MY BIG FAT GREEK STUPIDITY. THE TSIPRAS AND VAROUFAKIS GREEK COMEDY SHOW WRAPS UP.

Well, it looks like shooting almost has wrapped up for the new comedy, My Big Fat Greek Stupidity starring Alex Tsipras and Angie Merkel, co-starring Yanny Varoufakis, Wolfie Schäuble, Donnie Tusk, Mario Draghi and many more!



First, if you are shocked by the outcome between Alexis Tsipras, the prime minister of Greece and the Eurogroup ministers, who are the finance ministers of the Euro zone, you should not be. Had you been a consistent reader of mine, you would have known all along what was happening between the Greeks and the leaders of the Euro zone, the EU and the IMF.

• REALITY SMACKS GREEKS. WHAT MUST BE PAID BACK WILL BE PAID BACK (Thursday, July 9, 2015)
• GREEKS HAVE BEEN SERVED A BIG CUP OF ELLINIKOS KAFES FOR THEIR COLD AUSTERITY WINTER AHEAD (Wednesday, July 8, 2015)
• GREEKS VOTE FOR GRECOCIDE (Sunday, July 5, 2015)
• GREEKS ARE SET TO VOTE TO SEND JINGLE MAIL TO THE IMF, EFSM AND THE EU (Monday, June 29, 2015)
• TSIPRAS AND VAROUFAKIS, THE GREEK DUMB AND DUMBER SEEK TO FORCE GREEKS TO DRINK HEMLOCK (Monday, June 15, 2015)

In these works, I shared with you reckless spending of Greek law givers compared to other countries with alike economies — the Czech Republic and Portugal. I shared with you what the Greeks needed to do — cut per capita spending a paltry 4.4% down to $3,913.33 so Greek law givers could pay a mere €6.36 billion a year of debt, roughly 1.9% of total debt owed and 2.6% of GDP, without GDP growth. I shared with you that Greek law givers had to pay €63.58 billion worth of debt over ten years  that Greek law givers borrowed to pay generously, for salaries and pensions of government workers and not €330 billion falsely cited by the ill-informed in effort to reduce total debt-to-GDP to 110%.

I shared with you why Greeks held no cards — Greece GDP is a rounding error — 1.84% of the total Euro zone GDP less the Greek GDP. That is like throwing two cents on the ground for every Euro in your pocket.

I shared with you that Greek law givers lost any leverage when the ECB shuttered ECB-aligned banks. Since Greek banks have much of their reserves tied to bonds of Greek law givers, the acts of Tsipras and Varoufakis-led SYRIZA impaired those reserves. Impaired reserves required emergency liquidity assistance (ELA) from the European Central Bank (ECB).

When the ECB cut off ELA to Greek banks, Greek bankers were forced to close. Closing the banks effectively cut off the metaphorical water supply to Greeks.  Litiming ATM withdrawals to €60 a day with no other banking services seized up the machinery known as commerce.

As well, I shared with you the big bomb that is going to drop on July 20. Greek law givers owe €3.5 billion (US$3.9 billion) to the ECB. That date marks the final call in this poker game.

Many have called for the Greeks to stiff their European partners and have their banking system return to the drachma.  In effect, many wanted to see the Greeks betray the European project. 

Why would the Greeks seek to exit the Euro zone and return to the drachma? If the Greeks have their own banking system with its own cash, how would that change anything for the Greeks? Greeks make very little their trade partners want to buy. 

The top export for Greeks consists of refined petroleum products. For the latest year (2012) available, Greeks exported $11.812 billion worth of refined petroleum products, which comprised 34.9% of all Greek exports.
  

The top importers of Greek products are near-penniless Italians (7.96%), penniless Cypriots (4.75%), penniless Spaniards (2.65%), near-penniless Frenchmen (2.56%) and penniless Russians (1.93%). 

Yet fools believe it is the Eurogroup ministers who are betraying the European project. In spite of what neither politician nor businessman but lifetime academician Paul Krugman has claimed, the Greeks have been the ones betraying Europeans.

In a show of generous unity by those leading the European project, the Greeks were bailed out not once, but twice, in 2010 and 2012. The socialist-communist SYRIZA came to power and reneged on those bailout deals. As well, since 2010, Greek law givers have failed to meet conditions they agreed upon to get Greeks and their economy in line with the European project.

Greeks have been living under the delusion of a massive credit bubble, one fostered not by bankers in Greece, but by Greek legislators. That bubble needs to be popped, permanently.

For years, since socialist party leader, Andreas Papandreou, the Greeks had been betraying the European project. Papandreou engaged in despotic-like spending, hiring supporters to government jobs. In so doing, Papandreou created a massive spoils system built around government using funds from the EU to pay for this system. And when the opposition party came to power, they grew the system even bigger.

This is why are the Greeks in trouble. For decades, Greek law givers created a bubble economy. Instead of the bubble economy being blown ever bigger by private-sector inflation — bankers' credit — Greek law givers created their bubble economy through public-sector credit.

By creating government jobs that ought not to exist and by overpaying for those jobs, Greek law givers kept their credit bubble inflated.

Varoufakis along with Tsipras and the rest of the jokers from SYRIZA are like all other law givers. They seized power by promises of more spending — ending austerity.

Varoufakis, Tsipras and all of the SYRIZA jokers wanted to spend beyond their will to tax. That is why they have been begging for five months to get more bailout cash and not pay on debt already accrued for law givers' spending largess.

Tsipras lost. Tsipras and his game-playing, cycle-riding sidekick lacked leverage. The ascension of SYRIZA to power was the first referendum and only one that should have been held. 

Tsipras worst move was holding and encouraging a No-Vote referendum to reject a new deal being offered by Eurogroup ministers. A yes-vote win would have forced Tsipras to cave into demands. 

The actual no-vote win forced Tsipras to present his plan. The Eurogroup ministers called him on it. In short, the no-vote meant no more delay tactics could be played.

The fix for Greeks is deflation. Greek law givers need to stop trying to create a phony economy through borrowing. 

Greeks need to devalue. They have needed to devalue for a long time. 

Their prices are too high. Their prices are too high because law givers borrow to spend on wages and pensions for government workers. All should know that wage rates are prices.

The Euro isn't going to fall much relative to the cash of other banking systems such as the U.S. dollar, the British pound, the Norwegian krone or the Swiss Franc. So to devalue, prices need to fall. Prices won't fall until Greek law givers cut the sum of credit they introduce into the Greek economy.

And so, to remain part of the European project, Greek law givers must give up their spoils system and bring Greeks into the 21st century.

Part of the new deal, Greek law givers must do these acts by Wednesday:

• make standard their VAT tax rates
• increase the retirement age for law-givers provided pensions to 67 by 2022
• legalize automatic spending cuts of Greek law givers try to abandon budget targets
• end the spoils system

If Greek law givers can do these acts, then formal talks can begin between Tsipras and the Eurogroup ministers for a new, permanent bailout deal of €86 billion.

Greek law givers must cut their per capita spending. That is what they have been asked to do. If Greek law givers do so, they will get their deal reworked. 

If Greek law givers agree, Greece will strengthen and the Euro gets better. If Greek law givers reject, Greece will exit and the Euro will strengthen. Either outcome is good for the Euro. Only one outcome is good for the Greeks — staying in the Euro, cutting Greek law givers' power.

The problem for Greeks is the same problem everyone suffers the earth over. Over many years bad law givers have leveraged doling welfare to gain power and keep it. With power, law givers have then created a horrible culture — codified law — of bad design, which unsurprisingly has led them to their final destination of failure. 

Greek law givers let their debt grow beyond their ability to service the interest payments. Their poor decisions led to exponential growth of debt. Per capita spending by Greek law givers is well beyond the size of Greek economy compared to other EU states of alike-sized economies as measured by GDP.

And in spite of what Krugman and others like him wrongly claim, the Eurogroup ministers strive to keep the European project going. They are trying to come up with a plan for short-term financing to help Greek law givers over the next few weeks.

Even if SYRIZA Greek law givers reject this final deal, Greek law givers are on the hook for all kinds of bonds floated in jurisdiction that is not Greece. No matter what, Greeks will be paying taxes to their law givers for those bonds. Greek law givers will pay on those foreign bonds.

In life, when adults have the power to decide, they don't get what they want always, but always, they get what they deserve.

For an up-to-the minute timeline for the SYRIZA-caused crisis, check out the Guardian UK. Be wary about what you believe published there.

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REALITY SMACKS GREEKS. WHAT MUST BE PAID BACK WILL BE PAID BACK.

I've taken heat for stating what all should should have known all along about the so-called Greek crisis, which Greek legislators brought upon all Greeks over many years: What must be paid back will be paid back.

Populist fools everywhere want Greeks to be their Hercules heroes. They want the Greeks to default and stiff the bankers because they have been indoctrinated to believe bankers are evil swindlers who somehow by the very nature of the banking, cheat everyone.

If Greek law givers want to stay in the Euro zone, they must pay back enough of the outstanding debt apportioned over time to reduce cumulative debt-to-GDP to 110%. However much debt that Eurogroup ministers say Greek law givers have up to the full amount will be the sum apportioned.

If Greek law givers don't want to stay in the Euro zone, they won't pay back anything, at least not on bonds sold in Greece under Greek jurisdiction. If that is what Tsipras and his cronies decide, Greeks won't have much of an economy though.

As I have said repeatedly, should the Greeks return to the Drachma, the real austerity will begin. If Tsipras doesn't do as told and if Greek law givers don't do as told, they can enjoy crushing third world poverty under their Drachma.

With a return to the Drachma, voluntarily Greeks will turn their country into a Submerging Market™.

If Greeks don't want to become Argentinians, Venezuelans, Iranians, North Koreans and the like, Greek law givers are going to play ball. Greek law givers will be on the hook for bonds sold outside of Greece and falling under jurisdiction elsewhere. Those obligations are not going away.

Many have heralded Alexis Tsipras, the Greek Prime Minister as a negotiating genius, someone who has played the Eurogroup ministers as if they were fools. That belief is the belief of fools.

Tspiras called for a snap referendum, politicking for a no-vote. Greeks gave him what he wanted, a no-vote. Only in fantasy land did self-confused pundits claim Tsipras would be emboldened with a no-vote, being empowered to dictate terms and conditions to the Eurogroup ministers.

To any clear-minded thinker, it was obvious, with a no-vote, Tsipras straightaway had to put forth his plan. The Eurogroup ministers called him on it. In short, the no-vote meant no more delay tactics could be played.

If Tsipras wanted the Greek banking system out of the Euro, why didn't he announce so on the day of winning election and SYRIZA taking power? Why didn't SYRIZA pass a law the next day to swap Drachma for Euro?

If Tsipras has wanted the Greek banking system out of the Euro all along, why go back to the Eurogroup ministers over five months, becoming a street beggar each time, panhandling for another bailout?

Greek law givers lost any leverage when the ECB shuttered ECB-aligned banks. €60 Euro a day ATM withdrawals with no other banking services seized up the machinery known as commerce.

By cutting off emergency liquidity assistance (ELA) to Greek banks, Greek bankers were forced to close. Closing the banks effectively cut off the metaphorical water supply to Greeks.

Greek banks have much of their reserves tied to Greek law givers. With impaired reserves, Greek bankers relied upon the ELA. Those reserves deteriorated worse precisely because of the Tsipras-led SYRIZA.

Also, there is no way for the leaders of Estonia, Latvia and Lithuania along with Slovakia and Slovenia, leaders who helped their peoples financially atone for the sins of communism, to sell to their citizens that Greeks must stay in the Euro and to do that, they must let the Greeks off the hook for all of their profligate spending.

In an interview with Radio Free Europe's Rikard Jozwiak, Sandra Kalniete, the former Latvian foreign minister and current member of European Parliament had stern words to say about Tsipras and the Greeks.

I would say that, of course, Europe has to show solidarity, but that means that Greece has to go forward with [a] very precise and concrete reform program not only on paper but they have to convince Europeans that they are going to implement it. Because I consider that this isn't fair that countries like Ireland, Spain, Portugal, and Latvia -- we went through [a] reform program. Our people made such sacrifices, and now there comes a nation which received much more from the European Union and international society in credit, and now they are saying that they are not able to reform Greece to make it sustainable. I simply cannot accept it.

I believe the euro can survive without Greece. Greece cannot survive without the euro, that's the dilemma. Of course, every European [is] conscious [of] the geopolitical importance of Greece in an environment which is rather difficult to manage and in front of migration waves which are coming from Syria and Libya, and they are also reaching Greece.  ~ Sandra Kalniete, member of the European Parliament and former Latvian foreign minister

Only a day or so ago, Tsipras foolishly said that a "clash with Europe ... will take ... the euro zone down." Greece GDP is a rounding error — 1.84% of the total Euro zone GDP less the Greek GDP. That is like throwing two cents on the ground for every Euro in your pocket.

On July 20, Greek law makers owe US$3.9 billion. That date marked the final call in this poker game anyway. As it is, the deadbeat socialist-communist SYRIZA legislature already missed a major payment owed to generous creditors.

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WHEN IRISH EYES ARE SELLING AND BUYING. WHY THE EURO AND NOT THE U.S. DOLLAR? AH THOSE BANKER'S BLUES.

So, Jeremy Warner of the UK's Telegraph caught a performance by the American financial TV broadcaster, CNBC's Joe Kernan (YouTube video) who seemed bemused upon learning the Irish banking system belongs to the Eurozone and not the British.

Warner claims it's "from an economic perspective, it's a very odd state of affairs which isn't obviously doing the country [the Irish] a great deal of good."

The Irish have had overlords since Henry II sent a force in 1171 to control his own Norman knights in their 1169 conquest of Ireland. The Irish overlords of today are German bankers mostly along with French and Italian bankers as well as their respective national politicians who get these bankers to buy sovereign bonds, thus enabling deficit spending and ever weakening the buying power of the Euro.

So why are the Irish beholden to their continental masters and not their former British masters? Here is what the numbers say.

It's true. The Irish import more goods from the Brits than from anyone else. In fact, 38.5% of all their goods come from the UK. The Irish import 1.5 times as much stuff from Brits as they do from their Eurozone friends.

However, the Irish export 2.7 times as much stuff to their Eurozone friends as they do to Brits. With their Eurozone friends, the Irish have a $37.5 billion trade surplus. With their not so beloved Brits, the Irish suffer a -$2.4 billion trade deficit.

Of their Eurozone friends, the Irish hold their best trade position with the Belgians and Luxembourgians. The Irish run a $16.5 billion trade surplus with with the two countries combined, which is 2.5 times better than their trade position with the French or the Germans, their next two biggest trading partners of the Eurozone.

In spite of their -$1.4 billion trade deficit with the Norwegians, mostly for oil, the Irish enjoy a $7.4 billion trade surplus with the banking independents, Swiss, Danish and Swedes, including the Norwegians.

Americans buy more stuff from the Irish than anyone. The Irish sell 21.6% of their goods to Americans. Americans buy 1.4 times as much stuff from the Irish as the Brits do. Americans buy from the Irish 1.5 times as much as Belgians and Luxembourgians combined, 2.4 times as much as the Germans and 3.0 times as much as the French.

The Brits with their Bank of England and British pound whom Kirnan believes should be the banking masters over Irish, engage is substantial trade with those of the Eurozone. A whopping 62.4% of Brit imports come from Eurozone countries while the Brits sell 57.4% of their exports to Eurozone countries.

Eurozone countries hold 77.5% of Brits's net trade position. The BRIC countries of China, India and Russia come in second with 44% of the British's net trade position.

As with the Irish, Americans buy more stuff from Brits than anyone else, although the Germans aren't far behind ($52.4 billion vs $47.5 billion). Brits sell three times as much stuff to the Eurozone players as they do to Americans and Canadians combined.

So, the bigger question becomes why aren't the Irish using the Federal Reserve banking system for theirs and thus the U.S. dollar for their cash? Likewise, why haven't the Brits long ago abandoned the British pound and the Bank of England in favor of the Federal Reserve and the the U.S. dollar or the European Central Bank and the Euro?

Unless the Irish have their own cash, never will the Irish be free. The Irish might as well celebrate the Henry the 8th Tudor re-conquest of Ireland of the 1530s.

Enjoy an little-known Irish export, a quality guitarist, Rory Gallagher.

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