What follows
here is a synopsis of an email sent out by Graham
Summers, Chief Market Strategist at Phoenix Capital Research.
Summers and
other analysts say the coming collapse has been delayed by heavy intervention
from the European Central Bank. European
leaders have been quite aggressive in their efforts to hold things together --
the preservation of the euro depends on it, and many economic & commercial
benefits accrue from that for most of the countries in Europe.
However, by
the end of last year, Greece had already received bailouts in excess of 150%
of its GDP -- yet still posted a GDP
loss of 6.8%! So it was hard to
believe that the Greeks would accept yet more austerity measures and more debt. But they did.
Political
tensions between Greece and Germany had reached the point that Greeks were
openly comparing German Chancellor Angela Merkel and Finance Minister Wolfgang
Schauble to Nazis while the Germans referred to Greece as a "bottomless
hole" into which their money was being tossed.
The obvious
reality was that Germany wanted to force Greece out of the EU, but didn't want
to do that explicitly or directly. So instead they acted indirectly, offering
Greece the worst deal imaginable that
could still be portrayed as an offer to help: The German aid package stipulated that Greece would
have to accept levels of austerity measures so onerous that there was no chance
the Greek people would ever tolerate it.
Or so the Germans thought. But
Greece surprised them and accepted it. And
so it is that the EU experiment continues to exist today. But it hangs by a thread and will not last
much longer. The reasons are as follows.
For starters,
unemployment in Greece as a whole is now over 20%. For Greek youth (aged 15-24) unemployment if over
50%! The country is in nothing short of
a Depression. So let's not fool
ourselves with pretensions to the contrary.
Instead
understand that Greece has by now experienced five straight years of economic contraction, resulting in a 17% contraction
of its GDP. To view this in perspective,
understand that when Argentina collapsed in 2001 its total GDP loss was 20%, and
this was accompanied by full-scale defaults as well as systemic collapse and
open riots.
So, with freshly
installed austerity measures now in place in
Greece, there is little doubt that this country too will soon see a GDP
contraction of 20%, if not more. Therefore this will almost certainly lead to an
Argentina-style default in this country as well.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
5
2
1
