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  1. Wealth
November 5, 2012

Obama is letting Greece go down the drain

By Spear's

Obama asked that no decisions be taken on Greece before 6 November. The crisis in Greece has got a whole lot worse in the last month

The Gods of Democracy, dismayed at the non-debates for the White House between a ghost and a phantom, hurled a thunderbolt called Sandy onto the Eastern seaboard, sidelining the candidates and the electoral process and giving them something real to do.

The candidates were left stranded neck-and-neck, with Obama ahead in the key swing states of Ohio and Florida – just! And then it’s all about Wisconsin and Colorado, and ‘base turn-out time’ on Tuesday.

There’s something else being sidelined by this election – the ongoing eurozone crisis. Obama asked that no decisions be taken on the Troika’s report on Greece and actions on the other PIGS before 6 November. The crisis in Greece has got a whole lot worse in the last month, which should surprise no one: if I had said it had got a whole lot better, you would have thought I was off my rocker!

Read more by Stephen Hill

The problem is that it is clear that it is never going to get better for Greece while she remains in the eurozone, unless the creditors grant debt forgiveness. The creditors now are not private lenders who suffered a 70% haircut last time, but state creditors, including the ECB and Central Banks and Treasuries. In short, the madness of lending more to a bankrupt must now result in write-offs and losses – any new money to Greece is going gurgling straight down a Greek plughole into a bottomless sewer.

So, what has happened in the last month of the US elections? New calculations show that the Greek Debt-to-GDP ratio has risen from 179% to 189%. Why? Because the austerity programmes mean that GDP will be minus 4.5% in 2013, but the annual deficit will still be stuck firmly on 5.2%, with unemployment at a socially unacceptable 25.1%, and rising.

What does this really mean? That austerity programmes and bailouts do not work in a fixed currency regime which does not allow devaluation; or, in other words, the single currency across Europe cannot possibly work – ever: for instead of Greece, insert Portugal, and then the rest of the PIGS, and then France and …

The single currency will guarantee long-term depression, and now the German economy is suffering too…

If you think the inescapable logic of this simple economic mathematics will change the thinking of the EU so-called “leaders” and their unelected bureaucratic potato-heads in Brussels, you are being naive about the disease known as Eurinalitis, an illness that prevents the ears and minds of the afflicted ones from working, and makes the tongue repeat the same absurd banalities in defiance of all evidence to the contrary.

This serious illness gets worse and worse and ends in total bankruptcy of all sense and sensibilities, until there’s no money left in the crippled ones’ bank accounts. History shows that when Eurinalitis breaks out in this uncontained manner, especially in Europe, it can only be brought to an end by a shock cure, known as a counter-outbreak of a highly contagious civil disobedience. We have been here before…

Read more by Stephen Hill

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