Greece Spiraling the Drain

The economic situation in Greece explodes -

Greek tax collectors and customs officers walked off the job on Thursday, kicking off a spate of strikes against government austerity cuts designed to halt a financial crisis caused by massive debt. Both groups embarked on a two-day walkout ahead of industrial action called by civil servants, doctors and Communist-backed workers on February 10 and a general strike called by Greece's main umbrella union on February 24.

Greece's largest union with around 600,000 members, GSEE is expected to approve Panagopoulos' call for a February 24 general strike later Thursday.

GSEE has also walked out of the official debate on how to reform the country's cash-strapped pensions system that is a key part of the government's economy rescue agenda.


Greek Prime Minister George Papandreou on Tuesday ordered a public salary freeze, a higher retirement age and a hike in petrol prices, supplementing a crisis plan unveiled last month to reassure the international financial community.

And in Europe -

European and UK stock markets fell more than 2 per cent, with Portuguese and Spanish stock markets leading the declines with falls of 5 per cent or more. Investors also sold sovereign debt in these periphery eurozone countries and sought the safety of the dollar and US Treasuries.

“The latest catalyst was [Wednesday’s] bond auction in Portugal, which was scaled back and which has reignited fears that the likes of Portugal and Greece will not be able to fund their deficits without a bail-out,” said Gavan Nolan, credit analyst at Markit.

Posted on January 5,and most recently on January 30th I said the following -

The situation in Greece is FAR WORSE than the positive news warrants.

Either way, it doesn't bode well for the global consumer. Look for default to begin causing defaults across the globe as this crescendos into a global sell off.

Oh! And who can forget Vincente Fox's little escapade regarding a North American currency? (In October of 2007, right before the begining of the Greatest Depression)

When asked if he supported globalization through NAFTA, Fox responded: "Yes, absolutely, NAFTA has been good, as a matter of fact we should have a new vision, go further, integrating and working together to build a better future for both. "That happened with Spain and with the European Union with them joining the union and having access to those huge cohesive bonds, they were able to overcome poverty and today Spain, or Ireland or Greece or Portugal are all very successful nations, what you need is a little bit of solidarity."

The Real Effect
I do know that Greece's woes are going to blow out into the eurozone specifically Spain, Portugal, Italy and Ireland as they are all big holders of Greek bonds. This in turn will cause their economies to suffer as the fallout becomes contagious. Yet America plugs along, content to repeat these mistakes as we "integrate" and "harmonize" our way into oblivion.
What will be of some interest is whether or not the EU attempts to isolate Greece somehow in a fashion similar to the economic collapse of last year in the United States. I don't know how they would do it, but it would make for a very revealing study of what could come to the US shortly.

The next six months should be very interesting.