Posted Feb 1, 2015 by Martin Armstrong
The decision by Greece’s anti-austerity government in Athens to refuse fresh EU-IMF loans has set economists guessing how long Greece’s meager finances can last. In all honesty, Greece may be the first government to question this entire insane system of borrowing money that nobody intends to pay back anyhow. At last someone is starting to ask – who is nuts here? The borrower or the lender?
Greece could just create euros. This would be a very interesting problem. They should create the drachma once again and “suspend” all payments in euros. Britain was the first to abandon the gold standard and it was the first to recover during the Great Depression. It takes a crisis before one sees the light.
Nonetheless, we are witnessing a stand-off between Angela Merkel and the new “radical” government of Alexis Tsipras in Greece all over austerity. Merkel’s personal political career is on the lone for she has been insisting on austerity and lending money that can never really be repaid in a total shell-dame Yet on Saturday Mr Tsipras insisted his country would fulfill all of its loan obligations to creditors, saying it had “never been our intention to act unilaterally on Greek debt.” He seems to have no idea how to solve this crisis.
We are headed into a real political crisis in Europe and the idiots in charge cannot see they are choreographing their own demise. The EU is in a serious power structure and has issued a stern and inflexible warning to Greece pay up or else. Syriza’s triumphant radicals must pay the country’s debts and stick to the letter of the hated `Memorandum’ imposed by creditors that was forced upon Greece under duress, and deemed unjust in Athens, or Europe will cut off €54bn of support for the Greek banking system and force the country out of the euro. The insane demand take the position that Europe must not yield to “blackmail”. The EU is by no means in a strong position. Greece pulls out and others will follow.
If Tsipras is ready to lead the world, I would not mind a trip to some warmer weather about now. But something tells me they are not quite ready for prime time. Feb/March looks to be some wild and crazy times ahead as Europe seems poised to shoot itself in the foot and maybe head simultaneously with a single magic bullet.