Geopolitics Will Trump Economics in Greece

It seems that other people are finally catching on.

This is why it’s often repeated here over and over again for years now (See also HERE, HERE, HERE and HERE) that Greece plays too much of a strategic role in Europe and will not be let go, although at times it seems it’s teetering right on the edge of the abyss and threatens to bring the world down with it. Although the latter still might happen, Greece isn’t going anywhere.

Whether it’s with today’s European Union or tomorrow’s planned United States of Europe after the EU crumbles, Greece will stick around. Europe does not want Russia (and China) directly on their continent. The Russians having strategic Kaliningrad is still bad enough. If a deal with Russia were to go through, you can bet there will be Soviet military bases within months — because that’s the cost of saving their necks.

Greece is also too important from an energy perspective and, whether the oil & gas comes from the Middle East or Africa, has the potential to be a critical energy hub for all of Europe. This would break Russia off of Europe’s back and Greece would rebound and become awash in cash.

In the end, we’ll still have to wait and see what exactly happens but it’s hard to believe Europe, mainly Germany’s Fourth Reich, will let an opportunity like this escape. Come hell or high water, before or after the aftermath in the current situation, Greece will remain reined in.

 

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. Continue reading

Greek debt crisis reaches ‘DEFCON 1’ as savers pull €400m in ONE DAY and markets plunge

PANIC has descended on Greece as the debt-stricken country careers out the eurozone – with savers pulling millions in cash while investors continue to flee financial markets.

The Greek Prime Minister today blasted Athens’ European Union creditors who he said were trying to “humiliate” and “strangle” Greece into making proposed spending cuts in return for bailout cash.

Alexis Tsipras confirmed that talks have completely stalled, with the two sides in total stalemate over austerity measures. Continue reading

Greece moves closer to eurozone exit after delaying €300m repayment to IMF

Athens takes creditor by surprise, saying it will bundle together €1.6bn of debt payments due to International Monetary Fund and settle up on 30 June

Greece has moved closer to default and possible exit from the eurozone after telling the International Monetary Fund it would not be making a debt repayment of €300m (£219m) due on Friday.

A crisis that has been going on for more than five years entered a new phase when Athens surprised the IMF by saying it intended to bundle up four payments in June totalling €1.6bn and make them all at the end of the month.

The move came as the Greek government reacted angrily to what was seen as an ultimatum from its creditors – including the IMF – that demanded further austerity and unpopular reforms to VAT, pensions and wage bargaining as the price for €7.2bn in fresh financial help.

Continue reading

Tsipras tells Merkel ‘Greece has made enough sacrifices for the euro’

Greece’s defiant Prime Minister has told Angela Merkel it is Europe’s job to do “their part” to keep his crisis-hit country in the eurozone.

Meeting on the sidelines of a European Council meeting in Brussels on Thursday, Alexis Tsipras is reported to have told the German Chancellor his debt-addled nation has made enough sacrifices to satisfy the demands of its creditor powers. Continue reading

Grexit: Remaining In The Eurozone Is No Longer ‘The Base Case’ For Greece

According to the Wall Street Journal, Greece staying in the eurozone is no longer “the base case” for European officials, and one even told the Journal that “literally nothing has been achieved” in negotiations with the new Greek government since the Greek election almost three months ago.  In other words, you can take all of that stuff you heard about how the Greek crisis was fixed and throw it out the window.  Over the next few months, a big chunk of Greek government bonds held by the IMF and the European Central Bank will mature.  Unless negotiations produce a load of new cash for Greece, there will be a default, and right now there is very little optimism that we will see an agreement any time soon.  In fact, as I wrote about the other day, behind the scenes banks all over Europe are quietly preparing for a Grexit.  European news sources are reporting that the Greek banking system is on the verge of collapse, and over the past couple of weeks Greek bond yields have shot through the roof.  Most of the things that we would expect to see in the lead up to a Greek exit from the eurozone are happening, and now we will wait and see if the Greeks actually have the guts to pull the trigger when push comes to shove. Continue reading

Greece May Sign Russia Gas Deal As Soon As Today

According to Gazprom’s CEO comments on Greek TV, following his meeting with Greek PM Tsipras, Russia will guarantee 47BCM/YR of gas via Greece with the link to be built by a Russian-European group at a cost of around €2 billion.

First, talks with Russia on extension into Greece of Turkish Stream pipeline are positive, will continue with aim of concluding “soon,” Greek Energy Minister Panagiotis Lafazanis says in comments broadcast live on state-run Nerit TV. Continue reading

Fears grow over Greece exit after ECB says Europe is ‘equipped’ for fallout

Fears of a Greek exit from the EU have grown after the head of the European Central Bank said the currency bloc has “buffers” in place to avoid a chain reaction meltdown were the country to be forced out.

The statements came from the ECB after a series of meetings with big players from the international financial community. Continue reading

Grexit Could Boost Russia’s Influence in Balkans – Reports

Greece’s exit from the eurozone could lead to the establishment of very close relations between the two countries and contribute to the expansion of Russian influence in the Balkans, “Frankfurter Allgemeine Zeitung” reports. Continue reading

Greece bailout: Time is running out to avoid ‘catastrophic’ Greek exit from euro, warns EU

Eurozone finance ministers and officials have warned that time was running out to avoid a “catastrophic” Greek exit from the single currency, as they awaited a new proposal from Athens aimed at keeping Greece afloat beyond the end of this month. Continue reading

Germans in Shock as New Greek Leader Starts With a Bang

While Berlin and Washington swiped Ukraine away from Russia, Russia installed one of their own in Athens.

Matter of fact, the German government was likely not ‘stunned’ by Tsipras’ victory, but more or less is playing politics by downplaying the predicted aftermath. The Merkel leadership isn’t filled with rookie politicians. Germany dropped many hints that the EU could go on without Greece on more than one occasion, which aimed to deaden the anticipated blow that happened in last Sunday’s elections.

It would also be interesting know what “orders from abroad” Tsipras was referring to. That could be this ‘former’ Communist’s subtle hint at orders from Moscow.

 

Berlin:  In his first act as Prime Minister on Monday, Alexis Tsipras visited the war memorial in Kaisariani where 200 Greek resistance fighters were slaughtered by the Nazis in 1944.

The move did not go unnoticed in Berlin. Nor did Tsipras’s decision hours later to receive the Russian ambassador before meeting any other foreign official.

….

“No doubt about it, we were surprised by the size of the Syriza victory and the speed with which Tsipras clinched a coalition,” said one senior German official, who requested anonymity because of the sensitivity of the issue.

Continue reading

Banks prepare plans for Greek eurozone exit

A new Greek currency? Plausible. Grexit? As oft here discussed, Greece is too important for that.

 

Banks and other financial institutions in Europe are stress-testing their internal systems and dusting off two-year-old contingency plans for the possibility Greece could leave the region’s monetary union after a key election later this month.

Among the firms running through drills are Citigroup Inc., Goldman Sachs Group Inc.,  and brokerage ICAP PLC, according to people familiar with the matter. Continue reading

Bild Warns German Govt Fears Greek Bank Runs, Financial System Collapse; Prepares For Grexit

It has been a busy few days for Germany. In the space of a week, they have warned Greece “there will be no blackmail,” adding that a Greek exit from the euro was “manageable,” only to hours later deny (clarify) these comments. This was then followed up with beggars-are-choosers Syriza demanding any ECB QE must buy Greek bonds (or else) – which Germany has flatly ruled out – only to see today that Syriza is practically guaranteed to win a “decisive victory” at the forthcoming snap election. So it with a wry smile that we note Bild reports tonight that the German government is preparing for a possible Greek exit, warning of financial system collapse, bank runs, and huge costs for the rest of the EU. Continue reading

The “Merkel Memorandum”

“For all you know, Angela Merkel is even now contemplating how to break up the euro,” says The Economist in its latest assessment of the options available to the German Chancellor. In a spoof memo addressed to Ms Merkel “drafted in utmost secrecy by a few trusted officials,” the newspaper outlines the kind of advice she may be receiving. Assessing the current situation, the weekly says –

Bluntly, the plan isn’t working. Greece is a disaster zone. Ireland and Portugal are making some progress … but they still have a long way to go and could easily be knocked off course. Worse, Spain looks as if it may need a full bail-out rather than the partial one for its banks you had hoped would suffice.

Of the two options, our judgment is that the larger break-up makes more overall economic sense than an exit of Greece alone. But we must emphasise that the economic and financial risks of it going wrong are much greater, and pushing it through would be an order of magnitude more difficult than co-ordinating an exit by Greece alone. Finally, a drawback associated with both options, even if they were to work, is that many of the benefits would lie in the future … whereas the costs would be felt here and now – and blamed on you and your government.

Full article: The “Merkel Memorandum” (Presseurop)

On the Relevance of Democracy

What seems to be an economic crisis is actually a premeditated assault via economic warfare in attempt to subjugate sovereign nations — and Greece is only the first.

When you hear Germany, Europe’s leader, speaking about stabilizing Greece, it means the desired result is capitulation and relinquishing of sovereignty in exchange to stay afloat just a little while longer — all for the United States of Europe project that was destined to fail from the beginning. Yet, they continue to push forward, piece by piece. What’s more, it was conceived to fail and it was known it would fail. The failure was only the tool for reshaping the continent to German will. In the case of Greece, the German government is well aware of the difficulty of convincing Greeks to willingly relinquish their national sovereignty. Therefore, the only way to achieve unification, without war, is through stealth. The people must not know that sovereignty is being and has been surrendered until it is gone.

Greece is only the beginning and the public is being prepped for possible military intervention should a the (planned outcome) crisis spin further out of control (hint, hint). We’re still yet to see what will become of the other largest economies in Europe such as Spain and Italy who see Greece’s fate as a benchmark. Furthermore, perhaps we may not see the same defiance with these since they are more compliant and politically allied. France has been known to toe the German line for quite some time now.

The same desired outcome with a twist, and a different game plan is in play.

As one article puts it:

Europe’s leaders are on the cusp of a unification project that will turn the disparate nations of Europe into a true superpower. As Europe’s debt woes increase, so too will the desire for further integration—at any cost. With each crisis, Germany’s position is strengthened. If unification is to proceed, it will be on German terms.

Those who are tuned out to reality or see the economic crisis for what it is only at face value on the evening news, this may seem highly unlikely, unfounded, ridiculous or even appauling.

For those who are tuned in: Make no mistake. Under a German-dominated EU superstate, the Fourth Reich is here.

ATHENS/BERLIN (Own report) – In the run-up to new elections in Greece, the German elite is discussing various scenarios involving the use of force to ensure control over Athens, including the establishment of a protectorate or the deployment of “protection forces” in that southern European country. The German austerity dictate, pushing Greece into destitution, is provoking growing popular resistance, which, apparently, can no longer be suppressed with democratic means. Berlin has failed in its efforts to force Athens into subordination by threatening to withdraw the Euro, as much as with its demand that Greece combines its parliamentary elections with a referendum on the question of remaining in the Euro zone. Berlin categorically rejects the option of retracting the austerity dictate and replacing it with stimulus programs, as is being demanded by leading economists world wide, even though the exclusion of Greece form the Euro zone threatens to push the currency, itself, into an abyss.

No Right to Respect

In addition, Berlin has obviously applied pressure on Athens to combine a referendum on remaining in the Euro zone with the elections. This tactic is aimed at weakening the opponents of austerity. According to reports, German Finance Minster Schäuble made this proposal already last Monday to his Greek counterpart at the meeting of the Euro finance ministers.[2] This proposal is obviously supported by the Chairman of the CDU/CSU parliamentary group in the Bundestag, Volker Kauder (“Now German will be spoken in Europe” [3]). A Greek government spokesman confirmed that Chancellor Angela Merkel urged Greek President Karolos Papoulias last Friday to implement the German plan for a Greek referendum, whereas in November 2011, Berlin briskly rebuffed the Prime Minister at the time, Giorgos Papandreou, when he publicly announced his proposal to hold a referendum. This led to his demise. Berlin’s open interference is met with outrage in Athens. The Greek population has a “right to respect,” the chairperson of the conservative Nea Dimokratia, Antonis Samaras, was quoted as saying. And the chairman of the opposition party Syriza, Alexis Tsipras, declared that Berlin is acting as if Greece “is a protectorate.”[4]

Protectorate

The sectors of the German elite, which refuse to consider this change of course proposed by Krugman and numerous other experts outside Germany,[7] are now publicly debating scenarios involving the use of force. In a newspaper interview early this month, the director of the prominent Hamburg Institute of International Economics, Thomas Straubhaar, called for establishing a protectorate in Greece – “regardless of the outcome of the elections.” The country is a “failed state,” he says, which is unable to raise itself “to a new start” under “its own steam.”[8] Athens needs “help in establishing viable state structures.” It, therefore, must be transformed into “a European protectorate.” “The EU must do it,” affirms Straubhaar. The EU “would have to help Greece modernize its institutions at every level, particularly with administrative staff, tax experts, and tax inspectors.” However, refounding Greece would demand “intuition” to “overcome national pride, conceit, and the resistance of interest groups.” This is referring to a sovereign democracy, a German ally in the EU and NATO.

Protection Forces

Last week, a leading German daily discussed the issue of dispatching troops to Greece. Should the country go bankrupt, it would then, as a “‘failing state,’ (…) be less in a position” to shore up its borders against migrants, writes the Frankfurter Allgemeine Zeitung. Just recently, the EU Commission announced that it finds itself forced to prolong the mission of its EU border troops at the Greek/Turkish borders. If Athens “should no longer be able to pay its officials, or can pay only in Drachmas,” the situation risks “chaotic.”[11] The country could possibly “be rocked by rebellions.” “Help for Greece would then no longer be on credit, but be transformed into a sort of humanitarian emergency aid,” prophesied the journal in its front-page lead editorial. “Hopefully, an international protection force, such as is stationed in the teetering countries further to the north, will not become an option.”[12]

Full article: On the Relevance of Democracy (German Foreign Policy)

Lloyd’s of London preparing for euro collapse

The chief executive of the multi-billion pound Lloyd’s of London has publicly admitted that the world’s leading insurance market is prepared for a collapse in the single currency and has reduced its exposure “as much as possible” to the crisis-ridden continent.

Mr Ward says Lloyd’s had been working hard on contingency planning and had the capability to switch settlement of European underwriting from euros to other currencies.

“We’ve got multi-currency functionality and we would switch to multi-currency settlement if the Greeks abandoned the euro and started using the drachma again,” he said.

Lloyd’s has de-risked its asset portfolio in recent years, with investments split equally into cash, corporate bonds and government bonds, mostly in the US, UK, Canada and Australia. “We have de-risked the asset portfolio as much as possible,” he said.

The contingency planning comes as German politicians piled the pressure on Greece ahead of elections on June 17.

A conservative member of German chancellor Angela Merkel’s cabinet said today Germany would not “pour money into a bottomless pit”.

On Sunday, Swiss central bank chief Thomas Jordan admitted his country is drawing up an action plan in the event of the euro’s collapse

Full article: Lloyd’s of London preparing for euro collapse (The Telegraph)