Monday, July 13, 2015


The Greeks have reached a deal with the EU/IMF which doesn't seem like that good a deal at all and, as it crosses all sort of red lines the Greek people voted against, might be cause more harm than good. At the same time, John Kerry and his Iranian counterparts have signaled a deal may be near, but much like the Greek deal, no matter how good or bad it may be, chances are good the GOP will squash it just because Obama is still president.

Let's start with the Greek deal which in exchange for more bailout money they have agreed to slash pensions, raise taxes, mostly on the poor and middle class, privatization of the state's power company and give unions far less power so they can fire people easier. What isn't included are higher taxes for corporations or a change in their inability to collect taxes from the richest individuals. This is known here in the US as the Republican game plan. It hasn't worked here or abroad so what chances do you think this whole Greece thing will turn out for the better? Slim to none come to mind.

Not only does this merely kick the can down the road to an inevitable collapse, but it also makes perfectly clear that the world elite's are trying to impose a new form of slavery upon us by threatening us with economic collapse every time something doesn't go their way. It has to end or economics will make it end for us, and that result will be far, far worse.

The major problem with all of this is that it is by no means certain it will pass the Greek government, some of whom will see this as a betrayal. The voters overwhelmingly said NO! to what they ultimately got and the ruling Syriza party may not go along with it. If they don't, the government will collapse and a new round of elections will be called, putting any agreement signed in mortal danger if an either further leftist government takes over, which is not outside the realm of possibility.

This is from

Whenever a country borrows too much, the IMF usually recommends that it write down its debts, balance its budget and devalue its currency. The idea is that it’s pointless to try to pay back more than you can – it can actually be self-defeating – but you also need to become fiscally self-reliant so you don’t have to go back for one bailout after another.

The tricky thing, though, is that at the same time you’re raising taxes and cutting spending, which hurts the economy, you need to get it growing again. That’s why the IMF prescribes a big dose of monetary stimulus – that is, a cheaper currency – to offset the economic pain from fiscal austerity.

But this isn’t what happened in Greece. Well, aside from the austerity. It did get a lot of that. What it didn’t get, though, was a cheaper currency or enough debt relief. See, back in 2010, policymakers were petrified that the euro zone was like a line of dominoes just waiting to get knocked over by the weakest link. If Greece defaulted on its debt, the French and German banks that had lent it money might go bust, and the banks that had lent them money might, too. Not only that, but default also might force Greece out of the euro, at which point markets would begin to bet against whatever they thought was the next weakest link. That would push up borrowing costs for, say, Portugal and make it more likely that it would, in fact, default, which would then push up borrowing costs for Spain. In other words, Greece wasn’t allowed to default, even though it needed to, because doing so threatened to set off a series of self-fulfilling prophecies that could have ripped the common currency apart.
So Greece got bailed out to the extent that it was given money to then give to the people to whom it owed money. That was good news for French and German banks that got their money back, but it wasn’t for Greece. It still had as much debt as before, only now it owed official creditors such as the IMF instead of private ones like the banks. Since 2008, Greece’s debt burden has shot up mostly because of its economy was getting smaller rather than its debts getting bigger.
The Europeans faced a choice, but the problem was they don’t know how what they decide will turn out. It was possible that ejecting Greece from the euro could actually make it easier for the rest of the euro zone to come even closer together. Or ejecting it could have been the end of the dream of a United States of Europe. But in either case, the continent’s political future was at stake.
In the end, the Europeans decided they weren’t willing to give up on the dream.

In the long run, this kind of Band-Aid will wear out and fall off creating a whole new set of problems all over again. This is trickle down economics all over again, where we give money to the banks, who lend back with interest to a few, hoard the rest and no one gets any better. This plan will not save their country but may actually doom it. We will wait and see over the next few days if the Greek government wants to risk a default, and true economic turmoil, or roll the dice and perhaps try to go the same route as Iceland, an economy now one of the strongest in Europe by doing the exact opposite of everything they are trying there and at home.

And then there is Iran who may or may not be close to a deal depending on who you talk to. Rumors are they are close to a historic deal, 18 months after they first started these debates. Issues exist such as removal of US sanctions, particularly with new weaponry, and writing of the treaty which no longer describes Iran's nuclear ambitions as illegal. The first part should be a no-brainer for the US to deny and the second seems idiotic because if they are giving up their nuke program, why are they demanding an end to the US calling it illegal? The one thing I have to agree with some of the detractors, and the GOP of Congress, is we cannot have another deal like the one we made with North Korea that blew up in our faces and destabilized and entire region on the planet. Thank God Jimmy Carter is nowhere near this, but John Kerry doesn't seem much better.

Now regardless of a deal that may be made, it is going to be a hard, hard, sell to both countries who rightfully don't trust each other. Hardliners in both places have reasons to kill the treaty for both political and realistic reasons. Mitch McConnell and John Boehner have both singled a wariness that may leave Iran on the threshold of becoming a nuclear power. Israel has made it clear they oppose this treaty and may act unilaterally if they even think Iran is getting a bomb.

We will have to wait and see what the nuts and bolts are of this agreement but I can pretty much guarantee if the treaty has a lifting of US sanctions immediately and includes new weaponry for some vague promise of no nukes, the GOP is going to have a fit and fall in it. It will be DOA. Likewise, if the Iranian Mullahs don't see those in the treaty, they are likely to kill it as well. Chances are pretty good that even if a deal gets made, it won't last. And if it doesn't, an Iran speeds up their desire for nuclear weapons, war is all but certain as Israel will attack them post haste and may even use nukes in a pre-emptive strike.

So between the possible Greek and Iranian deals, this week should prove very interesting. At least we are more likely to hear more about this this week than Scott Walker's attempt at being President (yuck!) or any more nonsense from Donald Trump and the illegals he wants to get rid of so badly.

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