Beware of gifts bearing Greeks

While the story line goes that it's all about saving the Euro it is really all about saving Banking. The ECB, with or without the assistance of other Central Banks, announces it has printed some fictional money and gives it directly to the banks exposed to Greek debt so they don't go bankrupt and the financial system doesn't collapse in Domino fashion. In order to pretend that this money is real they call it a loan to Greece and tell the Greeks they will have to pay it back with heaps of interest. This allows previous, unrepayable, Greek debt to be written down on the banks' balance sheets and makes them look healthier. It will keep going until the banks don't hold enough Greek debt to take them down along with the financial system when the inevitable happens. Then the Greeks will be allowed to default and leave the Euro. The Central Banks will by then own most of the Greek debt, write it off and invent more money to cover the gaping hole - they are the only ones that can do it. Until this happens the Greeks will continue to have the shit kicked out of them - austerely speaking - without getting so much as a sniff at the money. You'd be on the streets too.

It is all part of the same financial Shell Game. The Central Bank lends other banks invented money at zero interest to buy Government Bonds and accepts bad, invariably worthless, investments as collateral for the loans - a toxic for good paper shuffle.  The banking sector looks to have solid(ish) Government Bonds as investments. The Government is charged less interest on it's Bonds for which there appears to be a market, hopefully resulting in a negative yield. It also works the other way round - the banks issue paper and the government, by one means or circuitous other, buys or provides the money for them, thus injecting liquidity - it has to be this way since the public won't stand for another bank bail-out.  By this sleight of hand the risk is taken out of the private banking sector and made public. The theory being that the present system can survive a near-death experience - until things get better. Extend and pretend at it's best. Unfortunately for this scenario Greece isn't the only problem. There are several more countries on the brink of default. The hope is that the Central Banks can extract the banking sector out of the bad national debt, one debtor country at a time, by printing money in controlled quantities that doesn't result in massive inflation. This is what they mean by a controlled default. An uncontrolled default is one where the banks are still nostril-deep in bad loans when a nation implodes - nothing to do with the manner of the country defaulting. There is only one way a country can default and that is neither controlled nor uncontrolled it is simply "Goodbye!"

The question is how long will the public go on letting this happen before they rebel. Something that politicians, bankers, economists, fuck-wits and the rest of the 1% don't seem to have asked themselves. Not as long as you'd need is the answer, despite assurances that it'll all get better just so long as you do what we say and don't argue. If the Greeks manage to bring down their own government and default before the next round of loans then the game becomes extremely difficult if not cancelled due to bad economic weather. "Pour encourager les autres" is the great fear of Greece defaulting. The Portuguese, Irish, Spanish, Hungarians and even the Italians might see this as a good idea when Greece is still there the next morning. Why spend years paying off debt for money that went directly to banks.

It all gets a bit more emotionally complicated because the Germans are in charge - never overly popular in Greece - so it is a pity they're telling the Greeks what to do and insist on running their country - again. Especially as Germany is the main beneficiary of the Euro - and plays a big part in the reason several countries are now in the financial latrine. Wehrmacht dressed as bankers to most Greeks.

As recent research has shown, the poorer you get the stupider you get the more right wing and religious you become - doesn't bode well. A quick glance at the USA will confirm this. What are the odds that the Greek Army will make a comeback; this time it won't be communism but finance as the excuse the US uses to support a Junta. Spain, Italy and Portugal all have histories of Juntas. Will the real revolution come onto the streets after Armies try to usurp power to save Liberal Capitalist Democracy? An interesting proposition.

Of course an aristocrat fed-up with the nouveaux riche might follow the example of the derided Marquis de Sade. A man capable of not only deviant writings but of both philosophical and political musings that point to him as a materialist atheist, rabid left-winger as well as a sadist. He is rumoured to have played his part in the storming of the Bastille. Will Robespierre ride again?

Return of the Gooh Gooh

The exchange rate is the least of it. Protectionism and all the monetary constraints of economic collapse ensue. But the gist of your argument is that, as with the UK, Sweden and Denmark, you're better-off out of the Euro so why then propose an expensive (unworkable, unaffordable) solution to save it? You're knocking down your own argument. Rather than a single economic zone the Euro is an economic chimera of smoke and mirrors developed from an original treaty designed for the benefit French farmers.

The UK's economic performance is abysmal - so unfair to Sweden and Denmark to compare their performance based solely on a shared ability to flex exchange rates. The only thing that keeps the UK out of an Italianesque tradgedy is, as you say, that it is fortunately not in the Euro -  as a result, they are able to devalue against it - the saving grace along the way is the US Dollar weakness - already ending as American money heads for home in panic. This does not mean that the UK economy is doing any better or that their banks aren't just as vulnerable as the likes of France's when debtor nations try to repay loans with garbage currencies - however they are aligned. By the way, aligned to what?

When you devalue your Mickey Mouse currency against the Euro you can't buy as much in Euros (or anything else) as you used to which then impacts on all those that remain in a real currency - badly if enough countries revalue - so they have to try to hold down the value of their real currency. This can't happen. Result Mickey Mouse inflates.

Usually the country invents a name for it's new Specie (I've always liked "Gooh, Gooh" - as in the Italian Gooh Gooh or the Spanish Gooh Gooh) and defaults on any debt not marked in that currency - basically declare bankruptcy without the discharge. Their economies immediately go into several years of ass tightening and reappear when enough time has passed for everybody to have gotten over being stiffed by them. Of course, up to now, this hasn't included the likes of Italy - new territory indeed.

What we have here is a problem that can't be solved within the Box of present economic theory - why? - because the Box is a mirage with vaporous walls of synthetic debt. A faith based belief economic system with one commandment - growth. The only requirement to be a supplicant is to have "confidence". No lasting solution can be found within the confines of this thinking - just more of the same. Given the all-pervading nature of the present belief system an alternative can not be found in time to prevent an economic equivalent of The Rapture, slash, End of Times.  If the Box is an illusion then there is no "outside the Box" to think in. As Weed used to say to the Flowerpot Men - "Time to go home" - or was that the Wooden-tops?

Germany's biggest advantage is that it's labour costs have remained reasonably flat (they started high in line with their productivity) while the others' shot up by 30% with little or no increase in productivity - who in their right mind drinks Retsina. Italy has gone nowhere in a couple of decades thanks to Berlusconi and a peculiarly Italian version of the free-market. One of the few things that sets Italy apart from the other failing economies was the lack of a property bubble. This is of little consolation.

I advise that in order to come up with a successful solution to the Euro shenanigans you might resort to recreational narcotics, hallucinogenic drugs or go into a trance - an induced coma might be a better long term condition.Which is what the likes of EC Commissioners and The ECB must have been in when they allowed Greece in.