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When default is inevitable, it’s best to do it sooner rather than later

The EU bailout did nothing but bail out banks while forcing a a six year depression on Greece. Its time for Athens to cut the debt loose and move on to better days faraway from the corrupt, sinking eurozone.

Alex Christoforou

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Post originally appeared on Global Economic Analysis entitled, “Greece ‘air of unreality’: ‘Do you feel lucky, punk?’, who has the gun?

In the wake of the IMF walking out of negotiations with Greece, the Financial Times says the Pullout is Amid an “Air of Unreality”.

What’s Unreal?

Sure, everyone expected Greece to buckle. But what if Greece did buckle for the nth time? Greece was eventually going to default anyway.

There is not now, nor was there ever, anything “unreal” about the inevitable default.

Earlier today German officials said “European taxpayers have been generous” to Greece. What a hoot. Now, that’s “unreal”.

What’s also “unreal” is forcing €330 billion worth of debt on a tiny country, pretending that it can be paid back.

This alleged “generous” bailout did nothing but bail out banks while forcing a hellacious depression on Greece. Taxpayers have not footed the bill yet, but they will, thanks to bondholder and bank bailouts.

Some blame Greece. And to be sure Greece made mistakes. But the real culprits are the ECB’s one size fits Germany interest rate policy, the stupidity of the eurozone agreement itself, the lack of a fiscal union, etc.

Everyone knew Greece lied to get into the eurozone. They let Greece in anyway. Isn’t that “unreal”?

“Do You Feel Lucky, Punk?”

The Guradian reports the IMF walkout this way: IMF to Alexis Tsipras: ‘Do you feel lucky, punk?’

“You’ve got to ask yourself one question. Do I feel lucky? Well, do ya, punk?” The lines spoken by Clint Eastwood in Dirty Harry sprang to mind when the International Monetary Fund (IMF) announced that it had called its Greek negotiating team home from talks in Brussels.

The IMF’s message was short and brutal. There were still major differences between Greece and its creditors. There was no progress in narrowing those differences. The two sides were well away from an agreement.

The IMF, clearly, has had enough. This, then, is the IMF holding the gun to Alexis Tsipras’s head. It feels like a pivotal moment, the point where the creditors are saying “take it or leave it” and the Greeks have to decide whether the IMF really means it.

They are fed up with Tsipras acting like he is the one holding the .44 Magnum and they are threatening to pull the trigger.

This movie climaxes next week.

Who Has the Gun?

The IMF? OK. Pull the trigger.

Tsipras wants someone to blame. If he can point the finger at the despised IMF, the IMF will effectively have shot itself.

Greece has nothing to lose. The Troika does have something to lose.

Let’s look at things from the point of the best case scenario.

Best Case Scenario

  1. Greece defaults.
  2. Greece sheds €330 billion worth of debt.
  3. Greece opens up trade with Russia, killing EU sanctions once and for all (and exposing the stupidity of the unanimous nature of EU rules in the process).
  4. Greece threatens to yank US access to the US military base in Crete.
  5. Russia builds pipeline through Greece. In turn, Greece collects shipment and storage fees.
  6. Russia provides interim funding for Greece until Greece runs a primary account surplus.
  7. The interim agreement from Russia requires Greece to initiate some market reforms that will pay big dividends down the road.
  8. Greece reforms and does very well in a relatively short time frame.
  9. Italy, Spain, Portugal, get some clever thoughts of their own.

US Naval Base in Greece

US Naval Base in Greece.

US Naval Base in Greece.

The military Base is in Souday Bay, Greece.

Note the strategic location.

In August of 2013, the US Asked Greece for Military Base Access in Kalamata and Souda for a possible strike on Syria over the alleged use of toxic gas in Ghouta on the eastern outskirts of Damascus.

In 2013, Greece said yes. What will they demand to say “yes” the next time?

Nothing to Lose

From my perspective, Greece has nothing to lose.

To be sure, Greece would be far better off defaulting and reforming rather than simply defaulting. But default is the best option for sure.

Even staunch euro supporter Wolfgang Münchau agrees. See his April 19 column: Greek Default Necessary but Grexit is Not.

For my take on Grexit, please see Can Greece Default and Stay in Eurozone? Russia is the Key!

When default is inevitable (and it is), it’s best to do it sooner rather than later.

When You Ain’t Got Nothing

I offer a musical tribute to Greece. Click here to play “Like a Rolling Stone” by Bob Dylan.

It’s an excellent video, but not directly embeddable. Click on link to play.

Key Lines

Now you don’t seem so proud
About having to be scrounging for your next meal

You said you’d never compromise
With the mystery tramp, but now you realize
He’s not selling any alibis
As you stare into the vacuum of his eyes
And say do you want to make a deal?

When you ain’t got nothing, you got nothing to lose

Speece Revisited

Some will insists this is all Greece’s fault. Most others will insist it’s primarily Greece’s fault.

Actually, it’s neither of those.

I make the case in From ZIRP to NIRP: Virtues of Germany vs. the Vices of Greece; What About “Speece” and Gold?

The big fear out of the eurozone should not be that Greece fails miserably, but rather that Greece succeeds!

Success as I have pointed out above is quite possible. If Greece were to immediately initiate the necessary reforms, I would even go so far as to say “success is likely”.

Unfortunately, I don’t believe Greece will reform.

Regardless, Greece is better off without a €330 billion albatross around its neck for the next 40 years.

References:

http://globaleconomicanalysis.blogspot.com/2015/06/air-of-unreality-do-you-feel-lucky-punk.html

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The Duran Quick Take: Episode 115.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss how EU leaders have agreed on a plan to delay the the Article 50 process which effectively postpones Brexit beyond the 29 March deadline.

The UK will now be offered a delay until the 22nd of May, only if MPs approve Theresa May’s withdrawal deal next week. If MPs do not approve May’s negotiated deal, then the EU will support a short delay until the 12th of April, allowing the UK extra time to get the deal passed or to “indicate a way forward”.

UK PM Theresa May said there was now a “clear choice” facing MPs, who could vote for a third time on her deal next week.

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Theresa May outlines four Brexit options, via Politico

In a letter to MPs, U.K. Prime Minister Theresa May set out the four options she believes the country has in light of Thursday’s decision by EU leaders to extend the Brexit deadline beyond next Friday.

The U.K. is faced with a four-way choice, May wrote late Friday.

The government could revoke Article 50 — which May called a betrayal of the Brexit vote; leave without a deal on April 12; pass her deal in a vote next week; or, “if it appears that there is not sufficient support” for a vote on her deal in parliament next week or if it is rejected for a third time, she could ask for an extension beyond April 12.

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May wrote that she’s hoping for the deal to pass, allowing the U.K. to leave the EU “in an orderly way,” adding “I still believe there is a majority in the House for that course of action.”

“I hope we can all agree that we are now at the moment of decision,” she wrote.

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US media suffers panic attack after Mueller fails to deliver on much-anticipated Trump indictment

Internet mogul Kim Dotcom said it all: “Mueller – The name that ended all mainstream media credibility.”

RT

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Via RT


Important pundits and news networks have served up an impressive display of denials, evasions and on-air strokes after learning that Robert Mueller has ended his probe without issuing a single collusion-related indictment.

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“What is collusion and why is Robert Mueller unlikely to mention it in his report on Trump and Russia?” a Newsweek headline asked following Friday’s tragic announcement.

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Via Zerohedge

Canada’s feminist-in-chief Justin Trudeau wants to support and empower women…but his support stops at the point where said women start creating problems for his political agenda.

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