Morgan Stanley says the D-word is "Inevitable;" Can the US ever default?

Citing the obvious aging populations and difficulties in collecting adequate revenue for the various massive social welfare programs in nations worldwide, former zombie-investment-bank-turned-zombie-"commercial"-bank Morgan Stanley today resurrected the d-word--default! Simply seeing the word "default" in a Bloomberg headline is encouraging in our fight against the banksters...but don't get too excited.

According to a article by Bloomberg, the Morgan Stanley has rendered a prediction that default by certain nations on the debt owed to their bondholders is "inevitable." The bank's debt analysts cite the overwhelming burden on future generations, including even the current generation who is now paying into but not receiving full social welfare benefits: they find that these generations will simply be unable to foot the multi-trillion dollar bill. As more and more workers leave the workforce for retirement and working families have fewer and fewer children--children who would increase the tax base once working themselves--the simple rules of arithmetic are catching up to the pipe dreams of government-funded checks in the dozens of social welfare-based nations worldwide.

On the top of this list are, of course, many European nations. It is mathematically inescapable (a "mathematical tautology") that some nations will be forced to default on the huge amounts of debt outstanding, debts which they acquired largely to fund their current and future entitlement liabilities. Morgan Stanley cites Greece as an example. But there is one little complication that develops when applying this same conclusion to all governments, because some governments need not subject themselves to that silly math stuff. Why, when the principles of mathematics are accepted by humanity worldwide, and when everyone know that you can't get blood from a turnip? Well, easy, silly--because some nations have printing presses! Ah yes, you might not be able to get blood from a turnip, but you can get trillions from a printing press, and if you do it electronically, you don't even have to pay for ink!

Those with well-lubricated national printing presses--including that of US--will always have the magical option of currency dilution and devaluation before outright default. You'll get your dollars, alright, and good luck using them. Morgan Stanley's assessment, therefore, applies most aptly to those nations without the power of the press, and most specifically, to those nations of the European Union. As evidenced by the ongoing Greek debt crisis (see Greek bailout V1 and Greek bailout V2), a nation (ah-em, Greece) without control of the currency in which its debt is repaid (ah-choo! euros) has, basically, three options when the revenue spigot runs dry:

1.) Raise taxes and cut services in an attempt to collect more money, in an attempt to pay off your debtholders, in an attempt to keep them from taking over your nation.
2.) Beg your bankster masters, especially your currency-issuing central bank, to please, please, please print you up some money, and quick!
3.) Call Morgan Stanley. Default.

Greece has tried options 1 and 2, and though like any good drug, these measures worked quite well--for a very short period of time. Also like a drug, of course, the high has diminished rapidly. Today, less than four months since the €110 Billion ($146 Billion) bailout of Greek bondholders, the spread between German bunds and Greek paper is back to its crisis-like spread of over 900 basis points (that's a stunning 9%; during the depths of the crisis just before the bailout was announced, the spread was over 14%). Morgan Stanley is suggesting that the likelihood of option 3 is, well, more than a likelihood for Greece and others, and is apparently an inevitability. The d-word might become a widespread reality.

Our response: we can only hope so!

Default is a good thing. Repeat: default is a good thing! Default is how a real market prevents overzealous financiers from financing ridiculous overexpenditures--particularly from governments who have no money to make promises they cannot possibly satisfy. One of the many reasons the ECB and its bizarre child, the euro, was sold to member nations in Europe as the panacea to economic instability was that both the ECB and euro would end the manipulation of national currencies by each country, manipulations that were usually devaluations. This is ridiculous, of course, because the ECB itself has a printing press, and its bizarre child euro creation itself is the first-ever purely fiat currency on the planet, so if devaluation has ever seen a body, it is the euro. Printing presses, and their electronic incarnations, are all the euro has ever had as parents. The euro itself is a default of the original currencies that were surrendered to it, in the opinion of many skeptics (Bankster Report included). It is a very untrustworthy currency, even among a group of utterly untrustworthy fiats.

And evidence of this untrustworthiness appeared this year. The ECB effectively allowed/precipitated the devaluation of the euro to save the Greek bondholders: check out the euro's move from over US$1.36 in April to $1.19 by June (and no, I'm not blaming this all on the ECB, I'm just pointing out that the ECB, like all central banks, will happily devalue their euro before it lets it reckless shareholder banks get burned). The ECB should have let Greece default in May. Instead, it extended loans to the nation of Greece, and direct bailouts to the bondholders (read: banks) holding the paper, because the ECB cannot stand to have a single investor bank punished for its stupid, stupid, stupid decisions.

You see, if you are a bank in, say Greece, and you're standing next to a Greek politician who is, say, lighting his cigar with a couple of rolled up thousand-euro notes, and you're listening to him promise to provide every Greek citizen with free healthcare and 14 months per year of pension payouts and free this and free that, and he asks you for another couple of k-notes to light another stogie because that first one "didn't taste right," and you open up your billfold and give him three k-notes instead (just to be sure), then, according to the ECB, you were taken advantage of!

ECB: "How dare that Greek son-of-biscuit act so fiscally conservative right before your eyes when he was really a spendthrift crook! Why, we'll teach him to be so reckless with money--we'll steal a bunch of money from other people who aren't even Greeks, and give you more money to give that Greek rascal for his stogie-smoking spending sprees! Yes, we'll teach him!"

Which is why, again, default is good. Had Greek defaulted in May, then their stogie-smokin'-Mediterranean spending spree would have come to a close, and the idiotic financiers of it would have been duly burned. Instead, it continues. So the next question is, what about these United States and our instrinsically anti-parsimonious federal government? Can the US ever default?

The answer is we already have. The United States government official defaulted on debt domestically when Roosevelt signed the Gold Confiscation executive order in 1933 and subsequent legislation in 1934 which magically "relieved" the US government from fronting gold species in return for its issued paper notes. Internationally, the same default happened in 1971 when Nixon ended the dollar-gold peg. So, the US has a history of default, though like any good druggie, we'll deny it. But this, I understand, is not what people mean when they ask the question, "Can the US default?" The question is whether or not the United States federal government will ever be unable to meet the minimum interest payments (debt financing) of outstanding debt, that is usually what people are asking. The answer to this is more difficult to define.

Since the Federal Reserve prints up money at its own prerogative, then technically the US government could always get the Fed to print up more money to lend to Congress to pay off debt holders--even if the Fed itself is the debtholder to be paid off (the Fed currently owns nearly a trillion in US Treasuries--that they admit to owning). Since US debt is quelled in US dollars, as long as something is printing up dollars, then technically the debt can be quelled in. But, of course, only in perpetuity, and only at the cost of issuing more debt, as it is a go-nowhere treadmill because every time the Fed makes up new money out of thin air, it is charging the US Treasury for it. So, since 1913, the US has been an inevitable state of default. If the US took over the Fed and printed up trillions of dollars to pay off all the debt in a year or whatever, then it would be a total tanking of the dollar--a tanking which is, clearly, also an inevitability. So, the United States and other nations that still have quasi-independent currencies under sort-of their own control are in a very different position than the euro nations like Greece. Devaluation, not default, will be the tool of choice for the US.

It is almost pointless to have this conservation, however, because its all made-up money at any rate and by any cut. We can only wish that the future response to national bankruptcy is actual bankruptcy, or default. Only then will financiers take the pain that they helped cause, and only then will this worldwide bankster debt-based fascist-socialism hybrid be discredited and disabled. Even allowing individual banks to default and crumble into bankruptcy would be a nice start, but Congress, at the direct expense of taxpayers and complete benefit of reckless banksters, has been preventing this for years. Debt is now and has always been a poisoned field, and nothing grows of it but more and more debt.

So have a nice day, now!

US to foot $50 Billion for Eurozone bailout; $962 Billion plan is another massive international transfer of wealth

Breaking news tonight from Brussels, as the ECB's and IMF's weekend of collusion and conspiracy have resulted in a nearly $1 Trillion total Eurozone bailout operation. The plan to ostensibly backstop the euro stands to leave US taxpayers on the hook for $50,083,000,000 in what will be another massive international transfer of wealth.

This plan is another, separate eurozone-orchestrated bailout operation that is independent of, and in addition to, the Greek bailout adopted on Friday. To recap the Greek bailout, on April 26, I wrote a post detailing the $3.417 Billion planned contribution from US taxpayers to the Greek bondholders on a then €45 Billion ECB-IMF bailout. Before that plan could even be finalized, it was more than doubled to €110 Billion, entailing a $6.834 Billion US-backed contribution, on May 2. This second ( €110 Billion) plan was finally approved by all eurozone nations on Friday, and the IMF cleared the way Saturday for its €30 Billion contribution (of which $6.834 will come from the US).

This €110 Billion Greek bailout, however, was just the tip of the iceburg. We now know that the ECB, the IMF, and the EU and EMU finance ministers have spent the weekend colluding in Brussels to hammer out an even more massive taxpayer-backed bailout. This time the package is not for the salvation a specific eurozone nation, but for the salvation the euro itself. Last week, the euro fell 4.1% against the dollar, the most since the 2008 collapse, including a huge beat-down on Thursday, May 6, during the euro-linked 998 DJIA plunge in New York. Check out this video series to watch the drama unfold.

And now today, Sunday, an announcement has come that the ECB and IMF have concocted an incredible €750 Billion ($962 Billion) plan to backstop the faltering euro currency and its "P-I-I-G-S" bankrupt member nations, even as the "G" (Greece) has already been awarded the €110 Billion. The latest bailout is basically Euro-TARP 2010--but even larger than the $700 Billion TARP plan approved by the US Congress on October 3, 2008. Also, instead of propping up the banks as TARP was supposed to do, this ECB-IMF program is clearly intended to prop up the euro and the eurozone nations themselves. It is, according to the Financial Times, an attempt to "Shock and Awe" the bond markets into confidence in the euro. Bloomberg reported the words of Marco Annunziata, chief economist at UniCredit, as:

“This is Shock and Awe, Part II and in 3-D,” “This truly is overwhelming force, and should be more than sufficient to stabilize markets in the near term, prevent panic and contain the risk of contagion.”

Oh, sure--a central bank just knows everything is going well when it has to "shock and awe" the markets into believing in its competency, its member solvency, and its currency. Confidence in the euro remains solidly mixed. As I write this, the euro has rallied off the latest news of the huge backstop to over $1.29, from a 14-month low of under $1.26 on Thursday. Still, bets against the euro reached yet another record level on Friday, May 7, even after the Greek package was approved. A "bank funding crunch" has meanwhile developed, which is increasing both the cost of interbank lending and the reluctance of banks so to lend. Currently, interbank credit in Europe is the tightest and most fragile it has been since the collapse of Lehman Brothers in September 2008, when the bankruptcy cut the interbank liquidity strings and snapped lending to a standstill. The ECB-IMF plan announced is intended to protect the euro at any cost--starting at about $1 Trillion. From the latest Bloomberg article posted just hours ago:

"European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases as they spearheaded a global drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro.

"Jolted into action by last week’s slide in the currency and soaring bond yields in Portugal and Spain, the 16 euro nations agreed to offer financial assistance worth as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank will counter “severe tensions” in “certain” markets by purchasing government and private debt.

“The message has gotten through: the euro zone will defend its money,” French Finance Minister Christine Lagarde told reporters in Brussels early today after the 14-hour meeting.
"Under pressure from the U.S. and Asia to stabilize markets, the European governments gambled that the show of financial force would prevent a sovereign-debt crisis and muffle speculation that the 11-year-old euro might break apart."

The $962 Billion plan makes it very clear that the ECB and IMF will take whatever desperate, confiscatory measures necessary to prevent the markets from ripping the euro to shreds, even without the consent or concurrence of the people of the eurozone nations to whom the bill will be addressed. The plan even includes monetizing the debt of member nations through support of bond auctions, and even intervention to the secondary bond markets to control the price of traded debt through the central-bank purchase of debt, if necessary. Considering this last point, you should not be surprised that the Federal Reserve is helping.

US cost, Federal Reserve involvement
Included in the ECB-IMF plan is a staggering €250 Billion ($324 Billion) from the IMF. With a 17% stake, the US contribution to save the euro, monetize debt, and otherwise intervene in the bond markets will therefore be €42.5 Billion, or over $50 Billion (at the current 1.295 conversion rate).

Additionally, the Federal Reserve has re-opened the euro-dollar swap facility. This special facility was created during the crisis to fund the demand for dollars internationally during the crunch, and all lines were closed in February 2010. Now, months later and at the request of the ECB and IMF, the Mr Bernanke has agreed to re-open the swap lines. Euro-dollar swaps are agreements between the Federal Reserve and ECB to exchange currencies with the obligation to reverse the transaction in the future; the ECB then sells the dollars to European banks, and the Federal Reserve either sells the euros or holds them. The agreement entangles the dollar in this euro mess even more than it already is, and is meant to decrease the pressure on euro in dollar terms, as banks can have assured access to dollars through the ECB's swap at a certain price. The agreement will allow the ECB to sell unlimited amounts of US dollars.

The ECB might receive more help from the Federal Reserve--not in the form of more swaps, but in the form of advice. The ECB today announced that it too will pursue the path of monetization of debt, a path well-pounded by the the Federal Reserve. Just as the Federal Reserve has recently (they claim) completed the "buying" at least $300 Billion in US Treasuries from auctions and secondary markets, the ECB will soon embark upon a monetization of euro debt in an attempt to keep the yields low and the price of financing within reach of the over-extended eurozone nations such as Greece, Spain, Italy, Ireland, and Portgual. As last week's routing demonstrated, lenders to these eurozone nations are currently demanding a serious premium in return for buying what the market considers risky debt.

This weekend's developements cast an even more suspicious angle on the market plunge we witnessed on Thursday. Like everyone else, I'm still investigating that day. I've already noticed the similarities between October 1, 2008 and May 6, 2010, as I'm sure you have too. I've noticed the difference is TARP in 2008 and euro in 2010. This $962 Billion bombshell makes these similarities even more suspicious. I wonder if the phrase "martial law" surfaced in Brussells this weekend as it did in Washington in 2008.

I won't be surprised it if did.

Update: US payment to Greek toxic debt-holding banks now doubles; "Unbelievably big support" for German suit to stop bailout

Earlier this week, the original planned bailout of the Swiss, French, and German banks holding billions in toxic Greek debt included contributions from the EU and IMF of €45 Billion and €15 Billion, respectively. This bankster plan entailed a contribution from the US taxpayer (through the IMF) of some $3,417,000,000. This was bad enough--but, amazingly, that amount has since doubled.

The latest EU/IMF bailout packages has risen substantially since earlier this week--substantially meaning that the plan has ballooned from an emergency €45 Billion bridge-loan to a staggering €110 Billion ($146 Billion), multi-year total bailout operation. The IMF contribution has risen from €15 Billion to €30 Billion, and thus the associated US taxpayer contribution has doubled.

The new number for your contribution to the irresponsible Swiss, French, German, Dutch, English, and American bank-rollers of the out-of-control socialist entitlement nation of Greece is:

$6,834,000,000.00.

And to add to this outrage, this is likely just the minimum payment on what will likely be an even larger bailout. Considering that the plan has increased from €60 Billion to €110 Billion in the gap of time from Monday to Friday, it should not be surprising if that €110 Billion skyrockets to €150 Billion, or perhaps €200 Billion in the gap of time from the first payment this month to last scheduled payment in 2012. In fact, an increase is already being reported: today, the Wall Street Journal is reporting that according to unnamed sources of the German newspaper Sueddeutsche Zeitung, Greece will need €150 Billion by the end of 2012--27% more than is currently slated.

Sueddeutsche Zeitung might be on to something, as the Germans are watching their government-sanctioned mugging and transfer-of-wealth very carefully. We US taxpayers should be outraged at the IMF-funneled contribution of $6.834 Billion, but no one even seems to understand that such a transfer is even happening on this side of the Atlantic. Conversely, German taxpayers are well aware of the operation, and are hopping mad that they are made to be on the hook for at least €8.4 Billion ($11.2 Billion) this year alone, and are in for a total of 28% of the total EU contribution. Given the size of the current package, the German contribution equates to €22.4 Billion ($30 Billion). The German people are overwhelming against any bailout of Greek bondholders, but that obviously doesn't mean much to Merkel or the other so-called leaders in the EU. On Friday, the Parliament in Berlin will vote on the measure to grant €22 Billion in aid--which brings us to the second part of my headline.

Germans threaten suit against Greek bailout
While the German and EU leaders are readying to transfer billions from the pockets of their citizens to save the bondholders of Greece, the entire operation is apparently in violation of the euro-zone's founding document, the Maastricht Treaty, in the first place. In fact, a leading German economist and retired professor at Tuebingen University, Joachim Starbatty, declared in mid-April that the entire deal is outright illegal, and he will challenge it.

In his March 28 New York Times editorial piece, Mr Starbatty explained that the euro "began on a grand illusion," and elaborated that:

"Germany and other “euro-optimists” hoped that the introduction of a common currency and the global economic competitiveness it spurred would quickly lead to sweeping economic and societal modernization across the union. But the opposite has occurred. Rather than pulling the lagging countries forward, the low interest rates of the European Central Bank have lured governments and households, especially in the southern part of the euro zone, into frivolous budgetary policies and excessive consumption."

Mr Starbatty continues that "single euro zone economy is false," and warns that, "In short, the euro is headed for collapse." He states that Greece should leave the euro zone, return to the drachma, devalue its currency to increase competitiveness, and allow for re-structuring and re-negotiation of its foreign debt in an "international conference." As Mr Starbatty and others have noted, however, there is no provision within the Treaty that outlines the procedure for exiting the euro zone. But, according to the economist, somebody's gotta go: alternatively, Mr Starbatty states that Germany could leave the euro with the stronger euro zone nations and start their own currency. No where in his article is there any mention of Germany bailing out Greece, and since March, Mr Starbatty's stalwartness against any such measures has only increased with the stakes.

In the case that Friday's up-coming vote in the German Parliament authorizes the extension of €22 Billion in credit to Greece, Mr Starbatty et al have a simple plan:

"We will file a suit at the Constitutional Court against the credit from euro states."

The group not only enjoys considerable support from the outraged German masses, but they are supported--incontrovertibly--by the Masstricht Treaty itself. Read Article 104, paragraph 1 for yourself, and see that the economist is right:

Masstricht Treaty, Article 104, paragraph 1 (pdf, pg 13):
"Overdraft facilities or any other type of credit facility with the ECB or with the central banks of the Member States (hereinafter referred to as ‘national central banks’) in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the ECB or national central banks of debt instruments."

Seems pretty clear to me--and to Mr Starbatty, and to millions of Germans. Also on board is former Bundesbank governor Wilhelm Noelling, fellow economist Wilhelm Hankel, and constitutional law expert, Karl Albrecht Schachtschneider. As Mr Starbatty told the Wall Street Journal:

"We will make our lawsuit public once the law has been approved by the upper house," he said. "We can't challenge that Greece wants aid but what the government wants to do isn't in line with the Constitution. For this, we need the law. We will then act immediately."

And so Friday may be the day. As for his predictions on whether the suit will be granted the consideration it deserves, Mr Starbatty told a Czech newspaper on Thursday that, "We expect that the Federal Constitutional Court will not reject our suit, because our initiative has unbelievably big support." The bailout plan, meanwhile, has a mere 16% approval among Germans.

Good luck and best wishes to Mr Starbatty and his coalition of constitutionalists.

US Taxpayers to give Swiss, French, and German banks $3,417,000,000 for wisely holding toxic Greek debt; More $/€ in the mail!

As if being on the hook for $23.7 Trillion in fascistic government bailouts of domestic and international banks is not enough, US taxpayers will very likely soon be footing the bill to bail out the bondholders of Greek debt through the World Bank(ster) operation known as the International Monetary Fund. US taxpayers will, once again, be the pawns paying for the irresponsible lending of foreign and domestic banks, and the irresponsible borrowing of Greek politicians--thanks to the eternally bankster-run IMF.

On Friday, April 23, Greece's PM George Papandreou officially requested IMF and EU aid to enable the government to cover some €8.5 Billion ($11.4 Billion) of payments on debt coming due May 19. This request is just a bare-bones minimum to meet the most urgent debt service demands which are due in weeks: Greece will need at least €54 Billion to cover its obligations on interest payments alone for this year alone. As would be expected, after the announcement, the market continued its many-weeks long hammering on Greek debt, and intensified the pounding over the weekend, a throttling which resulted in a push higher of yields on 2-yr Greek bonds to over 14% by Monday morning. In the last 24 hours, the situation has only deteriorated more.

Today, S&P downgraded Greek debt yet again--this time three full levels to BB+ junk status. The continued outright pummeling magnified, as Mish covered, and has today resulted in a sky-rocketing, incredible, and staggering yield on the 2-yr of over 18%. Of course, ratings cuts are always a trailing indicator, as the bondholders have long-since figured out the danger of the Greek debt they hold, but along with the ratings downgrade, S&P also assigned a "debt recovery" rating of 4 to Greece. This "debt recovery rating" is S&P's way of saying that the firm predicts bondholders will recover only 30-50% of what they are owed.

As it stands right now with no possibility of changing lest international aid comes to the rescue, Greece doesn't even have the money to front that 30%, and will only avoid an outright default if given EU and IMF help before its payments are due May 19. Greece has accrued a national debt of over €302 Billion ($404 Billion), the importance of which is only recognized when compared to GDP, and according to the ever-increasing and latest revised figures on Greece's debt-to-GPD ratio, that number is a staggering 115%. Simply put, this means that the total debt of the nation is 15% more than the value of all goods and services produced within the country in an entire year. This debt assessment is bad enough, but add in the interest and debt payments, and Greece's situation becomes the unsustainable mess it is today. As stated above, to service its €302 Billion national debt, the Greek government needs €54 Billion this year alone to make debt payments. It, of course, has to borrow to get the money to pay those from whom the government has borrowed previously--and, in most cases, not even to pay them off outright, but instead to simply make coupon payments on the debt still owed.

And to whom is the debt owed--who are these bondholders? Who else--BANKS, including commercial banks and even the ECB. The European Central Bank, which backs the euro, is itself compromised of the 16 member eurozone nations' respective central banks, which themselves print and issue euro. The Greek central bank is the Bank of Greece, and the largest and oldest commercial bank in Greece is the National Bank of Greece. Of course, the central bank is privately owned: in fact, it just announced a shareholder dividend of €2.40/share, and the largest shareholder of the central bank (Bank of Greece) is the National Bank of Greece. National Bank of Greece, in sync with the nation itself, had its credit rating cut today, as the bank-owned central bank and the central bank-owner commercial banks, including National Bank of Greece, are the largest holders of Greek government debt. A ratings cut has to be expected when one of your bank's biggest assets is losing value hourly. As the major debt holders, Greek banks are in big, big trouble, as those assets are no longer being accepted as collateral by other banks. But the Greek banks aren't the only holders of that toxic Greek debt: German, French, and Swiss banks, and the ECB are other significant players holding serious amounts of increasing toxic debt. When the money comes from the IMF and EU bailout--money billed to the taxpayers--it will be given to save the skin of these banks. Here's the a simple picture breakdown, which includes Citigroup data that places the exposure as:

French banks: over 25%
Swiss banks: over 20%
German banks: close to 15%
US banks: just above 5%
UK banks: 3%

Additionally, according to the Wall Street Journal:

"Greek banks aren't the only ones at risk. French banks have nearly $80 billion in exposure to Greece, followed by Germany at $45 billion, according to the Bank for International Settlements. Within Germany, Hypo Real Estate has the largest exposure at €9.1 billion. Commerzbank holds €4.6 billion in Greek bonds, according to Germany's bank regulator, while public-sector banks known as Landesbanken hold billions of euros in Greek bonds."

For whatever reason, the Journal article fails to mention the other major category of Greek bondholders: Swiss banks. According to the BIS (data which differs slightly from the above Citigroup data), Swiss banks share a near equal exposure with France of $79 Billion, and Switzerland is neither a part of the eurozone nor the EU. In fact, Switzerland is not even offering any contribution whatsoever to bailout efforts---none. The EU and even the IMF are stepping in, but the Swiss? No where to be seen until the check start getting stamped. Perhaps that's one of the perks of hosting the Basel headquarters.

Besides these Greek, French, Swiss, and German banks and their owners and shareholders who will get bailed out, the other big piece of the bankster pie is the central bank of Europe itself, the ECB. Since 2008, the ECB has been under "relaxed" collateral conditions that have allowed Greek banks to convert some of the Greek bonds they hold as collateral for loans from the ECB. The reason why the Greek banks would do this is simple: they can get a better rate from the ECB on loans than they can selling the bonds on the market, and this condition has only been exaggerated in the last six months. Greek banks have taken up the ECB on this generous offer, and Mr Trichet's ECB is now sitting on at least €68 Billion in Greek-bond backed loans extended to Greek banks. And here's the rub: like all loan collateral, the Greek debt is subject to margin calls when its value declines, which require the debtors to post more collateral, and thus only further increase the pressure on the Greek banks--including National Bank of Greece--as well as the ECB itself, because unlike the Federal Reserve's allocation of loan collateral to a secret off-balance sheet location, the ECB holds collateral on its balance sheet. As the value of that minimum €68 Billion in Greek bank loans/Greek bond collateral declines, it will impact that ECB directly. Additionally, this figure does not include the Greek debt that could have been offered up as collateral by those other than Greek banks, as the ECB and Mr Trichet will not comment on that total.

Therefore, though Mr Trichet knows, we don't know how much Greek debt has been offered by non-Greek banks as collateral to the ECB which the ECB has accepted for loans, but we do know how much Greek debt is out there ($404 Billion), and that only shorter-term debt is eligible. Based on this information, a Reuters article posted by the London Stock Exchange on December 16, 2009 speculated that:

"If Greece's debt were no longer accepted as collateral by the ECB, this would also leave banks in other European countries holding $235 billion of assets that they can no longer swap for an ECB funding injection should they need to."

Uh-oh: nearly a quarter trillion in assets that are suddenly a no-go? Perhaps all those zero's are why Mr Trichet recently said that a Greek default was "out of the question." What does a default do to a quarter trillion in collateral?

So, it looks like the French banks are quite lucky to have their man, former central bank governor of Banque de France and current BIS director, Mr Trichet, and his vehement assurances to protect them from the consequences of their irresponsible $80 Billion Greek debt bets. Indeed, Mr Trichet's got their backs, yo--even if it means, in classic bankster fashion, stealing from German taxpayers! Of course, the German banks, like Commerzbank and Deutsche Bank, are likewise getting the benefits of any bailout, and the Swiss banks--having contributed nothing--will be just rolling in it! When the bailout comes, those are the banks to whom the taxpayers' money will go--even after these same banks have already been given billions.

Americans might see this Greek thing as a far away, European problem that will have little or no impact on our nation, but unfortunately, such an assumption is wrong on both conclusions. Of the currently proposed €60 Billion Greek bailout, at least €15 Billion ($20.1 Billion) stands to come to the IMF. The IMF is, of course, headquartered in Washington, D.C. and majority owned by the United States: the US (read: "US Treasury which is under the total control of the FRS") "owns" over 17% of the fund's assets (or $56.7 Billion) and controls a veto-power 16.7% voting share. For perspective, the next closest nation is Japan, with just 6% share. Therefore, from just the initial bailout package likely to come within weeks, the US taxpayers will be transferring $3,417,000,000 to the coffers of European commercial and central banks. And that will likely only be the beginning. Bundesbank head Axel Weber said last week that Greece may need $112 Billion over the next couple of years. Other economists estimate the number even higher--€150 Billion or $200 Billion. We know how this goes: the bailout machine is just getting started.

As the ECB's contribution to the rescue will be larger than the IMF's, EU taxpayers will be hit even harder than us Americans, particularly the Germans. The notion of bailing out Greece is fantastically unpopular in Germany, where 85% of the populus oppose supporting Greece and are outraged at the idea that Germans should be paying for the profligacy of Greek politicians and their extensive public spending, spending which includes a fully-pensioned government retirement at age 50 for some 580 categories of jobs labelled "hazardous." These jobs include hairdressers (due to exposure to dyes), wind musicians (due to blowing in the wind instruments), and radio and television presenters (due to exposure to bacteria living in microphones, and no, I'm not making this up), among other legitimately hazardous occupations like mining. (Click here for more comparisions between Greek and German retirement, including the Greek "14-month year.") The retirement age in Germany, meanwhile, is 67, yet the German taxpayers are likely to front €8.4 Billion this year, and €16.8 Billion by 2012 to bail out the bankster Greek bondholders who financed the Greek spending spree. And please, note, that that figure excludes the additional contribution from Germany that would come through its 5.87% share in the IMF.

Mr Trichet's France, of course, is pushing Merkel and the Germans to agree to the bailout, which isn't surprising when you consider that French commercial banks are, again, on the hook for $80 Billion in toxic Greek debt. Currently, the French contribution would be €6 Billion ($8 Billion), or 28% less than Germany's, despite the exposure of French banks being 65% greater. Of course, it doesn't matter whether its German, Greek, Swiss, French, or American, the EU-IMF bailout will be yet another transfer of wealth to banks on the backs of taxpayers through this insane fraud called debt-based money.

The proper resolution of this mess is what the market is screaming for right now--with that Greek 2-yr at 18%--and that resolution is that the bondholders will have to take a loss. S&P's statement of 30-50% recovery of money owed might even be optismitic if the market is left to settle this, and no one should have any sympathy for reckless lenders who irresponsibly give money in return for interest to obviously and habitually irresponsible borrowers like Greece. Or the United States, for that matter. The bondholders need to be taught a lesson, as do central-bank-boot-lickin' politicians who believe they can think up "entitlements," print up "money," tax the people to pay off "interest" to the banks, and spend away until their re-election. Lending is risky, and should be coupled with premium on both sides that reflects that fact--and discourages and punishes irresponsibilty.

The bondholders absolutely must take a haircut, even if there is an outrageous wealth-transferring bailout. As Matthew Lynn aptly puts it (emphasis mine):

"First, it takes two sides to create a bond crisis. For every reckless borrower there is a reckless lender. The Greek government might have lied about its budget deficit and been needlessly extravagant during the boom years. But nobody was forced to lend the Greek government any money. Investors should have asked themselves where the money was going, and how sustainable Greek economic growth would be. They didn’t. Instead they just saw that yields were higher than on German or French debt, and jumped onto what looked like a gravy train."

Lynn advocates that the bondholders should take at least a 50% haircut as part of any bailout, and as he stated this before the S&P downgrade and assigment of a debt recovery rating of 4, I would guess that he would now agree with S&P's expectation of a 50- 70% haircut. Lynn further argues against bailouts in the first place, as they cause these very circumstances of "reckless lenders" lending to "reckless borrowers" by introducing implicit taxpayer-backed guarantees of risky debt purchases. The free market has little sympathy for the purchasers of debt, and no sympathy when those purchasers are the fiat counterfeiters who created the "money" in the first place, "sold" to the debtor, and the repurchased it at interest, as is the case in all central bank-backed currencies, including the dollar and the euro.

Tomorrow is another day closer the May 19 deadline, and somehow, I don't think the bondholders are sweatin' it.

Gold Stalls in $ and Soars in €

Something's up with gold and the euro. We know EUR is under major pressure right now, and has been since November. But just to demonstrate what's happening currently, consider this: gold closed Friday at $1126...in USD. In EUR, on the other hand, gold closed at €826--an all-time record high!

This is a very interesting paradox, especially for people like myself who look at gold as much closer to a currency than a commodity. Remember, the all-time high for gold in USD was back on December 03, 2009 at $1226. Today's close in USD terms at $1126, we're a flat -$100 (-8.1%) off the USD high for gold--and yet we have a new high for gold in EUR. That obviously reflects EUR weakness, but I think it reflects more than that.

When gold was at that USD high $1226 in December, it was trading at about €808, which was also at that time an "all-time high" for gold in EUR. So, gold hit highs in both USD and EUR at the same time in December, and now EUR has been hit again. Since the first "high" in EUR, gold gained 2.25% against EUR and lost 8.1% against USD before hitting the second, new all-time high today at €826. But if you look at the USD v EUR, you'll see that USD has moved from 0.66 on Decemeber 3rd to 0.74 today--a 12.2% change. In other words, while USD gained 12.2% against EUR, it only gained 8.1% against gold. Do you see where I'm going with this?

What seems rather bizarre to me about this week's USD-EUR-gold drama is that gold is "supposed to" drop when USD gains strength against other currencies--especially EUR--not record gains against both USD and EUR. I just say "supposed to" because people who deny that gold is a currency are always using it's sensitivity to USD-EUR as "proof" that the market only views gold in terms of other currencies, and thus it is strictly a commodity. Well, their "proof" just vanished, because now we have gold doing things independent of USD or EUR, and the market indeed treating it more like a currency. This is demonstrated by the fact that USD gained 50% more relative to EUR than it did relative to gold (12.2% v EUR; 8.1% v gold). I think this is important because it appears that gold, as money, is in a unique situation. It is currently at a high against EUR and about 8% below the high in USD. If USD strengthens more against EUR, this will only increase the price of gold in EUR, leading to more EUR highs. Conversely, if EUR strengthens against USD, it will only come with a drop in USDX and thus the value of USD, which will likewise lead to an increase in the price of gold in USD. The US Dollar Index v Gold is clear, and can be seen on when you compare charts of USDX v gold (all data from Feb 19 2010):

Here's USDX:

Here's Gold:

And here's my cut-and-paste blend of the two (red is USDX, grey is Gold):

These charts say, "USDX down, gold up." So again, if EUR weakens, it will result in newer, higher highs against gold. If USD weakens, it will drive down the USDX and weaken also against gold. It seems that EUR will be under a lot of pressure at least until this Greece mess gets straightened out, which, of course, has been pushed out another month. And speaking of Greece, they are certainly wishing they had some gold right now--well, actually, they are more than wishing, they are blaming the Germans for the Nazis for having stolen it decades ago. The plot gets thicker.

(Sidenote: this Dubai thing is not over, either. Not by a long shot: its appears right now that the offer from Dubai World to its creditors will be $.60 on the dollar, and no interest payments--a 40% haricut, and no payments! Needless to say, this is a developing story. Time and secret bankster meetings will tell what the Greek mess sorts out to, as well.)

Euro in Crisis--Thanks to dopes who buy Greek debt

You might have been watching the euro (EUR) tumble over the last couple months, and especially over the last several weeks as this crisis with Greece's finances really heats up. EUR has moved from around $1.50 in November to as low as $1.35 by the end of last week (3 month chart in USD). EUR is under major pressure, and it appears to be a fundamental pressure that is being stoked by the realization of the euro's fragility, as demonstrated by what a little nation called Greece can do to an entire "economic community."

As you would guess, the weakness in EUR has been matched by a relative strengthening in USD, as people sell those sliding EUR and scoop up USD. Compare this 3 month USDX (USDX is the "US dollar index:" USD versus 6 major currencies, weighted most heavily for EUR), and you'll see that while EUR has been moving down from its recent $1.52 high since November, USD has been moving up since its recent 74 lows in Nov/Dec. Right now, as EUR sits at a 9-month low versus USD, the USD itself is at about an 8-month high (1 year USDX). Now, currencies battle each other all the time, of course--but the question with EUR right now is whether or not this is an external battle with other currencies--like USD--or an internal battle with itself.

As we know, using the USD as a unit of measure against the EUR can be deceiving, but in the case of the recent EUR slide, EUR has lost against all major currencies, not just USD. Check these out 3-month charts: EUR v Canadian Dollar (EURCAD); EUR v Australian Dollar (EURAUD); EUR v Pound (EURGBP); and most importantly EUR v Swiss Franc (EURCHF). All down, down, and down. USD and Swiss Franc (CHF) appear to have been the biggest beneficiaries of money taken out of EUR and placed in USD and CHF.

And its very difficult to gauge EUR because it so artificial and it covers such diverse economies, which is also exactly why its really coming under pressure right now. Of the 27 nations that make up the European Union, there are 16 nations which have adopted the euro as their currency, and these make up the euro zone. These 16 euro zone nations are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain, which contain a total population of over 328 million (which is about 20 million more than the US). Some of these nations joined after the introduction of the euro. Over a quarter of these nations--specifically Greece, Spain, Portugal, Italy, and Ireland--are in serious economic and fiscal trouble, and face huge deficits and obligations. The population of these financially troubled nations is 182 million, or over 55% of the total euro zone population.

For a little historical perspective on EUR (and I mean "little" because there's not much history to work with!), EUR was trading at $0.90 back in 2002 when it was introduced as paper (it had be running for a couple years before that as an electronic inter-bank currency). Here's a fabulous chart from the ECB on the EUR v USD. You can move the time-frame back to Jan 1 1999, and you'll see that when EUR was introduced, it was about $1.18. EUR slid for nearly three years, reaching a low of $0.825, then generally rose for seven years to a 2008 high of $1.59, before crashing to $1.26 during the October 2008 fiasco. Since then, things have been mixed--which is to be expected in any currency during this mess, especially when that currency is measured against the wild n’ crazy USD. At any rate, I'm bringing all of this up because for the first time ever, major European bankers themselves are losing confidence in their own brainchild--the euro!

There is an article linked up on infowars that is just remarkable. Here it is, from the Daily Mail, and it's worth reading in full: Collapse of the Euro is "Inevitable:" Bailing out the Greek economy futile, says French banking chief." The article clearly follows the headline: a top strategist from Societe Generale--the mega French bank (and FRS primary dealer, I might add),--Albert Edwards recently declared to Bloomberg and others that the euro is basically doomed, and that "the Greek budget crisis is a symptom of imbalances that will lead to the breakup of the euro region" (Bloomberg's paraphrasing of Edwards). This is remarkable statement to hear from a top strategist, particularly when he's from one of the very banks that helped create the euro in the first place. It is drawing attention to what's happening with the euro and the question of whether the shake-up is a reflection of outside pressure, or some internal, fundamental flaw of the multi-national currency.

Edwards is no lightweight: he was voted second-best European strategist in 2009, and has predicted currency meltdowns before. From the Daily Mail , Edwards says:

"My own view is that there is little "help" that can be offered by the other euro zone nations other than temporary, confidence-giving "sticking plasters" before the ultimate denouement: the break-up of the euro zone."

"Any "help" given to Greece merely delays the inevitable break-up of the euro zone."
Mr Edwards argued that Portugal, Ireland, Greece and Spain are too economically weak to withstand the rigours of eurozone membership. Countries that are highly uncompetitive are normally able to slash interest rates and devalue their currencies to prop up their economies. But this is not possible within the euro, given its one-size-fits-all economic governance. The implication is that weak, peripheral eurozone members will have to suffer years of painful deflation and tumbling living standards, as well as draconian budget cuts, in order to adjust."

And from Bloomberg:

"Southern European countries are trapped in an overvalued currency and suffocated by low competitiveness," top-ranked Edwards wrote in a report today. (Martin) Feldstein, speaking on Bloomberg Radio, said a one-size-fits-all monetary policy has fueled big deficits as countries’ fiscal records differ.
The problem for countries including Portugal, Spain and Greece “is that years of inappropriately low interest rates resulted in overheating and rapid inflation,” Edwards wrote. Even if governments “could slash their fiscal deficits, the lack of competitiveness within the euro zone needs years of relative (and probably given the outlook elsewhere, absolute) deflation. Any help given to Greece merely delays the inevitable breakup of the euro zone.”

As outlined in these two articles, Edwards is saying that the "overvalued currency" and "years of inappropriately low interest rates resulted in overheating and rapid inflation," which can only be remedied temporarily by "years of painful deflation and tumbling living standards, as well as draconian budget cuts, in order to adjust," but admits that even such measures would "merely delay the inevitable breakup of the euro zone." As Edwards sees it, the euro zone is doomed. But what does that mean for the euro itself?

Both articles above mention Martin Feldstein. Feldstein is a very well-known and well-regarded Harvard University economist. According to the articles, Feldstein said the euro zone simply "isn't working," and that this is due at least in part to the fact that while the ECB alone sets interests rates for the euro and thus the 16 nations that use it, the euro zone has "a single monetary policy and yet every country can set its own fiscal and tax policy." He continued that, “there’s too much incentive for countries to run up big deficits as there’s no feedback until a crisis.” A crisis--like Greece.

When Iceland went down (read: “when banksters took down Iceland”), it dragged its own currency (Krona) with it. Now in the euro zone, we have at least five nations--Greece, Spain, and Portugal, and Italy, and Ireland--which are in serious fiscal crisis, and which all share the same currency. It is unprecedented. Milton Friedman himself was not a fan of the euro, and he predicted over a decade ago that the euro currency itself would not survive its first crisis, never mind the euro zone. I remember people on Bloomberg radio in 2009 talking about the fact that apparently Freidman was wrong about the euro, because it has indeed survived, and it was actually stronger than the USD at the time. Well, well, well, now--not so fast. Now we have the #2 European strategist coming out in chorus with Freidman's decade-old prediction, at least in regards to the euro zone part. The next question would be to further consider what the breakup of the euro zone would do to the euro currency itself. The heat is yet to come, and the euro is already getting singed. Of course, like I said above, the major benefactor of this happens to be the USD. There is, of course, all kinds of conspiracy-theory putty there. So, let's just speculate for a second. We will get to what might happen to the euro if the euro zone goes down later, but first, lets consider this: what would the USD look like right now is the EUR wasn't such a mess?

Think about what Edwards and Feldstein said: an "overvalued currency" and "years of inappropriately low interest rates" running up "big deficits" and "no feedback until a crisis"--hum, what other national currency does that remind you of? Obviously, I have no way of determining what USD would like if EUR wasn't so ugly right now, but all things considered, and in my opinion, if USD had any strength, it should right now be shining. Instead, while USD looks "good" compared to the disastrous 10% EUR has lost relative to USD since November, USD itself had lost 15% from the beginning of 2009 to Dec 2009, and is still down 8% from a year ago. That's not exactly "shining." And this with the help of huge amounts of money leaving EUR and rushing to USD. We can only speculate, but image what that change would look like without EUR giving everyone such a reason to leave.

I mentioned above that Milton Freidman thought the euro would not survive its first encounter with serious crisis. I have been finding various euro-death stories, fantasies, and predictions quite often since I started researching it in 2008 (there is apparently an entire underground culture of euro-hating folks who write extensively on the internet, and I manage to find a lot of that stuff, along with the myriad dollar-haters, too!). In the process of researching the report I did on the Euro Currency Standing Committee at the BIS (you remember, the group that's name was changed three weeks after the introduction of the electronic euro to the "Committee on the Global Financial System" which is now trying to possibly centralize data for singular monetary control!), I encountered plenty of historical skepticism of the euro that goes back to well before the currency was even agreed to by treaty. Freidman wrote extensively about the euro, and the problems with it. Many others did too. But fast-forwarding to the current situation, one very interesting article I discovered in mid-2009 is this one here: Euro Doomed to Fail as Governments Pull in Opposite Directions. It was actually written over a year ago (Feb 3 2009), and is worth reading, especially considering what we now are seeing with Greece.

In the article, the author details the problems caused by the euro zone's structure itself, and goes even further than Edwards recently did by speculating about what this possible inadequacy means for the euro currency structure itself (emphasis mine):

"There is admittedly an embedded weakness in the way the European currency union is structured. In the United States, arguably that largest currency union in the world, fiscal transfers between member states allow for the federal government to adjust for variances in economic performances. There is no such mechanism within the euro zone, which explains why the member states are subjected to a number of rules. These rules require for everyone to exercise a high level of economic discipline. The problem is that there is little or no such discipline."

"EU countries outside the euro zone, such as the UK, have also lost out to Germany in recent years, but the UK has been able to play a card which is not at the disposal of the euro zone members. That card is called devaluation. Whether by design or otherwise, the UK has received a massive boost to its competitiveness in recent months as a result of the sharp fall in the value of the pound. Italy used to play this card repeatedly back in the days of the Lira. So did countries like Denmark in the dark days of the 1970s."

"Another issue, which is potentially even more destabilizing for the euro longer term, is the massive liabilities facing Europe as its population ages. We have borrowed table 2 below from Goldman Sachs which makes no secret of the challenges facing a number of European countries. Greece is clearly facing the biggest challenge. Public debt, which currently stands at about 95% of GDP, will grow to a whopping 555% of GDP by 2050 if the current pension and social security programme is left unchanged. The Greek government is painfully aware of this and have been working on several new initiatives. It was the passing of one of those new laws which caused the riots in Athens before Christmas."

This is a nice summary. In the first group, by "fiscal transfers between the member states" of the US, the author is referring to the redistribution of wealth done by the Federal government through our confiscatory federal taxes and Congressional re-allocations (aka, our despicable “American socialism”). For example, California contributes much more income absolutely and per capita to the Federal government than does West Virginia, but West Virginia gets more money per capita than California. Because of the uniform tax policy, the Federal government (again, despicably and unconstitutionally) effectively regulates the fiscal policy of the states, and can coordinate this with monetary policy to the degree that the Federal Reserve will independently "cooperate." In our union, there is a mechanism to centralized regulation, and its called the Creature from Jeckell Island. Likewise, the Federal Reserve can unilaterally utilize the mechanism of devaluation to control prices and exports (ie, Plaza Accord). These mechanisms allow the central bank control of the dollar in a fashion that affects all the states in our union.

In the euro zone, there is no such mechanism available to an individual nation that allows an individual nation to devalue its currency as a strategic advantage, because, of course, no nation has its “own” currency. Any euro-zone nation likewise shares the same currency with its major trading partners—the other euro zone nations--and cannot single-handedly control the value of the currency. Conversely, there is also no mechanism for the ECB that allows for centralized regulation of the member states' fiscal and tax policies--not yet, anyway. At least for a little while still, the member nations have some limited "sovereignty," which is, of course, compromised by their commitment to the European Union and its various treaties. As of right now, they are still permitted by their bankster rulers in Frankfurt and Strasbourgh to have different tax and fiscal plans. The current European Union's tax policy is complex and not currently "harmonised," which creates exactly the reason why the other frugal nations (like Germany) are so mad at Greece, because they and their taxpayers might have to bail those irresponsibly Greeks out!

Of course, the Treaty of Lisbon, which was just ratified fully in December 2009, will vastly change this--it is "harmonisation" on steroids, and authorizes an amazing and insane amount of authority in the new, soon-to-be super strong and utterly supranational EU President and Parliament, which will be able to take whatever it wants from whoever it wants and redistribute as it’s almightiness sees fit. There will soon be a uniform EU tax code (or at least euro zone EU), you can bet on that. But right now under the current Greek situation, the centralized scheme is not yet created or operational. I'm sure that when it is, they will use Greece as an example of their authority--and in fact, they might be doing it to some degree right now.

I say this specifically because it looks like the citizens of other nations in the euro zone may actually have pay up and bail out Greece, and have their money stolen from them and given to the bankster debt-owners holding paper from a country that isn't even their own! As you can imagine, the people are already very mad about this: the idea of bailing out Greece is utterly rejected by the people of Germany and other nations who don't want to pay for Greece's irresponsibility (and more importantly, pay for the banksters' stupidity/arrogance in buying the bad debt in the first place!). This article from Der Spegiel discusses the different scenarios for handling the Greece problem, and it identifies bailing out Greece as a "Worst Case Scenario:"

"One scenario is that it [the ECB] could declare Greece to be an exceptional case and provide bridge loans in order to prevent the bankruptcy. But it would have disastrous consequences. After all, why would weak countries make any effort to balance their budgets if they knew the EU would bail them out in the worst-case scenario.

"If the EU remained firm against Greece, that would certainly be fair to the member states who have practiced balanced budget discipline in the past. But that would also be politically untenable because it would drive investors away from any country that showed even the slightest signs of not being able to service its debt. They would have to continue raising the interest rates on bonds, and eventually the Greek virus would spread further, driving other countries into bankruptcy.

"In this highly theoretical scenario, the euro would, indeed, collapse. The currency could survive the bankruptcy of one member state, but it couldn't sustain a series of them.

"Euro-skeptics have long warned that tension inside the euro zone could destroy the currency one day. They now feel their convictions have been affirmed -- even if the aforementioned scenarios remain far from reality."

That's an interesting analysis--but it was written over a year ago, and the "Greek virus" is still thriving and multiplying. The "highly theoretical scenario" of a Greek default is no longer "far from reality." According to this analysis, the choices are either the "disasterous consequences" of providing a bridge loan to prevent bankruptcy, or the "politically untenable" denial of funds that would lead Greece to an "inability to service its debt" and spark a viral spread across the euro zone which would "drive other countries into bankruptcy" and surely "collapse" the euro. So, apparently, these are the choices: bad or worse.

Greece's spending, lack of tax collection, corruption, and various other irresponsible behaviors have been subsidized and enabled by the euro for a decade. The EU, the ECB, and Greece have all known this for years. Greece was not an original member of the euro zone: it was barred from joining in 1999 because it didn't meet the fiscal requirements. After "promising" reform and changes and whatnot, Greece was allowed in by the ECB two years after the launch, in 2001. And guess what--the "promises" to be good are still pending actualization. Even before it was admitted, people had been worried about what Greece would do to the infant euro. In fact, here's a BBC article from the very day, Jan 1 2001, that Greece adopted the euro—over ten years ago--and it mentions the same concern over Greece's public debt, public spending, and generally whack finances that we are hearing about today. However, the article ends with the statement that Greece's involvement in with the euro will have "little impact" on the currency. How things change in ten years: Greece's impact is hardly so insignificant. And now people from other nations might have to foot the bill to the banksters!

It would be an unprecedented insult of a caliber never before seen if euro-zone taxpayers are forced to bail out the stupid, irresponsible, and reckless banksters who lapped up the obviously toxic Greek paper when it was so blatantly obvious to even the Daily Mail over a decade ago that Greece had no possible way of paying it back! It seems clear that this was the assumption (the plan?) all along: by golly, the banks will not lose one single euro of their numbskull paper investment in the impossibly upside-down Greece, not even if we have to steal money from Germans to settle it! Europeans—wake up! Letting a group of criminal banksters destroy your currencies and feed you back a single, bankster-controlled piece of paper will only continue to lead you to the utter dismantlement of your entire economic and social structure--just ask us, we know!

It is not clear yet what the EU's plan is on Greece. Last week, the EU finance ministers "pledged" to "help" Greece, but gave no specifics on what that meant. A recent poll of Germans showed that people think Greece should be expelled from the euro zone rather than bailed out. Of course, if the EU bails out Greece, who's next? Spain? Portugal? Italy? Ireland? Where does it stop? The EU leaders are meeting again today in Brussels to perhaps hammer something out. It is likely it will be yet another transfer of wealth from the people to the debt-holding banks, probably under the guise that some impending economic collapse would occur if they didn't do "something." But we shall see.

We shall also see what happens with the deteriorating euro zone. If Edwards and others are right, there is no saving it. The next question, then, would necessarily be the euro itself. In the article quoted above (this one), here some of the author's observations:

"..I may disappoint one or two readers..but I firmly believe that the euro will almost certainly survive the current crisis. I am much more worried about some of the member countries."

"There is nothing in the Maastricht treaty [Treaty on European Union, 1992] which prevents a member country from leaving the euro, yet the decision to join is effectively irreversible. There are a number of reasons for this, the most important being economic costs. Take Italy which has a history of compensating for lost competitiveness through regular devaluations. If Berlusconi did the unthinkable tomorrow (sorry – nothing is unthinkable in Berlusconi's world), Italy's borrowing costs would explode. My guess is that bond investors would demand double digit returns on a Lira denominated bond to compensate for the dramatically increased devaluation risk. Already in a precarious fiscal position, Italy could quite simply not afford that."

"So, if any country were to leave the euro, it would more likely be from a position of strength, and only one country possesses enough strength to pull that off in the current environment. That country is Germany. And, although the euro is not particularly popular in Germany, I believe it is extremely unlikely for Germany to make such a move unilaterally. There are several reasons for that – Germany's history in Europe being the most important."

"At the same time, the fact that the euro has saved the bacon of more than one country in recent months - Ireland being the most obvious example - should not be ignored. For this very reason, the euro membership is actually far more likely to grow than to shrink as a result of the financial and economic crisis engulfing the world. The issue the EU has to deal with is whether the new applicants should actually be welcomed. Most of those who would want to join will bring plenty of baggage."

"Another possible outcome, which you hear almost no mention of, is the possibility of a new Transatlantic currency. When I mention this possibility, everyone laughs, but think about it for a second. The economic crisis on both sides of the Atlantic is enormous. Both are resorting to the same formulas – large fiscal stimulus and quantitative easing (a word invented by central bankers because 'printing money' smacks too much of Zimbabwe). There is a real risk that the entire financial and monetary system on either side of the pond needs to be re-designed. If that were to happen, I am pretty confident that the Fed and the ECB would at least sit down and discuss the possibility of a joint currency. That would also allow the UK to join a currency union without too much egg on its battered face."

And of course, that is a possibility--and a dream for globalists. It would also suit the general bankster-government feedback loop: if a program doesn't work, make it bigger, more extensive, and mandatory until it does! Or, Problem-Action-Solution. If the euro zone does not work in 16 nations, make it a transatlantic version that covers 20 nations, and if that doesn't work, make a global version that covers everywhere! It's very interesting that we have the chance to see what is happening right in Greece with euro. This is potentially something that will have long-lasting ramifications, especially if the ECB does not bust a bail out. I think that because of the Lisbon Treaty, it is only a matter of time before the EU is subject to a uniform, totally supranational tax code that will be imposed upon the citizens of the member nations through the unelected Parliamentary officials and unelected President. So if they steal some money from the people now and give it to Greece's creditors, that is just Lisbon-lite. But we shall see what happens, indeed.