The Euro-Greek Tragedy In Pictures: A Greece Stain vs A Spaniard In The Works! - Granite Grok

The Euro-Greek Tragedy In Pictures:
A Greece Stain vs A Spaniard In The Works!

MichaelRamirez-20150701-GreeceStainAmericans may only have become aware recently of the financial tug-of-war in Europe between the mostly sensible northern tier (AKA Germanic nations) and the mostly carefree and profligate southern tier (AKA Latin nations), but in fact it is an age old problem, heck, even northern and southern Italy have a smaller version of the same conflict.

Basically a country or region united by a common currency relies upon the commitment of all parties to either balanced budgets or similar deficit rates, or at least the illusion of balanced budgets and controlled deficits.

The not-so-secret stereotype, nay archetype, of failure to keep the bargain has been Greece, with that country being the running joke of Europe for several years – the cartoons from which I borrowed go back 6 years!

Greece has come unglued, both internally, and in its relationship with Europe, especially the northern tier, and even more particularly Germany, because its population, or at least a sufficient percentage, has become fat, lazy, and dependent on government handouts – far too many work for the government, are retired from government, were “retired” early to “make way” for younger workers, or saw no reason to look for work.

LaTuff-20120305-Merkel-GreeceFor a long time, tax income vs social expenditure outflow has been upside down in Greece, which means that, being unable to print money like Uncle Sam, the only option has been to borrow more and more from banks dealing in Euros. Eventually the strain began to show, as the solvent nations got fed up of making loans. or allowing the European Central Bank (ECB) to print money, to the detriment of the value of the Euros in their pockets.

The Germans have been itching to cut Greece loose for a few years now, as illustrated by this 2012 cartoon of “sawbones” Merkel ready to hack them off, but the dream of a united and larger Europe prevented them from actually doing the deed….. Until this year, when a loony Socialist government, led by Alex Tsipras, won election by promising to stiff the creditors, end the (very timid) “austerity” program, and somehow keep the gravy train flowing for the people.

LaTuff-20120520-greece-ballot-paperThat couldn’t work out well, and it hasn’t – this past week, the threat of no more loans without self-control became reality, and Greece’s threat to halt payments on their debt (naturally) came to pass, as well. The steady trickle of withdrawals from Greek banks became a torrent as it sank in to the man in the street that the banks must eventually run out of Euros. Now, with a bank “holiday” declared and everyone except the elites running out of cash, the LisaBenson-20150630-ATM-OlympusGreeks are going to the polls as you read this, to determine whether or not to stay in the common currency, or to execute a “Grexit”, which from the Greeks’ inverted point of view means kicking the Germans out (cartoon).

The flip side of the story is pretty ugly, too – turns out it’s not just the big Euro-dream that’s keeping the European Union, The ECB, and the IMF “negotiating” and pressuring the Greeks to get with the program: The loan guarantees are underwritten by the “rich” countries, and if Greece defaults or exits the Eurozone, those bills will come due and require ZeroHedge-Greek dominos_1the guarantor countries (Germany has the largest slice) to raise money by issuing huge amounts of bonds, which will either raise interest rates dramatically, or devalue the Euro as Mario Draghi (ECB) prints the money to hoover up the bonds.

But that’s not all folks – remember I said there was more of a north-south divide? Ever hear about the PIIGS (Portugal, Italy, Ireland, Greece & Spain)? Ireland may, or may not, avoid the fate, but Spain is next up, and a new political party has just stepped on the trainwreck gasoline!

Pablo IglesiasWhat would you think if a populist socialist like Bill DeBlasio won control of all the big cities in the USA? Well, a party known alternately as “Podemos” or “Si, se puede” (We can/ Yes, we can!), run by Pablo Iglesias, has directly, or through affiliates, won the mayoralties of: Madrid, Barcelona, Cadiz, Santiago de Compostela, Zaragoza and La Coruna. “It means Podemos is now in charge of local policies for 6 million Spaniards in a country of 40 million and leaves it poised to create greater electoral havoc in national elections that have to be called by December this year.” (Souce Heritage)

There’s much more in the Heritage article, but here’s a couple of snippets the will help you see why Pablo Iglesias could truly be a “Spaniard in the Works”** for Europe!….

If it were to win, [Podemos] promises to restructure Spain’s massive debt of $1.16 trillion, which is close to 100 percent of GDP, to adjust it to “social justice criteria and legitimacy.” This, of course, would mean ending the mild spending cuts instituted by the center-right government of Prime Minister Mariano Rajoy (cuts which Podemos denounces as an “austerity program”) and turn on the Keynesian spending spigot.

….. There’s much, much more to Podemos’s program, but you get the picture. Suffice it to say the party and Iglesias are very close to the government of Greek Prime Minister Alexis Tsipras and his leftist Syriza party, which caused so much consternation this week by breaking off talks with his European Union and International Monetary Fund creditors.

DaveBrown-MikeR-20150704-SpaniardInTheWorksWith Friends in low places, including Greece, Venezuela, Cuba, and IRAN, which finances his TV program, it is clear that Iglesias is no ordinary leftist, but more of a communist revolutionary, even though he bristles at being called one.

As Heritage tells us, Spain is Europe’s 4th largest economy, and full-tilt default would be a devastating blow for monetary and political unity. Don’t think it can’t happen – with 22.5% unemployment and 50% youth unemployment the younger set are flocking to the articulate academic. One more piece from Heritage to leave you thinking that Greece is just the hors d’oeuvres for a complete Euro meltdown:

It probably helps to think of the Podemos phenomenon as the terminus point of the various anti-globalization, anti-capitalist and occupy movements the globe has seen over the past few years. It has simple answers to complex problems that, if enacted into policy, would make the global economy wish it were still dealing with just Greece.

ZeroHedge-NationsOutsideEuro600Perhaps those Brits weren’t so dumb keeping the Pound? Just look at the growth rates of these small countries who stayed out of the Euro!
Heritage credits Forbes as a source.

** “A spanner in the works”, or as Americans put it, “A wrench in the works”, is an excellent metaphor for jamming up the machinery, in this case, the gears of Europe. We Brits sometimes bastardize the saying to “A Spaniard in the Works” (Believed to originate with Spike Milligan), and I found an excellent 2009 cartoon by Dave Brown of the UK Independent, onto which I grafted Señor Iglesias.

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