have compounded for 73 years we arrive at an amount due equal or greater than 232 billion.
The question that needs to be asked is why Greece should forgive that Nazi era loan but the offspring of present day Germany and the European banks who will be receiving payments from Greek debt for the next 50 years should not.
In other words, why is the Greek loan of 1942 invalid yet its current debts fully due and payable? Is a debt not a debt DT? What difference does a war make? Keep in mind that England paid all its war debts to the US and the last of those were debts were repaid and retired just a few years ago.
Just because it is a long time ago does not mean it doesn’t matter. And clearly, such a repayment would wipe away the majority of Greece’s current obligations.
OFF TOPIC but I have to state: I love the rand Paul new tax plan. Flat 14.5% tax.
About time someone proposed something that would actually work to get the economy moving again.
Church only wants a tithe (10%) without using guns to collect yet most hate the Christian religion and worship the state.
Oops! You dozed off on that one. A government with a printing press can steal as much as it wants even while you think you are paying only 14.5% or even 0%. We need sound money, not phoney tax cuts.
Less govt. ……not more tax revenue to a group that can not manage anything..
Rand Paul is just another lifer on the hill…………
So what, Wayne.
Is that a question?
Donald Trump will give Americans a glimpse into their past, what’s old is new again and The Donald is a welcome addition. DT
Trump them Donald!
Not with the racist billionaire Marxist on his arm.
That was a good explanation of the Greece situation. A Greece default puts Germany and douetche bank on the hot seat.
Exclusive: ECB not sure if Greek banks will be able to open on Monday: officials
http://news.yahoo.com/ecb-not-sure-greek-banks-open-monday-officials-183742488–business.html
There is an effort to push silver back down to 16 and push gold back down 1200. By going through these integer levels again and again, manipulators can fleece the funds using stop loss. I cannot remember how many times metals have gone through this levels. Unbelievable.
Agreed. They making money trading it back and forth and knocking out both bull and bear stop losses. That is why for the short to mid turn this market is to be swing-traded or even day-traded, or if an investor has a longer time horizon, they can hold through it. Many have elected to go to the sidelines in cash waiting for a trend to develop, so that could prove to be wise if PMs head lower (which is still somewhat likely) or detrimental if the PMs bottom here and head higher.
It is a wild market, but I agree with Docs analysis of the tightening range of the descending wedge the market is in, so this will continue even longer, until enough energy bulids up where we have a breakout. His position is that it may take until 2016 for this to play out, but I could see events get much wilder in the second half of 2015 and force the breakout a little earlier. I’m looking to the fall for the break down in the general stock markets and the break out in commodities.
The bigger plan is to drive precious metal lower as it has been since 2012 october QE3. However, for the last two years, the price is essentially anchored in a narrow range even as US dollar has risen a lot. It means that the effort to drive price lower has exhausted a lot of physical gold they have. It is virtually not possible now to push it under 1000 unless they they can source more gold to dump. The longer the time, the harder it gets. Now even the miners start to fold, which reduces supply. The miners have been fueled by speculation of higher gold and silver price during the last 10 years. Even few mines have made money, mal-investment kept coming in. This will finally kill most of the none profitable mines.
I generally agree lawrence, but feel the price will be driven down in the paper futures markets combined with more outflows from ETFs before we get confirmation that the bottom is in.
Sure. It can only last short term though since a percentage of people takes delivery. More paper there, more physical is demanded.
The key reason for me to believe that US gold and custodian gold are sold is FED refusing to let German central bank to inspect their gold. The reason is security risk. It could not be funnier since how can a few German officials impose risk to their heavilly guarded vault. It is logical to allow them to inspect since that will enhance the confidence. I could not think of any reason to refuse except one – the gold is not there. There are also many evidence such as refuse to audit, trying all them can to defeat audit the FED bill, slowness of returning German gold, etc.
They just did it
This is robery.
The ECB has just about managed during the Greece default postponement time to liquefy most major banks by buying up Greek debt from the banks.
So when Greece defaults later this month, nothing much should happen to the banks.
I say should,……
However, no on knows what can happen to the derivatives, credit and interest rate swaps.
It is clear that Lagarde, who worked in Chicago for a two thousand plus lawyer firm whose primary business was derivative law, is extremely worried both about Greece and the possibility of the U.S. raising rates.
I think government can order to cancel all the derivative contracts. This will end the derivative market but ensure system not collapse.
Derivatives are at $555trillion , I think she has a reason to be concerned.
Well said; well said indeed!