Grexit: The "Left" Failed Again, and Europe continues to fail Greece.

Soon, the Prime Minister of Greece will be forced to accept that capitulation did not save Greece, and that he has failed. Not only did he fail, but he failed in every way. Not only did he not achieve any concessions from Europe (read Germany), the IMF, ECB or European Parliament, he also failed to deliver the mandatory legislative changed demanded by the creditors. He failed to reform the Greek government, and instead has spend nine months perpetuating an already disastrous status quo.

Sadly his personal failure to stand by his values, and more importantly to meet his obligations to the 61% of voters who said "OXI", will taint not only his memory, but the entire "Left" for years to come. Meanwhile for his failure of nerve, the Greek people have lost a year of potential recovery, or at least the additional pain before the recovery has been postponed by a year, and the base from which they will begin their recovery has been reduced even further.

But nobody should be of any doubt, there will be a Grexit.

The Greeks know that the only way is out. Is Tsipras simply trying to hold power long enough to feather his nest (and create a future personal revenue by 'saving' the EU)? Does he really think that he will be loved for his treason?

How much longer before tractors blocking highways and undertakers going out in sympathy strikes leads to mass demonstrations in downtown Athens? Riots of farmers are already happening in Athens. General Strike anyone?

Greek Tractors about to block the highway

Greece's masters, also known as the European Commission and the Reichstag, meanwhile vilify Greece for its response to the flood or migrants (oops, refugees) that pour across its borders from Turkey, their NATO ally.

So while we have two themes here; subjugation by European powers, and exploitation by a NATO ally, the core problem is the treason of the Prime Minister. He claims a "mandate" from the post-treason snap election, an election in which the choice was the current traitor, or the previous traitors.

And in the snap election, the voter turnout dropped significantly from the referendum, to just over 50%. Looks more like voter apathy then a mandate.

Meanwhile the Center (Brussels and Berlin - if two places can be "the Center") lambaste Greece for not spending their last Euro on stopping migrants from getting in, and then moving on to wealthier European countries. After all, would you want to be an economic migrant to Greece right now?

Migrants are coming in through Greece because it is the "easy" route, and appears to have the defacto blessing of the Turkish government in their 2500-year war against Greece. If, in the logic of the Center, Greece can stop boats from landing on their islands (or sinking part way with the Greeks being the ones expected to pull the living and the dead from the water), then surely a country that is not broke, that is getting massive aid to address their refugee / migrant crisis, can afford to run a basic police force that can identify the starting and gathering points for people smugglers on their own territory.

Unfortunately the only thing that Tsipras is accomplishing is delaying Greece's recovery, while making the starting point even deeper.

This One Chart Proves the Grexit is desirable, and inevitable

Saturday 9th May, or as I've been calling it, G-Day (Grexit Day) has come and gone, without Churchill's desired invasion of Greece, with the idea of flanking Germany while also limiting the spread of Soviet control across eastern Europe.

No. Wait. I'm getting things mixed up here. Let me start over...

Now, I wouldn't want you to think that I'm actually comparing the Eurozone to the German occupation of Europe during the Second World War. There is no comparison. One brought pain and suffering across a continent, destroyed peoples, economies, culture, cities, indeed entire countries. And no, don't wait for the punch line - and then there was WWII. The fact is that the European Union with open borders and flow of people and capital has helped to lift millions out of poverty while also ensuring peace across (most of) the continent for over 50 years.

It is just a little humorous however to notice that the pre-D-Day map of Occupied Europe does bear a striking resemblance to a present day map of Euro Europe.

One of these is the EuroZone, the other is Axis occupied Europe in 1943 - Which is which?

So, starting over...

Saturday 9th May, or as I've been calling it, G-Day, has come and gone without the invasion of Europe by the New Drachma. Having predicted May 9 as the day, I now say "I was wrong ... about the date." Yet the conditions for a Greek Exit from the Euro are as strong today as they ever were, and getting stronger by the day. In my previous post predicting May 9 as G-Day, I listed six reasons why Grexit is inevitable. The passing of the 9th without a Grexit does not in any way invalidate any of those reasons.

Now I'll add another reason; it is the only way that Greece will rebuild the Greek economy and get the country back to work. And until the country gets back to work, there will be no future for Greece.

This chart, from the National Party (the ruling party) of New Zealand shows why Greece must leave the Euro, and why it will be a good thing. Look closely at this chart:

Now what does this tell us? Here are some quick observations:

1. New Zealand almost when broke in 1984, and in the space of 3 - 4 years, after restructuring its economy, went from being the 24th least open economy in the OECD to being the 1st, most open economy. And the economy grew nicely, after weathering the terrible pain of the restructuring.
2. Ireland has stuck with the Troika's demands and programme, and remains in trouble.
3. Iceland, after defaulting and being locked out of the international capital markets and the initial pain, has now enjoyed multiple years of solid economic growth, and is now #1 on this chart of levels of employment.
4. Meanwhile Greece is right there at the bottom. It knows that it can follow Ireland and spend another decade handing over assets to the loan sharks, sorry, the Troika and the loan sharks they represent, or it can take the Iceland approach and see renewed economic growth, quickly.

The road to growth is through a managed bankruptcy and fresh start. People can do this, and so can companies. As for lending to people, in the United Kingdom the FCA (Financial Conduct Authority) requires lenders to ensure that their clients are actually able to repay, and to ensure that the loan will not result in undue hardship. So why didn't those lending to Greece, or to be more accurate, buying Greek bonds and therefore making an affirmative investment, confirm that their investment would be able to be repaid without undue hardship.

A quick reminder of my original 6 reasons:

1. This is what the Greek people voted for.
2. The Greek people know that Europe is not going to bail them out, again (and again).
3. Greece (and the Troika) know the debt will never be repaid.
4. Syriza had six months or face political oblivion next election.
5. The Greeks needed to show "good faith" and negotiate, and they've done that.
6. The demand for reparations from Germany is designed to ensure negotiations fail.

Number 6 is almost the "General Belgrano" option. If it looks like negotiations will actually happen, thereby stranding your fleet in the middle of a South Atlantic winter, then do something to ensure the other side will not negotiate.

New prediction:

So, having missed the date, instead of fixing another date, I will only predict the following for anyone visiting Greece this summer:

• Buy your Euros before you leave, because if the Grexit happens while you are there, you'll not be using any ATMs, they'll be shut.
• You might even get the chance to buy your New Drachmas before you leave.
• The weather will be sunny.
• The Retsina will be tasty (and will go perfectly with the sunshine, olives and salads).
• The Greek people will be as wonderful and hospitable as ever.

Because let's be real about this, in or out of the Euro, Greece is a fantastic place, and the tourists will flow in, and the wine and olives and other produce will flow out. And with any luck, and Grexit will also begin the process of (re-)creating a vibrant economy that brings the Greek diaspora home.

Oh, and for a final treat - the official Talking P.I.G.S. music video!

Why the Grexit is inevitable - and some singing PIGS

In the past few days, we had the pleasure of a (very) extended lunch with a good friend from high school days in Thessaloniki, Greece. Of course we talked about mutual friends from those years - how So-n-so hadn't changed, how (yes, you know who you are) actually did become a (prominent) doctor much to all of our and our teachers', surprise. And what about, you know who, I heard he died. No, not true, he's alive an well and playing the electric guitar.

Of course there have been some deaths, and more than a few divorces, but many children who are now beginning to have children of their own. Some sing, including the snarlingly lovely Talking Pigs: We Won't Pay (As in Portugal, Italy, Greece and Spain).

One thing in common for almost all of my Pinewood International Schools (TiHi to some) class of '78 is that we left. Many still live in Greece and in Thessaloniki or have returned, and they are closest to the pain. The real pain of the past decade, that has destroyed wealth and hope. Unemployment is running at levels not see in Europe since after the war, and at levels that encouraged the socialist - fascist civil wars of the 1930s. Those did not end well.

But that does not explain why the Grexit is inevitable, and why it will happen very soon.

1. This is what the Greek people voted for. No, they did not vote to stay in the Euro, they voted for the party that said it would reduce the debt and meet pension obligations. The Greek people and voters are not stupid. They knew this could only happen by either the rest of Europe bailing out Greece again, or by leaving the Euro. 
2. The Greek people know perfectly well that Europe is not going to bail them out, because to do so will only set everyone up for the next bailout.
3. The Greek people, and the rest of Europe, know full well that the debt will never be repaid, and that the Troika are now acting as nothing better than the enforcers of loan sharks.
4. Syriza knows that it had six months before the voters would throw them out, and once out, Syriza would never come back. 
5. The Greeks needed to show "good faith" in actually attempting to negotiate a resolution with the Troika. This has now been done, and is failing.
6. The demand for reparations from Germany is designed not to actually extract the reparations, but to anger the Germans to the point that they will block any compromise that Syriza would have been required to accept.

The Greek government, elected by a battered and exploited Greek people, has been establishing the conditions that will give them the moral high ground (in the eyes of their voters) needed to actually leave the Euro.

Having set the conditions, when will it happen?

"Predicting the future is easy, getting the dates right is almost impossible." I would attribute that quote, but so many people have said that any attribution would be inadequate. But it certainly is true, and while I love to predict, getting the dates wrong is a specialty.

That being said, I'm still guessing May 9th.

Why?

Greece will leave the Euro, and they will do it sooner than later. They've made the April payment, but simply do not have the money for the May or June payments, and they cannot pass the legislation required by Europe and the Germans and stay in power. That gives us a late May or June date. So why earlier?

Capital flight.

Imposing currency controls will be a fundamental element of any Grexit. Accounts will be frozen, and any money in accounts will be re-denominated in New Drachmas. Once the bank accounts are unfrozen, the residual, former Euros will now be worth whatever the New Drachma has dropped to, and the drop will be significant, over--correcting to the downside.

Once it is accepted that the Grexit is coming and there will be no last minute deal, and with memories of Cyprus too fresh in every Greek's mind, the money will flow out of the country. Not just corporate money (most of which is probably off-share already) but any remaining personal money in bank accounts.

So Greece has to move before the coming Grexit is perceived as inevitable, and the money starts to flow out.

Weekend event.

When the Grexit happens, it will be on a weekend. The banks will be closed, parliament will be called into emergency session, and a packet of laws will be passed. As this needs to be on a Saturday to avoid wholesale capital flight the moment that parliament is called into session, were it a weekday.

This leaves only a few possible dates. And where there are few possible dates, I'm punting on the earlier date, so earlier in May. And looking at the calendar, that leaves us with May 2nd, 9th or 16th. My own guess is that the 2nd is too soon, and the 16th is too late.

That leaves me guessing May 9th.