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[Lee Adler]

“I ask you to vote in favour of the new loan agreement today and to have the ability to negotiate and change the current policy which has been forced on us”  Samaras, likely new Greek Premier after elections Since the opportunity cost for Greece of “pledging” to achieve unattainable targets while doing kittle,  is zero, then the real question becomes enforcement.  Next comes the Eurozone’s willingness and ability to enforce [see actionable Germany's Coo-Coo Times].  Implementation is a different animal from agreeing.  That said my comment here assumes Greece gets the next tranche of $145 billion and counting. The Greece “solution” has all the worst elements of debt structuring and leaving the afflicted country totally in the hands of creditors and global banksters, and with all the attendant privatizations, etc. Now Greece will spiral into a deep, long lasting Depression caused by extreme austerity (if that is even the correct word here). The bad news for banksters is that other insolvent countries will be able to observe the outcome of the “Greek solution” and plan (rebel?) accordingly. As a prelude 100,000 hit the streets in Lisbon to protest austerity.    Portugal has been discreetly sounding out advisers on options to restructure its debt. The most important [...]

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[qqqbear]

Athens Is Burning and Germany's Angela Merkel Holds the Spent Match
By Peter Morici
Published February 13, 2012

Athens is besieged by riots, because ordinary Greeks understand what their leaders won’t admit. The reforms imposed by German Chancellor Angela Merkel and Greek creditors will delay but not avoid a sovereign default. Those won’t solve the nation’s chronic economic problems, and ultimately will cause the ruin of Europe’s most ancient civilization.

At issue are the conditions imposed by Germany and other rich European nations, the IMF and European Central Bank, and private creditors in exchange for an aid package and deal to cut Greek government debt in half and avert a sovereign default in March.

In addition to ascent from the sitting Parliament, Germany and others are demanding that opposition political leaders pledge not to seek to renegotiate these terms if Greeks vote for a change in government. Essentially, led by German Chancellor Angela Merkel, Greece’s creditors are demanding that Greece become a German protectorate, deprived of democracy, or it will be let to default, treated as a pariah by the EU, and impoverished.

That might be acceptable, if the reforms would fix the Greek economy and permit sustained growth, but Greeks rioting in Athens and elsewhere have figured out what their leaders won’t admit—the package can’t work.

Like other southern Eurozone nations, the euro is overvalued for Greece’s economy—it makes Greek exports too expensive and imports from places like Germany too cheap. Consequently, all the Mediterranean nations have been running large and growing trade deficits with Germany and other northern economies, and borrowing to pay their bills—that’s the origin of all that sovereign debt in Portugal, Italy, Greece, and Spain, and why each of them is in need of some kind of bailout.

Higher taxes, spending and wage cuts, and labor market reforms will only permit these nations to attract investment, grow and earn euro to pay what they still owe, if those policies cause their economies to accomplish sustained trade surpluses with Germany and other northern European economies. Simply, that is not going to happen


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