Friday, July 3, 2015
Greek referendum prediction, and why
I'm just some bozo who's never even been to Greece, so my opinion is about as worthless as one from Doug Kass or Bill Ackman. But maybe I can make you think about something.
I'm pretty much certain that the Greeks vote Yes this Sunday. Old pensioners are always a militant voting bloc, and I think the grayhairs will vote en masse to continue in the ECU and EZ with the hope that Draghi and Merkel will continue paying their pension cheques.
Old people are never never never never the demographic of revolution and change. They're the demographic of piddlesome fear and cowed obedience.
Now, here's the thing: there has been a lot of 1s and 0s wasted this week on speculation about "what's next if Greece votes No", but nobody has bothered to ask how Europe digs itself out of its abysmal clusterfuck if Greece votes Yes.
OK, so Tsipras quits, Varoufakis quits, and maybe you get a PASOK/ND/WTF/LOL "government of national unity" formed to implement whatever the fuck stupid idea Europe has, but that's not the problem.
OK, a Yes vote means the next government implements all the idiotic further austerity measures demanded by EU clowns, which means Greece's output gap blasts even further past 10% and they fall further and further into a depression until Ethiopia looks good by comparison, but that's not a problem either as far as the EU is concerned.
The problem, which I don't think Merkel or Draghi or Dijsselbloem or Lagarde or anyone else on the Yes side has even bothered to consider, is that the ECB froze the Greek banks' lifeline at €89B back in February, and since there's a bank holiday right now I think we can assume that's all gone and Greek bank reserves are presently near €0.*
So the ECB, as supposed "central bank", will (if they decide to start meeting their official responsibility again following victory over the evil forces of Greek communism and the cowed acquiescence of the Greek people) need to recapitalize the Greek banks - assuming they don't decide to just bail in depositors and wipe everyone out, which might cause a bit of stink considering it was the ECB who encouraged the bank run in the first place.
So the ECB will need to find maybe another €100B to recapitalize the Greek banking system. Oh, and also another €50B just to drag the Greek economy out of the blood-caked gutter and into the ER, according to the IMF's report this week.
Will the ECB do this? "Give" another €150B to "the Greeks"? That's hilarious. Which countries do you think will even agree to handing over money to repair Greek bank reserves? The Europeans have been trying to force the Greeks out of the EZ for months now, and have been violating their own rules in order to do it: the Euro leadership have dug themselves a deep, deep hole and I don't see how they can backtrack from here.
So, typical for any Eurozone crisis, the present EU/ECB/IMF "solution" will be a clusterfuck of failed promises coloured with continued racist recriminations from the plutocratic Germans, as Greece will continue to spiral deeper into depression with a fully non-functioning banking system, until eventually the hospitals shut down and people starve in the streets.
That's with a Yes vote.
And that's my prediction.
* - No, nobody stole the Greek bank reserves, you racist scum. The reserves were transferred by depositors out of the Greek banking system, and into the banks of countries like Germany, the UK and Switzerland. That's what a bank run is, and that's what the ECB has been encouraging.