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Tragi-Comic Greece Illuminates “Austerity”

10 Jul

Tragi-Comic Masks--a Greek Invention [courtesy Google Images]

Tragi-Comic Masks–a Greek Invention
[courtesy Google Images]

Reuters wrote in May (“Euro zone: more time needed for Greek reforms”):

Euro zone finance ministers will not meet on Thursday and need more time to discuss Greek reforms that would unlock new loans, signaling significant differences remain between Athens and its lenders on bailout targets.”

Signaling”?!

Signaling significant differences?!“

Bunk.

What they’re signaling in this “never-ending story” is that Greece will never be both willing and able to repay its existing national debts—and neither side wants to admit that truth.

What they’re “signaling” is that the EU creditors refuse to face reality: Greece is bankrupt. Therefore, Greece should be allowed to file for bankruptcy because it can’t possibly repay its existing debt. Greece should be allowed to rebuild its economy without repaying existing EU debt obligations—and also without going deeper into debt.

What they’re “signaling” is the creditors’ refusal to admit that “what can’t be paid, won’t be paid”.

Athens and its EU/IMF lenders aimed to reach an agreement this week on reforms needed to conclude a key review of the country’s bailout progress that would unlock funds under a multibillion-euro bailout package it signed up to in July.”

What do they mean by “bailout” and “bailout package”?

They mean that Greece (which is technically bankrupt and can’t possibly repay its existing debt on its own) should be allowed to borrow more funds from “somebody”. Funds from these new “bailout” loans will be used to repay existing debt due on their old loans. Greece will be “bailed out” by allowing it to go deeper into new debt in order to seemingly repay the old debt that Greece already can’t possibly pay.

Does that make sense? Isn’t it like sending good currency after bad?

Isn’t it obvious that if Greece must be allowed to go into more new debt to seemingly repay its old debt, it’s just a matter of time before Greece will need to go even deeper in newer debt to seemingly repay its most recent bailout package.

Under these bailout packages, Greece may never stop going deeper into debt.

Somebody needs to face the truth. Greece can’t pay its existing debt. It won’t be able to repay additional, newer debt. Greece is bankrupt. There’s no point to allowing or forcing bankrupt Greece to go even deeper into debt.

Greece and its creditors have agreed on a package of reforms worth 3 percent of its economic outputbut still disagreed on contingent measures, to be implemented only if needed, to make sure the country reaches agreed fiscal targets in 2018.”

The creditors are predators; the Greeks are parasites. The creditor-predators loaned Greece more currency than Greece could ever hope to repay. The Greek-parasite debtors borrowed more money than they could ever hope to repay.

Now, they’re locked in a deadly embrace wherein both are trying to exploit the other. Creditors want Greece to agree to be their debt-slaves and repay 3% of their GDP to the creditors each year. Greeks want more free loans (“contingency measures, to be implemented only if needed”) that they’ll never repay in full.

It’s a lose/lose relationship where both sides, refusing to lose more, will ultimately lose everything.

A pox on both their houses.

I’ve said before—and continue to say:

1) Let the EU creditors admit that: a) they were at least stupid (and at worst, predatorial) for lending more currency to Greece than Greece could ever hope to repay; and b) they are therefore partially responsible for Greece’s insolvency—and, therefore, write off most or all of the remaining Greek debt.

2) Let the Greek government file for bankruptcy and admit that if they want to rebuild their country, they’ll have to do so on their own productivity, with their own sweat and hard work, but without signing up for additional debt.

Neither side wants to face the truth. Both sides want to exploit the other. To helk with ‘em both.

• “A swift, comprehensive deal would also pave the way for talks on debt relief, which Athens hopes will help restore investor confidence and convince Greeks that their sacrifices are paying off after six years of austerity.”

1) The EU creditors and Greek debtors have sought a “swift, comprehensive deal” for SIX YEARS without success. If they haven’t found one yet, they aren’t likely to do so in the foreseeable future.

2) “Debt relief” means that Greek debtors want permission to write off more of their remaining debt (after already writing off at least half of the original debt). The EU creditors are refusing to write off the balance of Greek debt and are insisting that the Greeks repay the remainder. It’s reasonable for the creditors to want to be paid. But, it’s unreasonable for those creditors to expect a bankrupt Greece to repay all, or even most, of its remaining debts.

3) Q: Why is it important to “restore investor confidence”?

A: So some new fools can be found to “confidently” lend more currency to Greece—which bankrupt Greece will, again, never repay without further bail-outs.

4) “[C]onvince Greeks that their sacrifices are paying off”?!

Sacrifices”? What “sacrifices”?

All the Greeks are being asked to do is to pay their debts. Where’s the “sacrifice” in that?

(It’s illuminating and even a little scary to see that, in our debt-based monetary and economic world, debtors are being conditioned to regard the repayment of their debts as a “sacrifice”. If payment of legitimate debts is really a “sacrifice,” why should any debt be repaid?)

As things stand now, the Greek people are being left to wallow in “austerity while they wait for some “confident investor” to lend them the additional currency they think they need to pay off their existing debts.

But what, exactly, is “austerity”?

A recent article by the AFP (Agence France-Presse) entitled “Greek no to austerity a ‘sublime act of resistence’: PM” can help us understand “austerity”. According to that article, Greek Prime Minister Alexis Tsipras recently Tweeted that:

Debt-laden Greece’s rejection exactly a year ago of austerity measures proposed by international lenders was a sublime act of resistance.

The ‘No’ of our people was a sublime act against the euro bigwigs promoting austerity but also against the establishment which wanted to stifle the country.”

Last year, the “sublimely” courageous Greek people voted by 62% to reject “austerity”. Bravo! (If we can believe PM Tsipras, this “sublime rejection” should go down in history as just as heroic as the Battle of Thermopylae.)

However, just one week after that vote, the same PM Tsipras (who is currently praising the Greek people’s vote as a “sublime act of resistance”) was allegedly “forced” (in his own “sublime act of surrender”?) by EU creditors to sign a new bailout agreement to avoid bankruptcy and to accept further austerity measures.” Boo!

And what is this “sublime act of resistance” all about? Well, ultimately, the modern Greek heroes voted to not pay their bills.

Makes me laugh.

I’m not here to defend the EU creditors, but I fail to see anything “sublime” or heroic in voting to not pay your legitimated bills.

Politicians are the same everywhere. Shameless.

Today, Greek PM Tsipras praises the Greek people’s “sublime act of resistance” that he, himself, betrayed in A.D. 2015—just one week after that “sublime act”.

Tragedy? Comedy? I choose to laugh. But I understand why others choose to weep.

• “[Last] May, Greek lawmakers voted in favour of more spending cuts and tax hikes. Greece urgently needs the next tranche of bailout money to repay big loans to the European Central Bank (ECB) and IMF in July.”

In the previous paragraph, we see the practical essence of “austerity”. Austerity means that the government will impose “spending cuts and tax hikes”. Why? “To repay big loans”.

In the final analysis, “austerity” merely describes the time when a debtor is required to pay his debts.

For example, suppose a man decides to take a second honeymoon with his wife. He’s going to max out his credit cards and spend $25,000 in July to take a first-class vacation to Tahiti. No expense spared. He and his spouse will have a fabulous month of July.

But, come August, when he returns home and even before he and his wife lose their Tahiti tans, the bills on his credit cards will start coming due.

July may’ve been a fabulous, credit-based vacation. However, August (and perhaps several months or years into the future), will be dismal as the “honeymooners” struggle to repay the credit-card debt they rang up in Tahiti. They won’t be able to go out for dinner. Wife can’t go shopping. Husband can’t afford a lousy six-pack of beer. They can’t afford the gas needed to drive themselves to work each day and therefore find themselves riding the bus.

That’s “austerity”. It’s the dismal time that inevitably comes after you’ve gone into debt and you’re forced to tighten your belts in order to repay your debts.

That’s all “austerity” really is: It’s the time when you’re compelled to pay your debts.

Sometimes, austerity is short-lived and almost unnoticeable (like when you buy a new flat-screen TV for $2,500). Other times (like when you pop for the $25,000 Tahitian vacation), the resulting austerity can be long-term and painful.

The bigger the debt, the deeper and more painful the resulting “austerity”.

Austerity is the natural consequence of any debt. Austerity follows debt as night follows day.

Love And Marriage is a song first popularized by Frank Sinatra in the 1950s. To paraphrase that song:

Debt and austerity, debt and austerity,

Go together like a horse and carriage.

Dad was told by muh-ther,

You can’t have one without the uhh-ther.”

Politicians would have us believe that “austerity” is some strange, unpredictable and unjust phenomenon. Politicians would have us believe that we can have endless debt (“free lunches”) without ever suffering a period of austerity (paying for those lunches).

But they’re lying. They seduce us with the promise of free benefits that government can magically provide without ever having to pay for.

The truth, however, is that “austerity” merely means debt-payment and therefore “austerity” follows debt like carriages following horses.

Again, the bigger the debt, the deeper and more painful the inevitable period of austerity when the debt must be paid.

If a nation lives on credit (debt), that lifestyle will inevitably lead that nation to a period austerity (depression) when, one way or another, the debt must be paid.

The United States government is the biggest debtor in the world. The National Debt is at least $20 trillion (official estimate). It may be $100 trillion (John Williams at Shadowstats.com). Including unfunded liabilities, the National Debt could be over $200 trillion (Congressional Budget Office & economist Laurence Kotlikoff).

That means that the U.S. (being the world’s biggest debtor) is heading for the world’s biggest and most painful period of austerity.

Love and marriage. Horse and carriage. Debt and austerity. It’s inevitable.

Living on credit inevitably brings individuals, governments and nations to periods of austerity. Credit inevitably runs out and debtors are forced into “austerity” (less benefits and more taxes) as they try to pay their bills.

The moment America embraced the idea of a “debt-based” monetary and economic system, America condemned itself to one day suffer an extended period of austerity.

If you would avoid austerity you should first avoid going into debt.

If the U.S. Constitution had a balanced-budget amendment that limited government to spending only whatever revenues it acquired each year (and therefore, never borrowing to go into debt), the National Debt would never have grown into trillions of dollars. If we’d had a balanced-budget amendment, we wouldn’t be staring down the barrel of the world’s most painful period of austerity.

But, seeing as we have gone deeply into debt, the only other way to avoid austerity (paying our debts) is to somehow cancel or repudiate those debts. That means restructuring, bankruptcy, police state, revolution and/or war (kill the creditors).

Unfortunately, government can’t cancel its $20 to $200 trillion National Debt without also destroying the value of the correlative debt-instruments (U.S. bonds) that are being held by the American people and global investments as paper assets.

If government canceled the National Debt it would also thereby destroy somewhere between $20 and $200 trillon in paper assets.

Can the U.S. or global economies withstand the loss of somewhere between $20 and $200 trillion worth of paper assets? They cannot. If $20-$200 trillion in paper assets are suddenly “disappeared,” the U.S. and global economies will collapse into a “dark age” of austerity.

If we try to pay our massive National Debt, we’ll go into austerity as we tighten our belts in order to make good on decades of debt.

If we try to repudiate our National Debt, we’ll also repudiate trillions of dollars worth of U.S. bonds. The resulting loss of trillions of dollars in paper capital will collapse the economy and thereby plunge us into austerity.

Either way, austerity is coming. Bet on it.

The Greeks are in austerity now.

Why? Because they dove eagerly into debt and never imagined that, one day, they’d be required to repay that debts. They thought they could just keep borrowing more currency to repay the previous debt—after all, that’s what America does, right?

After six years of “austerity,” the Greeks have learned nothing. They’re still trying to borrow another “tranche of bailout money to repay big loans to the European Central Bank (ECB) and IMF in July.” They still think they can avoid “austerity” by going even deeper into debt.

Dey be dumb. They don’t understand that austerity is the natural and inevitable consequence of debt. Go into a little debt, you get a little austerity. Go into big debt, you get big austerity. The bigger the debt, the bigger and more painful the austerity.

If Greeks be dumb, we’re no smarter.

The U.S. should’ve hit its “austerity moment” no later than A.D. 2008. However, unlike the Greeks (who have no central bank of their own), the U.S. was able to avoid that austerity by means of QE (Quantitative Easing) which allowed government to go even deeper into debt to postpone the austerity that the previous debt would otherwise have required. (Since A.D. 2008, the government has more than doubled the National Debt to avoid the “austerity inevitability”.)

Nevertheless, sooner or later, the government’s ability to live on more credit and go ever-deeper into debt will end. Then, we’ll no longer be able to use our Master Card to pay off our Visa to pay off our American Express. At that moment, the debt will actually have to be paid rather than rolled over, and Americans will suffer the same sort of austerity currently seen in Greece (or Venezuela).

Debt and austerity are as closely linked as the head and tail on a coin. Y’ can’t have one without the other.

America has enjoyed the high life based on big-time debt. We had our trip to Tahiti. Hope you enjoyed it.

Soon, however, America will be called on to pay its debt. Whether we pay or don’t pay that debt is almost irrelevant. Either way, when the debts come due, we will suffer a correlative, big-time austerity.

Buckle up.

 

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8 responses to “Tragi-Comic Greece Illuminates “Austerity”

  1. Blonddbythelight

    July 10, 2016 at 10:49 PM

    Hi Alfred!

    I’m just a bit confused about this article. I was under the impression that Greece was in major debt due to their government and politician’s crazy overspending. Is this about individual Greek’s debt or Greece’s government and politician’s crazy overspending?

    I’m sorry but that’s like saying we American’s are responsible for spending $300 for a toilet seat, $400 for a hammer, paying useless public servants salaries and pensions, black ops, millions of hollow point rounds, etc. I never approved a purchase order for any of those items above and I’m fairly sure you didn’t either. And neither did the Spaniards, Greeks or Icelanders/ians. You and I didn’t bring the several national debts of these countries to 1 trillion, 20 trillion or 200 trillion, the several governments did, not the people! That is not my debt or yours or any other people. In this country there is an alleged corporate debt within the 10 square miles of Washington, DC. They would have us believe that a corporation would fall due to debt and that would bring the entire country down. How so? It’s only a corporation, it’s incorporated for God’s sake! But remember, debt IS money in this crazy fiat debt based monetary paradigm. But really, what’s to repay when these countries are in “debt” when “debt” IS the money?

    I thought Spain, Iceland, Greece and such was about their governments crazy overspending, not the individual non-governmental people.

    Your thoughts?

     
    • Adask

      July 13, 2016 at 12:24 AM

      I’m not arguing that sticking the public with the debts incurred by our de facto government is just, but it’s done around the world on a regular basis. But, even though the people may not have incurred or benefited from the government’s debts, the people are still liable in this regard: they were too lazy, ignorant or indifferent to stop their “government” from going so deeply into debt. In the end, the people are responsible for whatever it is that the view as their “government”–even if that “government” is a private corporation, a fraud or a fascist dictatorship. If We the People are so stupid that we allow our “government” to enter into excessive debt then, one way or another, We the People will be held accountable for that debt. We might not pay that debt, but we will still “pay” in the sense that repudiating the debt will push us into an economic depression or even national disintegration. The people of every nation must be held liable for their own government–even if it’s a criminal enterprise. If we don’t impose moral values on our “government,” we will be held liable for its resulting debts. There’s a fundamental justice in that.

       
      • tommy glen

        July 13, 2016 at 2:04 AM

        sorry, but i disagree. i think the average person, in 1933, was much more in tune with the money system and banking than the average person today but they did not stop FDR from declaring a banking emergency and threatening all Americans enough that they turned in all their gold coins. what a CRIME on the people. and today with paper ‘money’ the whole ‘national debt’ is BOGUS. the banksters are holding us hostage by printing and ‘loaning’ us, at interest, paper that cost them basically nothing but in return we must work…which demands our time…and energy…and our families…our strength…our lives…to gain hard assets hopefully…that we can loose to the BANKSTERS in a minute if we fail to make the payments on ‘pretended’ ‘loans’ that again, cost them almost nothing. the entire banking system…and mortgage system is FRAUD. i don’t see what the people can do about it since most people have no idea. how are you going to educate them? our elected reps are so dumb and ignorant, or self serving is more like it. yes, most Americans are stupid in the ways that our gov is supposed to work. but that is not always their own fault. and not all of us fit that catagory. so while you may think that some might deserve it i think it would be CRUEL JUSTICE to put this on all the people.

         
      • Blonddbythelight

        July 13, 2016 at 1:48 PM

        Ahhh, I respectfully disagree with you, my friend.

        So what’s the point of even having people who allegedly serve the public, if they can go wild and leave us to pick up the tab AND the blame? So they can rape, pillage, steal, commit piracy and then just say “Oh well, it’s not my fault, it’s the people who paid me (very well I might add) that is at fault? The nanosecond each of these so-called servants of the public took their first paycheck, they each became fiduciaries and trustees liable to us, the intended beneficiaries of the trust! I don’t care if it’s the White House gardener or the “President”, they are all equally servants of the public.

        What happened to accountability? If I am doing a job, it’s my job to do what I am being paid for. It is my job to stay within the confines of the agreement, contract, trust, usufructuary arrangement otherwise it is my ass on the line. Talk about lazy, how lazy would that be if I worked for someone, got compensated handsomely then screwed up, overspent, put my employer in debt and hazard then just told my employer: “It’s all your fault, you were lazy, ignorant, indifferent. You didn’t stand over me every second so when the cat is away, and here’s the huge bill you have to pay for now, not my problem…” Aren’t we supposed to be using the same weights and measures? If so, why aren’t we? Why are we so quick to assign blame to the superior source? Are we that hopelessly Stockholm-syndromed?

        We are the superior source! Those who decided to take a public servant job, no one forced them into it, it was their own choice! They chose for themselves a subservient position which removed them from the superior source into subservients! And for the most part they get great pay, paid vacations, sick days, medical, dental, vision, 401k’s, pensions, fringe benefits, etc. As far as public servants, they made the decisions to commit the breach of contract, breach of fiduciary duties, breach of trust, why and how can it possibly be our fault? And don’t forget, we pay for supervisors to supervise them, and supervisors to supervise the supervisors so we can go about our daily lives. And we’re the lazy ones? And how are we supposed to monitor these servants? We’d have to be there monitoring 24/7, so what’s the point?

        And I don’t care what common practice is or what’s been going on for a long time or other countries do it. The instant we find that a pedophile has been molesting children, we immediately arrest and take that molester out of his domicile so no more children can be harmed.

        Maybe we need to start treating these malfeasants like pedophiles and pull them out of office. But how are we to know if they are malfeasant or not, because the rule is, we normally find out long after the fact of the wrongdoings. Also, most here are aware of the @hitshorm that happens when one goes against the status quo.

        So what is the solution?

         
      • Adask

        July 14, 2016 at 4:22 AM

        The “solution” includes two parts:

        1. We must learn what our God-given, unalienable Rights are and teach that knowledge to our children and our neighbors.

        2. We must be prepared to instantly fight (to the death, if necessary) against any governmental thug who tries to deny or eliminate those God-given, unalienable Rights. Government must know that we’ll go after ’em like lunatics wielding chainsaws anytime they try to diminish our God-given, unalienable Rights. Government must recognize and FEAR the people’s fierce determination to wage implacable “holy” war against any agent or agency of government that attempts to deny, diminish or void our God-given, unalienable Rights.

         
  2. tommy glen

    July 10, 2016 at 11:25 PM

    basically all governments in the world are in debt to bankers. where did bankers get all that “money”? Well, it’s not money, it’s paper, and it only cost the bankers the price of the paper and the ink and a little labor and then they loan it to whatever country treasury, at interest, and it can never be paid back because the money to pay the interest is never printed, and then after years of talk about budgets and spending and cuts and taxes and handwringing about the national debt the banks are gradually taking over hard assets in exchange for paper money that only cost them the price of the paper and the ink and a little labor.
    if i have learned this i think all the “lawmakers” in washington should know this by now

     
  3. cynthia

    July 11, 2016 at 8:26 AM

    I guess this shows that some do not prescribe to financial “Jubilee” and verifies that many still have no clue that ‘money’ no longer is ‘real’ rather just an illusion based in numbers on paper pulled from thin air – Two Faces of Debt and Modern Money Mechanics verify this just in the first ten pages each I believe, could be wrong… not to leave out historical or is it hysterical story of money… M1 thorugh M5 or higher, think of the “M5” espionage movies

     
  4. Peg-Powers

    July 11, 2016 at 3:04 PM

    “It is finished.” (John 19:30)

    The words, the life, and the death and resurrection of the Son of God fulfilled all the Law and all the old rites, timetables, yokes of bondage, and symbolism which served as mere reminders, pointers, arrows directing the people’s faith and lives forward in time to Christ the Lord. This divine Redeemer was promised to Adam and Eve. Gen.3:15

    “Stand fast in the liberty wherewith Christ hath made us free. Be not entangled again with the yoke of bondage……and if ye be circumcised or uncircumcised (or anything else the Old Testament regulated, proscribed, prescribed) Christ shall profit you nothing….for he that practices one thing is a debtor to do (show respect for, pay attention to, be regulated by) the whole law and Christ is become of no effect unto you……For we through the Spirit wait for the hope of righteousness by faith……No Old Testament ritual or timetable gains you an advantage, but faith which worketh by love. If ye be led of the Spirit, ye are not under the law.” Gal. 5:1-18.

    I only respond with this because the Pharisees are still infiltrating and dishing out their leaven which will infect the whole lump in due time. Beware.

     

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