Greece is Still Lying in Wait …
We haven’t written much about Greece recently, but there have actually been a few developments worth paying attention to. Several easily foreseeable things have indeed happened in the meantime: Prime minister Tsipras felt forced to call a snap election after securing the first bailout tranche, the radical Marxist faction of Syriza led by Panaghiotis Lafazanis has split from the party, and so has its “youth wing”. In the meantime, the Greek economy has predictably nosedived as a result of the banking system freeze (Mish reports the grisly details here).
The Gift that Likely Will Keep Giving …
Jay Taylor has mailed us an infographic he and his colleagues at Boston University and Pearson Education have put together, entitled “Why the Euro Zone Crisis is not Over”. We have decided to reproduce it here, as it provides a good overview of the most important data points surrounding the still festering crisis situation.
The Industrious Greeks Mystery
In the course of the Greek crisis, animosities between creditor countries like Germany and Greece didn’t take long to surface. They were fired up in the tabloid press, which was quick to revive various stereotypes. In Greece, Germans soon found themselves compared to their Nazi predecessors, while German tabloids inter alia complained sotto voce about those allegedly “lazy Southerners”.
The stereotype of “lazy Greeks”
Greek Stocks Reopen with a Thud
The Greek stock market very likely represents an emerging opportunity, as many stocks are sporting extremely low valuations these days. However, when we last discussed the Greek market, we pointed out that there was probably no hurry and more importantly, that using ETFs to play the Greek market would pose a difficulty at the current juncture.
Greek ruins – emblematic for the country’s situation.
Photo credit: fondos7.net
Austria’s Constitutional Court Decides to Uphold Property Rights
To everybody’s vast surprise, Austria’s constitutional court has decided not to side with the government in the infamous Hypo Alpe Adria (HAA) case. The bank went belly-up after the 2008 crisis and slowly but surely it emerged that it represented a financial catastrophe of truly stunning proportions.
Incompetence on a rarely seen scale, but probably also fraud (although that angle has yet to be pursued by the judiciary) ultimately produced the biggest de facto (if not de iure, yet) insolvency in Austria’s history.
Hypo Alpe Adria – a giant house of cards that imploded in the course of the financial crisis.
Photo credit: hypo-alpe-adria.hr
As we noted last week, a surprisingly large number of Syriza MPs voted against the bailout package, thereby defying their own government. The rebel faction was led by Marxist hardliner and energy minister Panagiotis Lafazanis, who has always been on record for being in favor of a “Grexit”.
After the vote, Lafazanis told journalists that he “was against the plan”, but “supported the government”. This didn’t save him however – Tsirpas reshuffled his cabinet, removing Lafazanis and two deputy ministers, replacing them with more loyal allies.
Grexit supporter Panagiotis Lafazanis got “exited” himself.
Photo credit: Thanassis Stavrakis / AP
Is Spain the Next Greece?
Today, we report on a new front in the Great Zombie War – the U.S. health care sector… and why costs there are set to rise. (More on that below…)
For now, we are sitting in the bar at The Hazelton Hotel. We always thought of Canadians as being a bit more reserved and conservative (socially, not necessarily politically) than their neighbors to the south. Well, not in this hotel!
It is more like Dallas than what we recall from our summers in Nova Scotia. People dressed in the latest gaudy fashions… loud hipster music… trendy decor… women who appear to have had extensive body work done. And on the TV above the hotel bar is a recurring ad from a zombie law firm advertising for personal injury cases!
Barrels of Spanish Rioja
Photo credit: illogronio.com.es
Interest Rates and the Euro
After the introduction of the euro, many peripheral countries in the euro area experienced a major credit boom. The reason for this was that these countries previously had “soft” currencies, this is to say, they regularly devalued their currencies instead of implementing economic reform.
Devaluation is the easy way out for policymakers after all. The supposed “advantages” of currency devaluation, illusory, misleading and fleeting as they are, are always experienced as the first effect. The disadvantages – which dwarf all the so-called advantages – are only becoming visible at a later stage, by which time most people are no longer able to properly assess the cause-effect vector.
This failure to understand cause and effect in economics is widespread. Unfortunately, one group among which it is widespread are economists. Looking at the assertions made by many of today’s most prominent economists, we are often struck by how superficial they appear, especially with respect to monetary debasement.
Frédéric Bastiat: a classical “proto-Austrian” economist whose writings remain highly pertinent.
Photo via Wikimedia Commons
Bribes and Payoffs
PARIS – Protesters gathered in Syntagma Square in Athens on Wednesday night…
They were demonstrating against the cruelty of life in general and, more specifically, the deal their government made with its creditors.
“Greek workers taken to the cleaners, as Tsipras forced to retreat on promises,” reports the Financial Times.
“Austerity,” the papers call it. But that is just the public narrative. Austerity is what Greece would have gotten without $220 billion in bailout funds from its neighbors and two debt restructurings.
Without these, public sector wages… and pensions… would go unpaid. The banking system would collapse. And Greek savings would be obliterated.
Riots in Athens – it was actually just a tiny group joining the rioting fun this time (as in: how dare they send us more billions and actually tie that to conditions!). Most of the Greek zombies know that if they want to keep suckling on the government teat, they have little choice, so they have decided to take the money just one more time ; )
Photo credit: Yannis Behrakis / Reuters
Euro-Group Deal Approved by Greek Parliament
The result of the parliamentary vote in Athens just came through, and was remarkably closely aligned with recent surveys of Greek voters. Funny enough, these surveys revealed approximately 70% approval of the deal offered by the euro-group among the population. No doubt the fact that the insolvency of Greece’s fractionally reserved banking system was recently painfully revealed to depositors after the ECB froze ELA had something to do with this sudden surge in support. Moreover, it is always possible that a majority of Greece’s citizens actually realizes that there is no way around wide-ranging reform.
Recent polls show soaring support for Syriza in spite of Tsipras ignoring the referendum outcome (source: Keep Talking Greece)
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