Greece: Why negotiate when it can dictate?

 

It’s time for the Greek government to remember the words of the great leader, Pericles, who wrote, “If you owe the bank 1 000 drachmas, the bank owns you.

If you owe the bank a million drachmas, you own the bank.”


It’s time for the Greeks to stop taking orders from its creditors and start giving them instead.


As you may recall, Greece is so broke, it can barely afford to pay attention.

This is what kicked off the Euro zone crisis that feels like it’s been going on since Alexander the Great was in office.


The Greek government is still in business only because of a series of ‘loans’ from the IMF, the European Central Bank and the European Commission, a.k.a. “The Troika.”


The Troika has been giving money to Athens which has no chance of ever paying it back because if Greece defaulted, it would take down a whole bunch of EU nations with it.


In return for its money, The Troika has been demanding the government to institute a slate of austerity measures.

These measures are allegedly aimed at shrinking the government’s debt to 120% of GDP by 2020.


The only thing they have really done is spur the contraction of the Greek economy and get a lot more Greeks interested in protesting - not that all that’s hard to do.


Previously Germany (Motto: “We’re not broke. Yet.”), suggested putting one of its bankers in charge of the Greek budget.

I wasn’t sure a nation could lose its sovereignty so easily. For some reason, this did not go down well with the Greeks and am sure it wouldn’t have been well taken by Namibia if we were in the same shoes.

By the way, April will mark the 71st anniversary of the start of the German occupation of Greece during World War II.


The Troika and the rest of the world should really tread lightly, lest Athens decide to call their bluff.

The Troika wouldn’t afford what would happen if Greece went belly up and they know it.

This is how The Troika has got the private-sector Greek bondholders to accept a 70% loss on their debt and surely Treasury Bills are not that safe now.


Here’s how Finance Minister, Evangelos Venizelos put it,
“There is a very serious discussion based on new facts.

We are talking about a [private sector involvement] much greater than the original.

We are talking about a haircut on the net present value exceeding 70%.”


Those ‘new facts’ are the same as the facts that have been provided all along in this situation: The private sector isn’t going to get money back under any circumstance and if it doesn’t agree to go along with this voluntarily, it is going to lose a lot more money when the economy falls apart.


Clearly, Athens has to know it holds the trump card.

The big question is, why hasn’t it played it? The main reason is fear that its terrible economic situation could get even worse.

Considering the nation’s unemployment rate and the fact that one-year Greek bonds are now offering a yield of more than 500%, that reason won’t last much longer.