Greece Is NOT Under Control

A sobering look at the current economy by Denninger -

There's no particular reason for Greece to get funds from the Eurozone "directly" in this case irrespective of anything else. If there's no rate advantage why not just sell into the market?

This is the problem with debt spirals, you see. Trying to borrow and spend your way out of recession runs the risk of interest costs exceeding cash tax inflows. If that happens you're done, and the market will react to the possibility long before it actually happens.

Contrary to popular belief we aren't any better off than Greece is. We've been at the same game they played for the same amount of time, basically - we embarked on our "borrow and spend to lie about GDP" in 2003, and we have maintained that level of borrow and spend ever since, until it blew out to where it is now in 2008.

Those who refuse to learn from what others have done (and blew up in their faces) are destined to have to go through it themselves.

We cannot mask a 10% GDP deficiency for very long. We've gotten away with it for two years, with the first of those years coming on the back of an all-on stock market collapse that fed the bond market with fear-driven money, and the second half with "QE" and similar shenanigans.

But now both of those influences are gone - and we're still trying to spend and borrow the same way, continuing to lie about our GDP circumstances.

We had better stop it and get behind some concrete block before Greece goes up in smoke - from what I can see from here, which is an admittedly-imperfect picture, the only two ways out for them are an outright default or departure from the EU; the latter would allow them to issue in massive quantity and thus effectively devalue.

Nothing else is going to work - they're too far down the hole - and if we don't cut this crap out right now we're going to follow them down the bowl.

The Real Effect
Of course Denninger is correct in noting that we are facing a similar fate as Greece, the operative question is - How do you "bail out" the largest economy in the world? And if the eurozone is so hesitant to "help" Greece, how much more hesitant will the world powers be to help us? I think we know the answer to that question.

Keep a close eye on Greece as the countries of the world blow out their currencies in a coordinated fashion so as to set up the idea that collapse was "unavoidable" and that we now need a global currency to chase the global trade zone.

There was a reason why Jesus chased the money changers out of the temple...