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The temple of folly

By Owen Paine on Saturday June 18, 2011 05:42 PM

The graphic shown below only fools benighted helots (click to enlarge):

It purports to show the Greek debt/GDP ratio under four different sets of assumptions. The only one that shows the ratio going down rather that up to "catastrophic" levels involves doing exactly what the author says -- naturally.

It's a snapshot nightmare crafted by a useful idiot; might as well come straight from the agitprop department of the great north economy corporate conspiracy. "Scary!", as Count Floyd might say.

Take the badass projection - the one that gets national debt to plus 350% of GDP by the mid-2020's. Now here's the sober verdict of scientific macro using the prime macro control tool: this fearful iceberg can be rendered into nothing but a pile of ice cubes, meltable in five years, say 26-31; an evaporating nuisance that could be called the great shrinking value play, performed in 5 annual acts by a progressive Euro zone on one of our possible parallel future planet Earths.

Alas, this path is without signage in the collective north economy commonwealth. Instead the deficit/debt clown crap runs rampant -- lies like a nightmare on the brain of the living, you might say.

"So fucking what, assholes?" That oughta be the torchlike response to these flapdoodle projections. Five years of "price level sprinting" -- i.e. fast-rising GDP, by the lead partners in Eurotrap 2025 could render the most "tewibble tewibble" debt-berg as feeble as a pile of snowballs in Hell.

Lesson number one for north economy wagelingers: "Comrades of the PIIG, listen. There is no runaway uncontainable deficit series."

Deduction for the people of Greece: keep striking, keep mobilizing, keep rioting and burning, just fuckin' keep on keeping on, till the central bank bureaucrats and their tower troll masters... cave.

Cheer to the noise, brothers and sisters. All this grinding of the class gears is the music of Clio's lovely antispheres. It manifests in its cacophonic glory the bloody bizzaro farce at the core of Korporate Earth -- the commanding heights, the financial friggers, and their Temples of Folly.

Comments (10)



jared bumsted joins the knot head brigade

greece is insolvent j ???
involuntarily insolvent ??

bull shit there is no such thing as involuntary insolvency
not with a credit system based on costless money
the ECB temple of folly numero uno
wants greece to dangle over
the insolvency abyss

why it could buy up all existing greek sovereign debt in a flash
recall the fraction of full zone
sov-debt greek sov-debt represents
buy it up without even a soft belch
and without issuing
any anal retentive accounting trick
euro bonds to fund the mass purchase either

what about the other piigs

bring them on board too

just monetize the stinkers


greece just needs a path to trade balance
it can be a very long path too


"It’s one thing to whack shareholders—they made a bet and they lost…not pretty, but it happens. But creditors are different, and once you start defaulting on sovereign debt, you’re telling the world that blood transfusions (liquidity injections) to your financial system will not work. It’s time to call in the surgeons and amputate."
-quaking bumsted

there's so much hemlock in that
you could kill the entire afl
national leadership


the prime macro control tool ??

managing the g/i
that is
the nominal national gdp growth
over the nominal sovereign interest rate

greece has seen its nominal S rate
sky rocket
and if its nominal growth rate doesn't sky rocket then yes trouble boils the social cauldron

but err the ecb really controls
the nominal growth rates
of all the euro zone nations

the euro trap !!!


burn baby burn

set greece on fire
only that might cause the ECB to monetize enough piigs' debt
to put the "crisis" into reverse


What exactly does it mean to "monetize" the debt?



print money and then pay the debt. trading the debt for a knock to the value of the currency.



in this case the ECB buys greek sovereign bonds and notes with digital euros
cost of producing new euros ..zero

possible impact on
"value of euros outstanding "
could be zero
probably will be close to zero
given the slack
in the euro community production system

revealing fact

germany is running large trade surplus
piigs running large deficit
rebalancing necessary

answer german intra community
imports need to rise
not piigs intra community imports fall
ie german nominal gdp needs to surge
ahead faster then the piigs
not just stagnate less
german wage rates need to surge
german buying surge
thus german imports surge


a key here

the so called risk of default premium
ie the spread between greek and german sov-bond rates

its a scam

if the ECB "insured " the greek sov bonds
the rate would drop on greek bonds
at no cost to greece or the ECB
look at the spread its obscene
and a pure blood suck play
unlike a compensation for
the relative inflation rates
a reasonable expectation
between two currency zones
but here
there is no inflation premium
its all one zone


not quite so
scientific but unless
fluent in Greek subtitled as required:



Nice catch there from Bernstein.

"Creditors are different," huh? And here I had the silly idea that the interest premium on Greek bonds was supposed default risk. But no, it seems that that creditors have a moral right not to actually bear the risk they’re supposed to be getting paid for.

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