EUROBLOWN: Why Greece will be staying right to the end of the party….

…and why citizen money will be paying for it

By John Ward: Cast your minds back ten months to late winter earlier this year, when the International (Troika) lenders to Greece said the immovable line in the sand was a target of 120% of the country’s GDP. But today, most of the debt – four fifths roughly – has been transferred from private to public hands. So now the situation is….Greek debt at 174% of GDP. Funny how our money is always more easily risked than bank money.

You will recall perhaps that at the start of all this nonsense, I posted to say that Greek debt must get higher by year unless there was debt relief. Here’s the Kathimerini chart that vindicates the view:

The Slog and millions of others said, in 2009, “debt forgiveness is ultimately the only solution”. Recently, the European Commissioner for Employment Laszlo Andor of Hungary said the same thing. He argued that what Athens really needed was debt relief:

“What Greece needs today is not a third bailout, but a proper reconstruction plan, which inevitably starts with significant debt relief, and programmes that bring fresh investments”

Last month I reported on the sudden absence of promised ezone debt relief being confirmed by Olli Rehn, and posted to say Greece must therefore default in Spring 2014; from Zero Hedge yesterday:

‘….the Greek government has far less incentive to pay, and far more negotiating leverage with, its creditors once it no longer needs to borrow from them to keep the country running. This makes it more likely, rather than less, that Greece will default sometime next year….’

ZH is right of course, because in the looney-tune world of Troika economics, despite having almost no citizen consumption to help growth, Greece now has a budget surplus. The Zero Hedge hacks triumphantly make the point that Athens can thus “keep the country running” without paying anyone back.

They’re being too clever by half: the default will come because Greece has no debt relief, not because Samaras and Venizelos are suddenly going to grow some balls. Greece does hope that its creditors will help it reduce its debt in order to make it viable in the long-term: Finance Minister Yannis Stournaras said in an interview with the French newspaper Liberation a week ago, “Ideally, our creditors – that is, EU member states – could help Greece by reducing its debt.” But he admitted it would not happen.

They key words above are ‘our creditors – that is, EU member states‘. The point here is not the Greek attitude, but the EC/German one. The bottom line is 80% of the debt is now owned by our money – not Wall Street and the banks. The Troika is today, to all intents and purposes, Brussels-am-Berlin.

Brussels-am-Berlin would be far too spineless to ask the banks to cough up bigtime (a little bit of Mario subordination was as far as that got) but they’re happy to have us pick up the tab….as Cyprus showed in spades….and especially as the German leaders have now been massively reelected by sailing across a sea of lies.

Sorry to crow a little here, but I do feel my hunches from the start have been borne out: the bit about Greece the ZH lads don’t get is the deadly combo of Greek middle-class older citizen pride on the one hand, and the naked fear of the political élite that their EU gravy train will no longer stop at Athens Central. And the bit most Americans and Brits per se don’t entirely grasp is just how big a pair of megalomaniacs Geli Merkel and Wolfie Schäuble are.

I have consistently said: Germany will leave the eurozone before Greece does. The majority of Greeks remain horrified by the idea of Grexit. But Germany isn’t going anywhere. Berlin has stripped out the Greek debt from its banks (as much as it can). It has made a massive comeback by reducing its liquidity exposure at the ECB…and thus rendered Draghi something of a Maginot line. Bankfurt stands triumphant in its victory for prudence. And the Führerin has the electorate nicely tucked up in her pocket.

From here on, get used to it: Germany is in charge, and Germany will – by myriad subterfuge, euphemism, jargon and bollocks – quietly wipe out the Greek debt. Why on earth do you think Camerlot is cleaving like a baby to the ample Merkelian bosom?

Are we therefore headed for FiskalUnion and the much-vaunted Fourth Reich? Well, despite the analysis above – no, we aren’t. And the reason is that when you’re, you know, a bit megalo, you forget sometimes about the bigger picture. The use of ‘bigger’ here applies almost entirely to the munneeee.

Guess which bank has the highest derivatives exposure in the world? Correct: Deutsche. Now fine, I know that strictly speaking it isn’t really a German bank any more, but the clue’s in the name, right? Banks spread contagion and – let’s be real here – compared to a non-netted derivatives meltdown, €320bn of Greek debt is walking around money. There is, thank God if only she existed, more to the world than the European Union.

That said, within the walls of the asylum for basket-cases previously known as the eurozone we have (see earlier) two UXBs about to explode….and who are themselves massive guarantors of Greek debt: Italy and Spain. They are the ones – not Greece – who will destroy the euro if anyone or anything can.

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Sometimes – if only because many folks I’m sure see me as a miserable bugger for the sheer undiluted fun of being one – I feel the need to sum up what the main point is I’m making. So think of this as a road sign saying “Rome 0.5km’.

In “dealing with” hahahaha the self-inflicted eurozone debt doom, the Sprouts and Krauts have done precisely what the Brits, the Americans, and every other gutless political class has done: protect bank money and spend ours….then bail the banks out and print more of our money, thus diluting its value…then bail us in to protect their money.

The lesson here as ever is “watch what the bastards do, not what they say”. Across the world, their behaviour is incredibly consistent…as is the resultant deflation of our spending power. This is not a conspiracy, it is élite anthropology playing out the way it always does. The pols work for THEM not US.

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