I’ve already assessed the significance of the Greek elections in an earlier article. That in of itself is cause for an alarm as the Syriza party (the most popular party in Greece today) has decided to go head to head with Germany in a standoff regarding the potential exit of Greece from the Euro-zone (Greece wants Germany to drop its bailout austerity requirements while Germany is pretty much on the verge of telling Greece to take a hike).
there is one final element to
The Second Greek Bailout has proven to be based on a total and complete lie on the part of the ECB and EU politicians.
If you’ll recall, during the Second Greek bailout, private Greek bondholders were told that they HAD to accept the terms of the bailout (a 70% haircut, and new bonds with lower interest rates and longer repayment periods). The alternative to this, as promoted by the ECB and EU politicians, was the total loss of money.
As you may or may not know, only 97% of private bondholders went for the deal. The remaining 3% (representing roughly €6.5 billion in Greek debt) decided they would maintain their bond holdings as they were and see if they got their money back.
Tuesday before last,
they didn’t even have to! Indeed, under normal conditions if
Put another way, those Greek bondholders who DIDN’T go for the Second Bailout, just got their money back at 100 cents on the Dollar (compared to those who DID go for the Second Bailout and lost 70% of their money).
has shown the ECB and EU bureaucrats to be complete and total liars. It also
shows the entire bailout/ austerity measures process to be garbage. Private
bondholders got screwed.
significance of this cannot be overstated. The Second Greek bailout has shown
the whole of
Bailouts don’t work (
2) Austerity measures worsen the economy.
3) Private bondholders get screwed.
4) The only one who comes out clean is the ECB.
of this ties in with the rise in Nationalism I’ve noted in previous articles. THIS is why
is why yields on Spanish and Italian bonds are rising (as I write
that note I fully believe that the EU will collapse before the end of the
summer. So if you have not taken steps to prepare for the end of the EU (and
its impact on the