DeGreecing EU Troika

indexThe EU President just said that “Greece risks bankruptcy if they continue with the strategy.”  Well, Yanis Varoufakis responded, “We are already bankrupt.” For once, a politician speaks the truth! Greece is a de facto bankrupt.

Greece’s newly appointed Finance Minister Yanis did a few whirlwind runs, having last met Germany’s Finance Minister. Result – they cannot even agree to disagree. At the same time, Prime Minister Alexis Tsipras met Italian Premier Matteo Renzi, Hollande in Paris and visited European Commission chief Jean-Claude Juncker and European Council head Donald Tusk in Brussels.

In a departure from usual formal meeting protocols, Tsipras went about without a wearing a tie. He was making a statement of a genuine people’s revolution. In contrast, greedy politicians acquiesce to the EU Troika’s wishes while wearing tailored suits and sipping champagne in manicured gardens. He insisted he will be honouring his election promise – no more submission to Troika’s austerity. And the MSM went gaga over his attire instead of focusing on his statements about Greece’s debt-ridden economy.

Syriza’s victory has opened the Eurozone’s Pandora box. Without a EU-compliant government, Greece is getting too greasy for the Troika to handle! Greece is slipping out of their grips …. away and into Putin’s open arms of welcome. Already, Tsipras’s Syriza party has been seen as pro-Russian, and Russia’s ambassador to Athens was the first to meet him after his election victory.

Elsewhere in Europe, things are falling apart in Ukraine. Cyprus has leaned towards Russia with its offer of air and naval bases to be housed in its territory. Should Greece exits the EU and be allied to Russia, that would be the ultimate black swan event leading to the nemesis of the EU.

In a bankruptcy, the easiest way out is to renege on all the debt obligations and start anew. The losers are the creditors. Lenders took on calculated risks when lending. When a loan is defaulted, it is a normal consequence of business risk. The lender takes on the full risk of making the loan. If Greece defaults, it is just a lousy customer. To continue giving loans to Greece with the knowledge that it cannot repay is not a prudent business practice. It is foolish. Hence, Greece should just default and let the lenders lick their own wounds.

In the event of a Greece default, the new government still holds a “moral ground” that the previous mess was not its doing, but a result of previous corrupt government who colluded with the moneylenders to borrow beyond its means. The new government’s responsibility is to get things right for the Greeks, not to appease the moneylenders. By being elected, Syriza has no obligations for past misdeeds. It has every reason to protect the Greeks from predators. While it would lose a certain amount of “integrity” in a default, that “credibility” can be regained through honest dealings henceforth. It has to prove its worth.

Hitherto, Syriza and the troika could not see eye-to-eye. Both sides stood their grounds. Without an amicable agreement, and with Greece running out of cash in a matter of weeks, a Greek default is imminent. Alan Greenspan, the old architect of the Federal Reserve, predicts that Greece will exit the EU.

Declaring bankruptcy is not a crime. That may just be the best solution to save the nation from past mistakes. But there is a cardinal lesson to be learned – never borrow beyond the means, best not to borrow at all. No one should emulate the American way of life that banksters lie and promote. That’s lifestyle 101, not rocket science.


Psalm 37:21
The wicked borroweth, and payeth not again: but the righteous sheweth mercy, and giveth.


 

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