Does The IMF Actually Want To Cause A Greek Debt Default? - By Michael Snyder -
http://theeconomiccollapseblog.com/archives/does-the-imf-actually-want-to-cause-a-greek-debt-default When it comes to geopolitics, there are often wheels working within wheels that are working within wheels. Once in a while we get a peek behind the scenes, but for the most part the machinations of the global elite remain shrouded in mystery most of the time. And sometimes the global elite appear to be doing things that, on the surface, do not seem to make much sense at all. What is going on in Europe is a perfect example of this. If everyone was negotiating honestly, I believe that a Greek debt deal would have been reached by now. As this endless crisis has stretched on month after month, it has become increasingly apparent that more is going on here than meets the eye. In particular, the IMF has been standing in the way of a deal time after time. So what do IMF officials want? Are they looking for the "unconditional surrender" of this new Greek government in order to send a message to other governments that would potentially defy them? Or could it be possible that the IMF actually wants a Greek debt default for some other insidious reason?
When the latest Greek proposal was embraced with enthusiasm by EU officials, many hoped that this meant that the crisis would soon be resolved. But it turns out that there is still one very important player that is not happy, and that is the IMF. The following comes from the Wall Street Journal...
But the IMF is still unhappy with key aspects of Greece's new economic proposals and German officials were irritated by the speed with which the commission welcomed them, warning that much work needs to be done.
Greece's plan calls for reducing the deficits in its pension system and government budget by relying heavily on raising taxes and social-security contributions, whereas the IMF wanted bigger spending cuts.
The Washington-based IMF has said Greece's economy is already too heavily taxed and that too many additional tax increases would hurt economic growth, making it harder to pay down Greece's debt.
"It is still short of everything that should be expected," IMF Managing Director Christine Lagarde said Monday, suggesting Greece will have to modify its proposals significantly to win the IMF's backing.
So what would make the IMF "happy"?
Would anything short of total capitulation by the Greek government suffice?
Meanwhile, members of Syriza are expressing a high level of frustration with the compromises that Greek Prime Minister Alexis Tsipras has already agreed to. At this point, there is even doubt whether the current Greek proposal could get through the Greek parliament. The following comes from Bloomberg...
Greek Prime Minister Alexis Tsipras is facing the first signs of dissent within his own party over his latest plan to end a five-month standoff with creditors.
Some of Syria's more radical and populist lawmakers expressed opposition Tuesday to the proposal as the deal's backers called on members to see the bigger picture.
"Personally, I cannot support such an agreement that is contrary to our election promises," Dimitris Kodelas, a Syriza lawmaker associated with former Maoists, said in an interview. "I do not care about the consequences of my decision."
Despite all of the optimism that we have seen this week, the odds of a Greek debt deal getting pushed through are looking slimmer by the day.
And even if a deal somehow miraculously happens, all it would really mean is that the can has been kicked down the road for a few more months...
Assuming Tsipras can force the deal through the Greek parliament, and that key creditors such as the IMF and Germany accept it too, it will do little more than buy time for negotiations on yet another rescue.
The final tranche of cash from the existing bailout should be enough to meet repayments due to the IMF and European Central Bank through the end of August. But the Greek government will then have to find more than two billion euros for both institutions in September and October.
"If this week concludes with agreement between Greece and its creditors, it won't be long before the next chapter in this drama," said Angus Campbell, senior analyst at FxPro.
And no matter what happens by the end of this month, it is a virtual certainty that the economic depression in Greece will just continue to deepen.
At this point, normal economic activity in the nation has pretty much ground to a halt. Just consider the following excerpt from a recent Zero Hedge article...
"Business-to-business payments have almost been paused," one Athens businessman says. "They are just rolling over postdated checks."
For Greek banks, mortgage loans left unserviced by strategic defaulters have become a particular headache, especially since the Syriza-led government says it is committed to protecting low-income homeowners from foreclosures on their properties
"There's a real issue of moral hazard...Around 70 percent of restructured mortgage loans aren't being serviced because people think foreclosures will only be applied to big villa owners," one banker said.
For a long time, I have been warning that the next major economic crisis would begin in Europe before spreading across the entire globe.
Greece has a relatively small economy, but Italy, Spain and France are going down the exact same road that Greece has gone.
And what IMF officials are doing right now is that they are setting a precedent for future debt negotiations that they know are almost certainly coming with other countries in the future.
Sadly, most of my readers (being Americans) don't really grasp the importance of what is going on over in Europe. We are watching a horrific train wreck unfold in slow-motion, and what is going to happen over the next few weeks is going to have massive implications for the entire planet.
An Approaching Financial Collapse - By Matt Ward -
http://www.raptureready.com/soap2/ward22.html
Greece and Europe are at a turning point. Many seasoned commentators already believe that the next and greatest worldwide economic crash has already begun. Over the next few days decisions and events are going to unfold that will literally affect the economic course of Europe, and arguably the entire world.
We are looking at the potential beginnings of a full-blown worldwide economic collapse.
What is happening now in Greece really is a tragedy. The place which witnessed the birth of democracy is on the edge of a precipice, and it looks very much like they may go over into the abyss. If Greece defaults on its debts to the International Monetary Fund, which at this point looks certain, it will bring forth a chain of events very difficult to control with repercussions very difficult to predict.
What is certain is the real effects and damage this will cause for Greece internally and that the contagion of this crisis will certainly move to other European countries, and very quickly at that.
The economy of Greece has been reeling since 2008 when the US financial crisis fully spilled into Europe, swamping unstable economies like Greece. Eurozone countries within a matter of just a year became so severely damaged that five had to seek official and massive financial help.
Greece, Ireland, Portugal, and Cyprus formally applied for bailout programs. Each country received huge bailout loans from a combination of the European Union, the European Central Bank and International Monetary Fund in exchange for the implementation of harsh domestic austerity measures.
As the crisis developed domestic economic activity in these five countries were severely affected; meaning that governments were only able to collect dwindling tax receipts leaving them with significantly decreased revenues. This in turn has led to even greater and harsher austerity and the further slashing of government spending.
The effect of this on these countries has been crippling, with massively increased unemployment, increased social disorder and discontent, limited and stifled new business growth and worryingly a large percentage drop in each nation's annual GDP.
During this same period because each of these nations borrowed a lot of money, each has seen a huge increase in sovereign debt since 2008. Spain and Ireland's sovereign debt has ballooned by as much as two-thirds since 2008 alone. At the same time the private debt of households and businesses has also risen -- meaning that combined public and private debt in these countries is simply staggering.
Greece and Portugal's public and national debt is three times the size of its annual economic output. Ireland's is four times bigger. Since 2008, the jobless rates have doubled in Ireland and quadrupled in Greece, especially amongst those over the age of 25.
These factors combined have led to the rise of political parties like Alexis Tsipras's Syriza party, elected on a specific mandate to challenge and end austerity. And challenge austerity is exactly what he is doing, and in doing so he may bring down the European financial system.
If Greece defaults on their obligations to the IMF it will likely try to return to the drachma system it had before, albeit a drastically deflated drachma. This would be great for tourists on Greek beaches but horrendous for anybody with a Euro investment in Greece. Anyone with any Euros held in Greek banks would look to withdraw their investments, meaning that the entire Greek banking system would likely implode.
This would mean there would be no Euros to convert into Drachma's therefore there would be no money for the Greek government to cover essentials like paying for the police force, the Army, so on and so forth. This could lead to internal anarchy in Greece.
This situation would lead to the second major issue Europe would face from this crisis: contagion. To prevent a Greek collapse the European Union may simply eliminate a significant portion of Greece's debt in return for further integration and promises of financial compliance from Greece.
This sounds great in theory but watching all this closely from the sidelines are Spain, Italy and Portugal who would see an immediate spike in support for their own domestic versions of the hardline Syriza party, who would look to make a similar deal to Greece.
This would be a much different situation because the debt owed by these countries on a whole is on a different level to that owed by Greece. Much of the debt held by Spain, Italy and Portugal is held by commercial banks. This means that if these countries were to default the entire European banking system would collapse as these banks would become insolvent. This would almost certainly drag many other worldwide financial institutions and banks over the edge with them.
To prevent this the Eurozone would only have perhaps one option; to waive a significant portion of their debts too, which would mean creating trillions of Euros from nowhere instantaneously to service and facilitate this debt. This would almost certainly lead to a currency crisis the likes of which we have not yet seen. It would be epic. This in turn would almost certainly cause a worldwide currency crisis.
I write often about the convergence of biblical prophecy. The more I look at the worldwide financial markets the more I find it hard to comprehend how they have not completely collapsed already. I am convinced it is the staying hand of God that has sustained them thus far. However, I believe that hand is being removed, along with the obvious removal of restraint more generally that we are witnessing in the world today.
At some point in the near future the markets will collapse and the worldwide banking and financial system that we know today will come crashing down. When this happens unprecedented chaos will follow in its wake. It is simply a matter of time.
There is real possibility this ultimate crash could be triggered by events similar to those we are witnessing in Greece today. Only time will tell. When the crash does come it will result in and require the complete rebuilding of the worldwide financial system.
One thing that is clear is that there has never been a time in human history where the forthcoming mark of the beast financial system has ever seemed such a viable and realistic possibility.
"He causes all, both small and great, rich and poor, free and slave, to receive a mark on their right hand or on their foreheads, and that no one may buy or sell except one who has the mark or the name of the beast, or the number of his name. Here is wisdom. Let him who has understanding calculate the number of the beast, for it is the number of a man: His number is 666" (Revelation 13:16-18).
Signs of Financial Turmoil in Europe, China and the United States - By Michael Snyder -
http://theeconomiccollapseblog.com/archives/signs-of-financial-turmoil-in-europe-china-and-the-united-states As we move toward the second half of 2015, signs of financial turmoil are appearing all over the globe. In Greece, a full blown bank run is happening right now. Approximately 2 billion euros were pulled out of Greek banks in just the past three days, Barclays says that capital controls are "imminent" unless a debt deal is struck, and there are reports that preparations are being made for a "bank holiday" in Greece. Meanwhile, Chinese stocks are absolutely crashing. The Shanghai Composite Index was down more than 13 percent this week alone. That was the largest one week decline since the collapse of Lehman Brothers. In the U.S., stocks aren't crashing yet, but we just witnessed one of the largest one week outflows of capital from the bond markets that we have ever witnessed. Slowly but surely, we are starting to see the smart money head for the exits. As one Swedish fund manager put it recently, everyone wants "to avoid being caught on the wrong side of markets once the herd realizes stocks are over-valued".
I don't think that most people understand how serious things have gotten already. In Greece, so much money has been pulled out of the banks that the European Central Bank admits that Greek banks may not be able to open on Monday...
The European Central Bank told a meeting of euro zone finance ministers on Thursday that it was not sure if Greek banks, which have been suffering large daily deposit outflows, would be able to open on Monday, officials with knowledge of the talks said.
Greek savers have withdrawn about 2 billion euros from banks over the past three days, with outflows accelerating rapidly since talks between the government and its creditors collapsed at the weekend, banking sources told Reuters.
All over social media, people are sharing photos of long lines at Greek ATMs as ordinary citizens rush to get their cash out of the troubled banks.
And if there is no debt deal by the end of this month, the Greek debt crisis is going to totally spin out of control and financial chaos will begin to erupt all over Europe. But instead of trying to be reasonable, EU president Donald Tusk "has delivered an ultimatum to Greece", and it almost appears as if EU officials are more concerned about winning a power struggle than they are about averting financial catastrophe...
EU president Donald Tusk has delivered an ultimatum to Greece, claiming the country must 'accept an offer or default' at an emergency summit set for Monday - in a last-ditch effort to stop the debt-stricken nation crashing out of the euro.
'We are close to the point where the Greek government will have to choose between accepting what I believe is a good offer of continued support or to head towards default,' Mr Tusk said today.
His comments come as Greek Prime Minister Alexis Tsipras warned that his country's exit from the eurozone would trigger the collapse of the single currency.
'The famous Grexit cannot be an option either for the Greeks or the European Union,' he said in an Austrian newspaper interview.
'This would be an irreversible step, it would be the beginning of the end of the eurozone.'
While all of this has been going on, the obscene stock market bubble in China has started to implode. Just check out the following numbers from Zero Hedge...
As the carnage began last night in China we noted the extreme levels of volatility the major indices had experienced in recent weeks. By the close, things were ugly with the broad Shanghai Composite down a stunning 13.3% on the week - the most since Lehman in 2008 (with Shenzhen slightly better at down 12.8% and CHINEXT down a record-breaking 14.99%).
Under normal circumstances, numbers like these would be reason for a full-blown financial panic over in Asia. But these are not normal times. Even with these losses, stock prices in China are still massively overinflated. For example, USA Today is reporting that the median stock over in China is "trading at 95 times earnings"...
Margin debt in China has soared to a record $363 billion, according to Bloomberg, and the median stock in mainland China is now trading at 95 times earnings, which even tops the price-to-earnings multiple of 68 back at the 2007 peak.
That is absolutely ridiculous. When a stock is trading at 25 or 30 times earnings it is overpriced. So these numbers that are coming out of China are beyond crazy, and what this means is that Chinese stocks have much, much farther to fall before they get back to any semblance of reality.
Meanwhile, in the U.S. money is flowing out of bonds at a staggering pace. The following quote originally comes from Bank of America...
"High grade credit funds suffered their biggest outflow this year, and double the previous week (and also the biggest since June 2013). High yield outflows also jumped to $1.1bn, the biggest since the start of the year. However, government bond funds suffered the most amid the recent spike in volatility, with outflows surging to the highest weekly number on record ($2.7bn). This brings the total outflow from fixed income funds to almost $6bn over the last week, the highest since the Taper Tantrum and the third highest outflow ever."
What this means is that big trouble is brewing in the bond markets. This is something that I warned about in my previous article entitled "Experts Are Warning That The 76 Trillion Dollar Global Bond Bubble Is About To Explode".
For the moment, U.S. stocks are doing fine. But just about everyone can see that we in a massive financial bubble that could burst at any time. Presidential candidate Donald Trump says that what we are witnessing is a "big fat economic and financial bubble like you've never seen before"...
Yesterday during an interview on MSNBC, presidential candidate Donald Trump said he has some big names in mind for the Treasury secretary if he wins the White House. "I'd like guys like Jack Welch. I like guys like Henry Kravis. I'd love to bring my friend Carl Icahn." He also opined on the economy and the stock market, admitting that the Fed has benefited people like him but that the economy and is in a "big fat economic and financial bubble like you've never seen before."
Ron Paul also believes that this financial bubble is going to end very badly. Just check out what he told CNBC earlier this week...
Despite record highs in the market, former Rep. Ron Paul says the Fed's easy money policies have left stocks and bonds are on the verge of a massive collapse.
"I am utterly amazed at how the Federal Reserve can play havoc with the market," Paul said on CNBC's "Futures Now" referring to Thursday's surge in stocks. The S&P 500 closed less than 1 percent off its all-time high. "I look at it as being very unstable."
In Paul's eyes, "the fallacy of economic planning" has created such a "horrendous bubble" in the bond market that it's only a matter of time before the bottom falls out. And when it does, it will lead to "stock market chaos."
Yes, this financial bubble has persisted far longer than many believed possible, but all irrational bubbles eventually burst.
And you know what they say - the bigger they come the harder they fall.
When this gigantic financial bubble finally implodes, it is going to be absolutely horrifying, and the entire planet is going to be shocked by the carnage.
BE SURE TO CHECK OUT MY ALL NEW PROPHECY AND CREATION DESIGN WEBSITES. THERE IS A LOT TO SEE AND DO..........
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.